Minutes Are Worth the Minutes:
Good Documentation Practices Improve Board Deliberations and Reduce Regulatory and Litigation Risk
Leo E. Strine, Jr.
UNIVERSITY OF PENNSYLVANIA CAREY LAW SCHOOL
The June, 24 edition of The Hub is highlighting a research report titled “Minutes Are Worth the Minutes: Good Documentation Practices Improve Board Deliberations and Reduce Regulatory and Litigation Risk" by Leo E. Strine, Jr., UNIVERSITY OF PENNSYLVANIA CAREY LAW SCHOOL, which emphasizes the critical importance of thorough and timely corporate minuting and board documentation practices.”
Here are the key points:
- Significance of Quality Minutes:
- High-quality, contemporaneous, and consistent minutes inspire confidence and are given considerable weight by Delaware courts in USA.
- Accurate minutes that detail the board’s decision-making process can lead to favorable legal outcomes and protect against regulatory and litigation risks.
- Positive and Negative Practices:
- Positive practices include detailed documentation of material factors and referencing key documents and advisor presentations.
- Poor practices involve omitting key topics, delayed approval of minutes, and lack of reference to advisor materials, which can undermine the credibility of the minutes and increase litigation risks.
- Judicial Expectations:
- Delaware courts (USA) expect minutes to cover significant issues and reference critical documents considered during board meetings.
- Courts differentiate between minutes and transcripts, focusing on the need for minutes to capture essential deliberative factors rather than being verbatim records.
- Practical Recommendations:
- In-house counsel, management, and boards should adopt best practices for documenting board meetings, ensuring timely and reliable minute-taking.
- Approving minutes at the next board meeting while memories are fresh enhances accuracy and serves as a bridge to ongoing deliberations.
- Legal and Corporate Benefits:
- Proper documentation practices can lead to dismissal of complaints and reduce the scope of discovery in litigation.
- Good minutes serve as credible memory aids for directors and managers, supporting their testimony and defense in legal proceedings.
The document concludes that investing time in creating and maintaining high-quality minutes is a crucial, albeit unglamorous, task that significantly benefits corporate governance and legal standing.
