There probably aren’t too many subjects nerdier than corporate minutes. Lawyers (among others) tend to focus on exciting (dare I say sexy?) matters like M&A, activism, and bet-the-company litigation. Those and other topics are surely exciting, but failing to pay attention to minutes can cost big time. Like it or not, minutes are among the few pieces of evidence – sometimes the only evidence – that boards and committees have properly executed their fiduciary duties. Did the board give a matter due consideration? Did the directors ask the right questions? Any questions? Did they consider the risks as well as the benefits of an action or of inaction? If these and other questions are not answered by reading the minutes, they may not be answerable at all.
Failing to have good minutes can have serious adverse consequences. Aside from the potential liability and reputational damage associated with a failure to fulfill fiduciary obligations, transactions can be voided, and so on. And in one recent case, the Delaware Supreme Court found that in the absence of minutes, plaintiffs making a “books and records” demand on a company would be able to see emails between directors, among other things. (You can find my prior posting on that case here.) If that doesn’t put butterflies in your stomach, nothing will.