Corporate Minutes: Best Practices Create Best Evidence
Preparing board minutes is often the least favorite of corporate governance tasks. Minutes themselves are frequently given only a cursory review by board members. Yet, a greater emphasis on corporate record keeping under the Sarbanes-Oxley Act of 2002 and related regulations, shareholders’ heightened expectations of directors and the intense scrutiny of director conduct in litigation, including option backdating cases, are increasingly placing corporate minutes in the spotlight. Because courts continue to view the minutes of board and committee meetings as the best evidence of what took place at the meetings – including whether the directors’ conduct complied with their duties of care and loyalty – careful and defensive preparation of minutes by skilled professionals should be part of every company’s arsenal of best governance practices.
In a two-part series, Evelyn Cruz Sroufe, Rebecca Hoskins and Scott Husbands discuss the increased focus on the role of the board of directors in response to corporate scandals and shareholder activism, summarize a director's fiduciary duties, review various requirements to maintain minutes and the issues raised by third-party review of minutes, illustrate how minutes are used in litigation, with examples from the Disney and NetSmart cases, and discuss the role of fraudulent minutes in option backdating cases. The series closes with a detailed guide for preparing and safeguarding accurate and complete minutes that will provide the best evidence that the directors complied with their duties when approving significant corporate actions.
Links to the summaries of Part I and Part II of "Corporate Minutes: Best Practices Create Best Evidence," can be found here. The complete text of the articles can also be found at this link, however, an account with LexisNexis is required.
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