Board meeting minutes are statutorily required by nearly all business corporation statutes in Canada.  More importantly, maintaining board minutes is prudent.  Failing to accurately record the board’s deliberations with appropriate detail may lead to adverse inferences regarding whether directors have fulfilled their duties.  Nevertheless, there is a natural tension between providing sufficient detail to avoid any adverse inference being drawn against the directors and a lingering apprehension that an innocuous record might, with hindsight, be twisted out of context in litigation.  And, of course, drafting well-written and well-structured board minutes is time consuming!

Here are five litigation-driven suggestions that the corporate secretary may wish to consider when preparing minutes.  In upcoming posts, I’ll dive deeper into each of these suggestions. 

1.  Use the “Front Page of the Newspaper” Test.  There is no substitute for writing board minutes with a critical eye.  As I’ll discuss in upcoming posts, the corporate secretary should not assume that the minutes will remain confidential if litigation ensues.  Assume that the minutes will be read by an adversary and could be accessible to the public generally. This seems obvious but is often forgotten.

2.  Keep the Purposes Front and Centre.  Board minutes are a key record of the deliberations, decisions and resolutions of the directors.  But more than that, they are documentary evidence of whether the directors have acted honestly, prudently and in good faith.  Board minutes should demonstrate that the directors acted in the best interests of the company, made an informed decision in an independent fashion, had reasonable grounds for the decision, and conducted a reasonable analysis of the situation.

3.  Draft to Minimize Unnecessary Production.  Even though only one part of a minute of a meeting may be relevant in litigation, there is a good chance that the entirety of the board minute will be produced as a “document”.  As I’ll discuss in upcoming posts, the flexibility provided by the business corporation statutes means that there are a number of strategies the corporate secretary can take to ensure that sensitive deliberations are recorded in separate documents.

4.  Draft to Protect Privilege and Confidentiality.  Well-drafted board minutes can assist litigators in seeking to protect portions of minutes from disclosure on the basis of privilege or confidentiality.  It is important that the minutes reflect the criteria necessary for privilege or confidentiality.  The corporate secretary should be aware of the test for solicitor-client privilege, litigation privilege, common law privilege and sealing orders for confidential information (each of which will be discussed in upcoming posts) and reflect those elements in the minutes.

5.  Be Alert to Process Issues.  Process issues can undermine the corporation’s attempt to protect board minutes.  The cross-appointment of in-house counsel to the office of corporate secretary may result in the notes of counsel not being considered privileged.  Retaining source notes or directors taking personal notes may result in alternative records of the meeting that can be used to challenge the accuracy, integrity and completeness of the board minutes.  As discussed in our article, routine destruction is a possibility but the corporation and its directors must be careful to avoid spoliation of evidence if litigation is anticipated.