One of the many requirements of a corporation is to maintain a minute book. This is the official record of all of your company’s business dealings. Often it falls to the responsibility of the “recording secretary” of the corporation to keep the minute book up to date. Why is this important? Here are the top five reasons to keep your corporate minute book up to date.
1) Detailed History
If for no other reason, the minute book becomes the written history of your corporation from its inception up to the last board meeting. This “open book” allows the many potential owners and their lawyers the opportunity to review all the actions taken by the corporation. It also establishes important financial milestones which will come in handy when it is time to report taxes and expenses.
2) Supports the Corporate Structure
A current minute book record will clearly show how decisions were made and voted on. This might come into play when a minority shareholder or director questions the actions of the board. In extreme cases, a government agency might want to review how certain decisions were made. The minute report clearly lays out the corporate structure at any given time. By doing so, the authority to make those decisions shouldn’t come into question.
3) Legal Backing
The bigger the corporation the bigger the chance that a legal opinion will have to be written to support a decision made by the board. With this record, your company’s attorneys will be able to build their opinions on a solid foundation of facts. This type of opinion could be written when a business is looking for investors and needs to establish the various banking relationships of the parent company. A corporation’s minute book can also serve as evidence in any dispute.
4) Stock Records
The minute book should have a section that keeps track of all the company’s stock records. It’s vital that this is always kept up to date so as to establish the current ownership. In fact, a corporation’s ownership principals are only officially recorded in the minute book. This record should also keep track of stock transfers and who the original holders of the stock certificates are.
5) Dividend Records
Just as it is important to trace ownership, it is equally important to keep track of dividend and compensation payments. A corporation cannot provide a clear financial portrait without access to these kinds of numbers. In fact, all company expenditures should be included in the minute record.