Should I Take Personal Notes in Board Meetings?

08/06/2010

Idle jottings, doodles, and vague notes taken during corporate board meetings can sabotage defenses against even the most specious claims raised in subsequent litigation.

A notation as simple as a question mark alongside a budget number on the agenda can wreak havoc in the hands of a deft plaintiff’s attorney. Perhaps it only indicates the director asked a question, received a satisfactory response, and moved on. But in a courtroom years later, a crafty litigator can twist the truth into knots of lethal doubt. What was the motivation for questioning this figure? What worried you about it? What was the answer to your inquiry? Did you ignore a
disturbing or ambiguous response in the interest of expediency?

As Disney’s board of directors learned during litigation over CEO Michael Ovitz’s termination, if the board minutes don’t provide official answers to questions like that, directors can find themselves open to accusations that they shirked their legal duties.

Many lawyers advise that official board minutes should be the only records retained by corporations and their boards. Directors, after all, are under no legal requirement to take notes, and it is unlikely that a court would infer that a non-note-taking director is any less diligent than a note-taker.

To be sure, properly recorded corporate minutes should be the ultimate record of director dissent, board decisions, and intent. Courts and juries have placed great weight on their content in judging director conduct. Quite simply, they are the prima facie/best evidence of director conduct.

This article excerpted from Boardmember.com. To read the full article, click here.

Related Practices

Email Disclaimer