The Increasing Importance of Corporate Minutes

As corporate scandals continue to dominate the financial press, the actions taken by members of corporate boards of directors are under attack by the civil class action bar, the Securities and Exchange Commission, federal prosecutors, and state regulators. As the activities of board members are increasingly subjected to challenge in civil and even criminal proceedings, the existence of a clear record of the board's activities has become an increasingly critical element in establishing a corporation's decision-making process. More and more, courts are taking hard looks at the minutes of board of director and committee meetings to determine whether the actions taken by directors are consistent with corporate law and the fiduciary duties owed by directors to the corporation. Thus, boards of directors should take a fresh look at how their decision-making process is described in corporate minutes to ensure that the minutes will permit the directors to defend the actions taken in the boardroom, as well as to demonstrate that the directors have performed their oversight duties with appropriate care.