On the 'long and the short' of board minutes.

• Position: BOARD PRACTICES - Excerpt

Ed. Note: Do you need a guideto getting your board minutes "just right"--not too much detail, but not too little? Then you may want to get your hands on a copy of Corporate Minutes: A Publication for the Corporate Secretary. Released in February 2014 by the American Society of Corporate Secretaries & Governance Professionals (www. governanceprofessionals.org), this 27-page guide has been substantially updated from the original 2006 publication to reflect current views and challenges in minutes taking. Topics include preparing the minutes, taking the minutes, choosing the form of minutes, writing resolutions, and other matters. Following is an excerpt from the new guide.

Minutes constitute a company's history of the collective actions of its board of directors and its committees, and therefore serve as vital legal records. It is important, especially in a time of increasing litigation by shareholder activists and others scrutinizing the corporate business community that minutes accurately reflect the various items presented at each meeting, and the actions taken.

In general, there are two alternative styles for writing minutes: The abbreviated, or short-form, style, and the narrative, detailed, or long-form style. Historically, the preference in writing minutes has been for an abbreviated style. However, in recent years, in response to various factors--including increased litigation challenging board actions--some practitioners have departed from the short-form model in order to demonstrate that the board has acted appropriately and are eligible for the protections afforded by the "business judgment" rule. The following points out some of the advantages and disadvantages of short- vs. long-form minutes.

Short-Form Minutes

Advantages

* Concise, easy way to determine action taken by the board or committee

* Helps avoid ambiguity

* Presents less language to be misconstrued in a litigation context

Disadvantages

* Does not spell out reasoning for action taken by the board or committee

* Does not demonstrate the board's diligence in dealing with specific matters

* Case law may require more detail for certain kinds of transactions

Long-Form Minutes

Advantages

* Spells out reasons board has taken action and provides evidence of the board's diligence in dealing with specific matters

* Presents clearer picture of total deliberation process

* More in tune with recent case law for material transactions Disadvantages

* Provides greater opportunity for...