If you are a business owner, you are most likely aware of the many compliance obligations outlined by state and federal law. One of the most important is the requirement to keep meeting minutes.
In most states, businesses structured as C or S Corporations are required to hold shareholder meetings each year, as well as meetings of their boards of directors. In some cases, limited liability corporations (LLCs) must do so as well.
Holding these meetings is essential for keeping the company compliant. But it’s not enough to simply have a meeting — the meeting must also be documented properly.
Meeting minutes are an official record of what occurred during a meeting. They document actions taken and discussions held on internal topics, such as changes to governance, financial projects, business strategies, and personnel issues, among others. Although some may erroneously believe minutes are a basic administrative task, they are an important compliance requirement and should be taken seriously.
With all the other tasks involved in running a business, meeting minutes can easily get relegated to the bottom of the priority list. I get many questions from clients about their obligations regarding meeting minutes — how to take them, when to take them, and what to do with them. Following are some of my most frequently asked questions.
Do I Need to Take Meeting Minutes?
If your business is a C Corp or an S Corp, you are required to hold annual meetings of both shareholders and boards of directors. Most corporations hold their annual meeting soon after the company’s fiscal year has ended. Minutes must be taken at these meetings.
Generally speaking, LLCs aren’t typically required to hold annual meetings for members. However, if the LLC Operating Agreement requires meetings, then minutes must be recorded. Regardless, holding meetings and recording minutes is highly recommended, as they serve as important legal documentation and can protect owners should problems arise.
What Do I Include in My Meeting Minutes?
For C Corps or S Corps, shareholder meeting minutes (held annually) and board of director meeting minutes (held quarterly) typically include the following:
- Date, time, and location of the meeting
- Who attended and who was absent from the meeting
- Who recorded the minutes
- Meeting agenda items with a brief description of each
- Details about what was discussed during the meeting
- Results of any voting actions taken
- The time when the meeting adjourned
Although LLCs aren’t always required to hold annual meetings and keep minutes, it’s considered a best practice because it reaffirms that the business owner is treating the LLC as a separate legal entity. LLC meeting minutes should include the same information as corporation minutes.
What Do I Do With the Meeting Minutes I Take?
Meeting minutes should be stored with other important documents related to your business, such as articles of incorporation, bylaws, and resolutions. It is recommended to keep them for at least seven years. They do not have to be filed with the state, but should be made part of a business’s permanent record.
What Happens If I Fail to Record Minutes?
Failing to abide by compliance regulations can jeopardize a company’s standing as separate from its owners. In other words, it can lead to the piercing of the corporate veil. This could put the owner personally liable for actions taken against the company. Should the company be deemed to be operating as a partnership or individual rather than a corporation, they could face a less desirable tax rate. It can also lead to a loss of good standing and financial penalties in some states.
Whether a corporation or an LLC, keeping accurate meeting minutes is more than just a formality — it’s a best practice to remain compliant and protect yourself. Understanding your legal and regulatory obligations with regards to meeting minutes is the first step in creating a culture of accountability.
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This article, "Meeting Minutes FAQs" was first published on Small Business Trends
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