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As a start-up, you may consider board minutes a necessity that only large publicly traded companies should produce, but not only is it a legal requirement, it is also a significant benefit for the growth of your company.
Structuring your discussions with fellow directors is a good idea and board minutes serve to document important decisions made between you. They also help keep a record of who was involved and what documents were considered to enable the board to arrive at a particular decision.
A common practice often adopted by start-ups is to appoint an advisor or mentor, or sometimes an investor, to the board to provide external expertise from within a specific industry and guidance on growingthe business. That individual however is likely to be busy juggling multiple commitments, so not only do board minutes benefit you internally, they also keep non-executive directors engaged between meetings, especially if that director is unable to attend every meeting.
Inevitably, as your business grows, various commercial opportunities will present themselves, some of which will be time-sensitive and require quick decision making by the directors. Accurate board minutes are important in these situations, as they should record why it is considered the contract is in the best interest of the company. Even if the contract does not prove as fruitful as the board had hoped, the decision making process will be recorded for all at the company, especially shareholders, to see why this decision was made.
Whether you are a growing company or an established multi-national, you never know what is around the corner and having detailed board minutes could short cut a lengthy litigation process in the event of a dispute if it is clear from the minutes how decisions were made. Minutes can also be evidence of whether shareholder approval was sought on a particular point in the event of a dispute between the shareholders and directors of a company.
Last but not least, good corporate governance is best practice and will make your company more attractive to potential investors. Preparing board minutes demonstrates that the board makes decisions affecting the company in a structured and well-considered manner.
Victoria Lewis, Solicitor, TLT
TLT are committed to supporting early stage companies and entrepreneurship. .
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