State corporation laws specify the requirements for properly maintaining a corporation, all of which mandate that meeting minutes be kept of proceedings that involve the shareholders and directors, as well as any executive committee. Although federal law does not mandate that corporations keep meeting minutes, the IRS will generally request to examine meeting minutes if it is planning to audit the corporation. Compliance with the request for meeting minutes may indicate to the IRS that the corporation is being properly operated.
In general, state corporation laws require that minutes be in writing or in a manner capable of being converted to writing. The meeting minutes should include such information as who was present, the matters discussed and the result of any votes taken at the meeting. The members of the corporation -- shareholders, officers and directors -- are entitled to review the corporation's meetings minutes upon reasonable request to the corporation. If a member's valid request is denied, the right to review the minutes can be enforced through court action.
Written Consent to Action Without Meeting
State corporation laws typically authorize a corporation's shareholders to take action without a meeting, so long as the minimum number of shareholders required to act indicate in writing their consent to the proposed action. Particularly in situations where the corporation has a small number of shareholders who unanimously agree on the proposed action, using this procedure alleviates the shareholders from the burden of having to hold a meeting. The written consent used in this situation is treated like the minutes of a meeting and must be kept with the corporate minutes.
Keeping corporate minutes may seem like a trivial matter compared to the daily responsibilities of running the business, but failing to adhere to this corporate requirement may lead to adverse consequences. The most serious consequence is the loss of liability protection for the shareholders' personal assets regarding the debts of the corporation, usually referred to as "piercing the corporate veil." When a corporation's shareholders are sued personally for the corporation's debts under this legal theory, the court will examine a number of factors, one of which is whether the corporation kept a proper set of books and records, including minutes of meetings.