As a paralegal, I have done my fair share of preparing and updating corporate minute books. Keeping an organized, complete minute book is necessary for establishing the legal record of actions properly documented, retrieving information, and quickly disclosing documents to investors for due diligence, among other reasons. Despite the proliferation of electronic files, physical copies of minutes and consents are still typically kept in three-ring binders or those confounded hard red books. Neither Wisconsin nor Delaware laws require that minutes be kept in original, hard copy.
There are more efficient, searchable, paperless ways of maintaining corporate records. The best solution depends on how a company weighs the below factors. The following table compares the traditional paper method to various electronic options.
Company Network File Folders
Cloud-based Storage (e.g., box.net, dropbox.com)
Tailored Solution (e.g., Corporate Focus or Secretariat)
|Ease of Use|
Login; simple navigability
Feature-rich, so more complex
|Controlled Access/ Permissions|
No, unless by lock and key
No, unless external access is set up
Yes, via Internet
Yes, via Internet
|Make Notes Regarding a Document|
|Hyperlink to bulky attachments|
No, just paper cross-reference page
Yes, but more involved to export database fields
None, except office supplies and staff time
$10 – $20/mo.
At the very least, this table demonstrates how electronic minute books have significant advantages over their hard copy counterparts. The main advantages that the cloud-based solutions have over network file folders are external access and search features. External access is an extremely important factor for at least a few reasons: (1) it is a more secure way to share files than by email, (2) it is deal-room ready for review by potential investors and buyers, and (3) in a separate folder, documents can be shared with the board of directors for board meetings. Beyond simply storing documents, tailored solutions can offer a richer set of capabilities, such as (1) tracking capitalization and equity grants, (2) preparing stock certificates, (3) storing contact details for officers and directors, and (4) setting reminders. The added capabilities are rather expensive though for most small companies.
As with any decision whether to move files to the cloud, there are considerations of security and reliability. Many have written on this topic, but at the very least you would want to look into encryption protocol, administrative, technical and physical safeguards for security, geographic redundancy, the cloud provider’s reputation / longevity, and their policies for file recovery in the event you inadvertently delete a file.
If you decide to use an electronic storage method for your minute book, it is important to develop and follow an organization structure and file naming conventions for the documents. Here’s one way to organize and name the files (bold titles represent folders):
2011-01-31 Articles of Incorporation
2011-03-16 Certificate of Authority (IL)
2011-07-21 Articles of Amendment
2011-07-15 Amended and Restated Bylaws
Minutes and Consents
2011-02-03 Incorporator Consent
2011-02-03 Board Consent
2011-04-01 Board Consent
2011-04-01 Shareholder Meeting (This would likely consist of an Agenda, Minutes, Affidavit of Service, and Exhibits, all of which could be combined into an Adobe Portfolio or Binder)
Capitalization Table (w/separate tabs for snapshots as of various dates)
Equity Grants Tables (w/separate tabs for options, restricted stock, and other types of awards)
Stock Certificates (or Stock Issuance Statements, if uncertificated)
02. Capitol Investment Group
03. Green Partners
Stock Incentive Plan
ABC Inc. Stock Incentive Plan
01. Capitol Investment Group
02. Green Partners
Documents will be displayed in alphabetical order, so the file names should start with either the number of the document (if numbered) or the date to force a logical display order. The organizational folders and file naming conventions will vary depending on the types of documents, but the above structure gives a baseline framework. Electronic drafts of these documents should be kept in another folder so it’s clear that the above folders include only the final versions.
For companies that already have years of company history stored in hard copy minute books, the decision to convert to electronic minute books is a cost-benefit analysis. The cost is the time for a staff member or intern to scan, save, and organize the files (perhaps as a down-time project) or the fee to outsource to a digital reproduction service. Then, companies must train their personnel on the new system. The benefits are listed in the above table. Many will conclude that the benefits outweigh the costs.
Let’s face it — organizing minute books is not most people’s idea of fun (unless you’re warped like me). However, keeping your corporate minute book documents organized, especially electronically, will help you find information you need and speed up the due diligence process for an investment, acquisition, or other deal. Developing a plan early in your company’s life, or converting from a paper system to an electronic system, will be well worth the time invested.