Association boards have legal, financial, and ethical responsibilities for the organization they lead. Individual directors in turn have a legal duty to act with due care in their service to the association. This involves attending meetings, providing legitimate oversight, and using their best independent judgment in making business decisions. An essential aspect of this responsibility is ensuring that appropriate meeting minutes are taken to record the business conducted during their meetings. In fact, MCL 450.2485 of the Michigan Nonprofit Corporation Act requires the board to keep minutes of their meetings.
Limiting Exposure
Board meeting minutes are not merely administrative formalities; they are crucial records that encapsulate the essence of discussions, decisions, and actions taken during board meetings. Did the board exercise its best business judgment? If questions arise about the legality or propriety of an association’s actions, minutes can be crucial in determining the board’s knowledge and timing of those actions. Even if decisions were well-considered and based on the best available information, inadequate documentation makes it challenging to prove that the board acted responsibly. Properly documented minutes can potentially dispel future legal troubles.
The principle of “everything you say can and will be used against you” extends beyond criminal law to all legal areas, particularly when assigning liability. Overly detailed minutes can provide a wealth of information that could be used against the board in a lawsuit. Getting the content just right in board minutes is therefore essential.
While the mere act of recording or not recording minutes does not eliminate legal liability, good decision-making and maintaining a meaningful record of the process are necessary to minimize risk. By being intentional about how the board documents its meetings, the board can protect both itself and the organization from unnecessary legal exposure.
Enhancing Effectiveness and Building Trust
Effective board meeting minutes can enhance the overall efficiency of the board. They can be used to track action items, assign responsibilities, and set deadlines. This ensures that decisions made during the meetings are followed up and implemented. It also helps in evaluating the performance of the board and its members, identifying areas for improvement.
Board meeting minutes foster transparency and accountability within an organization. Well-maintained minutes build trust among board members and between the board and owners. Minutes are akin to a written historical record, ensuring a clear and accurate record of what transpired, which can help in resolving misunderstandings and preventing conflicts. This is particularly valuable for tracking the progress of initiatives, understanding the rationale behind past decisions, and onboarding new board members who need to familiarize themselves with previous discussions and resolutions.
Finding the Balance
Striking the right balance in board minutes is paramount. According to Robert’s Rules of Order, the primary purpose of minutes is to document the official actions taken by a governing body. Key questions to consider include: Do the minutes reflect sufficient deliberation? Do they show that the decision was reasonable given the circumstances? Is the recorded information significant enough to preserve for historical or legal purposes? Our firm generally recommends meeting minutes include the following items:
- Meeting type (e.g., board, committee, regular, special)
- Meeting time, date, and place
- Attendees’ names
- Approval (or correction then approval) of prior meeting minutes
- Reports
- Motions and their outcomes (approved, denied, or tabled, and how each board member voted)
- Adjournment time
- Secretary’s signature
Since owners usually have a right to review meeting minutes (excluding executive sessions), details of discussions, especially who said what, should not be included. Once the minutes are approved by the board, we suggest that notes or audio or video recordings of the meeting should be destroyed. The final approved minutes should be the only record of the meeting that is kept and distributed. This is particularly important since minutes and recordings made during a meeting are discoverable in litigation.
In conclusion, board meeting minutes are a fundamental aspect of good corporate governance. They provide a clear, concise, and accurate record of board activities, supporting legal compliance, transparency, accountability, and effective decision-making. Taking appropriate board meeting minutes may not be thrilling, but it’s crucial for staying on the right side of the ‘law-gistics’!
Author
Bree Anne Stopera
Reprinted with permission from MAGWV – Condominium & HOA Lawyers, Michigan