A question we often get is, “Does my company need to take official minutes?”
The short answer is “yes”.
Consider an energetic start-up we will call Company X, which recently contacted us with a predicament. Over the course of 36 months, Company X had been busy building value and turning the heads of some significant industry competitors. The atmosphere was nimble and frenzied. The board of directors and shareholders held countless meetings and growth was rapid.
Everything was moving in the right direction, and up stepped a potential buyer that, in practicing due diligence, requested Company X’s minutes. Regrettably, Company X couldn’t deliver.
Amidst all the booming business and chaos of running a start-up, nobody at the firm had considered the importance of taking (and keeping) proper minutes in a centralized, easy-to-access platform. The prospective investor was unwilling to commit millions of dollars to a corporation that did not have a proper maintenance record of its history. But after the fact, nothing could be done morally or ethically to satisfy the request.
So the deal fell through.
That’s a particularly painful way to learn that most for-profit and non-profit entities in Canada and the U.S. must maintain corporate records including official meeting minutes – they are often mandated by law. Legislation aside, meeting minutes can be used as a roadmap for an organization — what takes place in meetings often addresses what has happened in the past and determines the entity’s direction moving forward.
Over time, minutes serve as a history of an organization — sometimes the only unbiased, officially recorded one. Even through the turnover of staff or directors, documented meetings may be the sole objective reference of an entity’s development. As we all know, memory can not only be fickle, but biased as well. It is therefore critical that all corporations — be they for-profit or non-profit — know what kind of record-keeping is required under the legislation that governs their industry and that they formalize a method of taking minutes, either internally or via a professional third party.
Company X’s cautionary tale demonstrates that while minute taking may seem mundane, overlooking this crucial – and often mandatory — job can result in paying a high financial price.
For any questions, please don’t hesitate to contact Minutes Solutions.