Minute book

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According to business dictionary, a minute book is ‘’ binder or bound book containing permanent and detailed record of the deliberations of, and resolutions adopted at, a firm's official meetings. All incorporated or registered firms are required by law to maintain an up-to-date minute book which should be accessible to all members of the firm at the firm's registered office or legal address’’ (BusinessDictionary 2018).

What contain Minute Book

A minute book is necessary for large corporations because it contains important corporation’s documents. According to J. Schwarz and E. Finnegan, a minute book often contains the following: ‘’The Articles of Incorporation; Bylaws, Initial Resolutions setting out officers elected, date incorporated, approval by laws, forms of share certificates, authorization re bills of sale etc, corporate seal, registered office, Consent to Act as Directors, Consent of Officers, Resolution of Shareholders electing Directors, Resolution of Directors electing Officers, Subscription for Shares, Resolution of Director re Allotment and issuance of Shares and relating Share Certificates, Resolution of Directors re Banking and Signing Officers with attached Bank account information, Resolution of Directors re Financial Year End, Resolution of Shareholders re appointment of Accountants and Exemption from Audit Provisions’’(J. Schwarz, E. Finnegan 2018).

Moreover, a minute book consists of records of the minutes of shareholders meetings, records of resolutions passed by shareholders as well as records of directors meetings. All of these are required by law, so it is necessary for the corporation to keep their minute book (J. Schwarz, E. Finnegan 2018).

Application of Minute Books in Enterprises

Enterprises need to keep their minute book up to date for various reasons. According to J. Kahane, they are:

  • validity the corporations actions the company actions are valid when the corporation passes the proper resolutions. Validity is checked in the minute books,
  • opening a bank account appropriate resolutions are required when the company needs to open a bank account. A minute book includes this type of documents;
  • a minute book is required while receiving the loan from bank. If the corporation needs to obtain a loan, their lawyer gives the bank any necessary documents which are included in a minute book,
  • minute books are kept when selling your company. Any corporation has a lawyer who before buying another company makes sure that the company possesses the minute book with all necessary documents. If the minute book is not completed, it causes delays in selling your company,
  • Another reason, namely audits. While tax planning, a company needs to pay high taxes and many fines when their minute book does not contain proper resolutions. Shareholder dividends may be regarded as an income when record dividends are not proper,
  • annual returns. They need to be filed with the provincial government. Annual returns inform about any changes to the corporation. A minute book needs to be organized because otherwise it may result in high fines;
  • shareholder disputes and audits. In a situation when appropriate resolutions are not passed, minority shareholders are able to challenge decisions taken by corporation. It often leads to cost audit. Sometimes it ends up in court, and when a company does not keep a minute book properly, it results in disputes connected with shares, dividends, etc.,
  • director protection. Directors need to issue a declaration in order to avoid possible conflicts. When a director wants to avoid responsibility, their dissent must be recorded. According to J. Khane, ‘’ If the corporate minute book and records are not organized and up to date, a director could be liable regardless if he dissent’’ (J. Kahane 2017).

Tradition versus modernity

In traditionally managed enterprises, there was only a paper version of the minute book. At present, as a result of available facilities, there is a possibility of keeping an electronic minute book. As B. Milliken pointed out, companies often maintain an electronic minute book. They are able to share important documents by a cloud - based service. Keeping a minute book up to date is not oppressive provided that a company is able to paper meetings properly (B. Milliken 2018).

Examples of Minute book

  • The minute book of a corporation typically contains a record of all corporate resolutions, including the minutes of all meetings of shareholders and directors, and the written consents of shareholders and directors.
  • The minute book of a limited liability company typically contains a record of the company's organizational documents, such as the company's articles of organization, operating agreement, and any amendments thereto, as well as a record of all meetings of members and managers, and the written consents of members and managers.
  • The minute book of a partnership typically contains a record of the partnership's organizational documents, such as the partnership agreement and any amendments thereto, as well as a record of all meetings of partners and the written consents of partners.
  • The minute book of a trust typically contains a record of the trust agreement and any amendments thereto, as well as a record of all meetings of the trustees and the written consents of the trustees.
  • The minute book of a nonprofit organization typically contains a record of the organization's organizational documents, such as the articles of incorporation, bylaws, and any amendments thereto, as well as a record of all meetings of members and directors, and the written consents of members and directors.

Advantages of Minute book

A minute book is a vital document for all incorporated or registered firms, as it contains the permanent and detailed record of the deliberations and resolutions adopted during official meetings. There are several advantages to keeping an up-to-date minute book, such as:

  • It serves as a legal record of the firm's decisions and activities, and can be used as evidence in disputes or legal proceedings.
  • It ensures transparency and allows members of the firm to access the records of official meetings.
  • It provides a reference for future meetings, as the minutes can be used to recall the decisions or resolutions of the previous meetings.
  • It helps to monitor the firm's progress over time, allowing for better decision-making in the future.
  • It helps to ensure that all members of the firm are aware of their responsibilities and obligations.

Limitations of Minute book

  • The minute book is limited in its ability to provide a full account of all the company’s activities, as the minutes only record resolutions and decisions taken in company meetings.
  • The minute book does not record all of the discussions leading up to the resolution, and it is not possible to gain an understanding of how the resolution was reached.
  • The minute book also does not capture the details of implementation of the resolutions.
  • The minute book does not contain any information about the shareholders’ opinions or voting patterns.
  • It is also not possible to track any changes over time as the minute book does not provide an ongoing timeline.
  • The minute book does not provide any information on the internal operations or the financial performance of the company.

Other approaches related to Minute book

A minute book is an important tool for any business and there are several approaches which can be used to ensure it is maintained effectively. These include:

  • Ensuring that the minutes are accurate and comprehensive. This involves recording the date, time, and attendees of meetings, as well as a summary of the discussions that took place.
  • Maintaining a standard format for the minutes. This will help to ensure that all information is clearly noted and will make it easier to find specific information when referencing past meetings.
  • Keeping the minutes up-to-date. Minutes should be reviewed and updated after each meeting and any changes or new resolutions should be noted in the book.
  • Ensuring that all meetings are documented. Even informal meetings should be recorded in the book to ensure that all discussions are accurately remembered and referred to.

In summary, a minute book is a valuable tool for any business and there are several approaches which should be taken to ensure it is maintained in an effective and efficient manner. These include ensuring accuracy and comprehensiveness, maintaining a standard format, keeping the minutes up-to-date, and documenting all meetings.


Minute book — recommended articles
Share register — Statutory meeting — Distribution statement — Management representation letter — Stock ledger — Focus report — Proxy solicitation — Statutory books — Internal audit

References

Author: Joanna Piórkowska

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