Atty. Jun De Zuñiga
The record of the proceedings of a corporate board is called the “minutes.” In legislative bodies, it may also be referred to as the “journal.” The minutes are not simple recordings of what transpired in a board meeting. They should be given attention and significance because they constitute part of the corporate records which measures the regularity and soundness of board decisions, the quality of the judgment and competence of the directors, and even the accountability for a particular corporate act, specifically, if the same causes prejudice to third parties or is a violation of the law (Herbosa and Recalde, Revised corporation Code, p. 283).
To affirm the importance of the board minutes, the Revised Corporation Code declares the same as part of the corporate records which are to be kept and preserved. The minutes are also subject to inspection by any director or stockholder who may demand for copies thereof. Any officer or agent of the corporation who shall refuse to allow such inspection and/or reproduction of the minutes shall be liable to the requesting director or stockholder for damages and may also be charged criminally for violation of the law.
Additionally, the aggrieved party may report such refusal to the Securities and Exchange Commission (SEC) and the SEC can conduct a summary investigation and issue an order directing the inspection or reproduction of the requested records (Sec. 73, Revised Corporation Code).
The minutes are also subject to review and audit by regulatory bodies like the SEC and, for banks, the Bangko Sentral ng Pilipinas. Refusal to allow the regulators access to these records is tantamount to refusal to permit examination which likewise constitutes a violation of law.
The law does not specify any particular form for the minutes, but requires the same to set forth the time and place of the meeting, how it was authorized, the notice given, the agenda, whether the meeting is regular or special, those present and absent, and every act done or ordered done. The minutes shall record the attendance, those who entered and left the meeting, the votes taken on a proposition, and any protest made by a director (Sec. 73, supra). Being documentary evidence, it is also understood that their production is subject to subpoena by the courts.
The minutes of the meeting are normally approved at the beginning of the next regular meeting. Corrections, if any, and approval of the minutes are normally done by unanimous consent. The chair calls for the reading of the minutes, asks for any corrections, then declares the minutes approved. By practice, the actual reading of the minutes may be dispensed with (Robert’s Rules of Order, Revised, p. 456).
A draft of the minutes can be sent to the directors in advance. It must be understood that the formal copy placed in the minutes book contains all corrections that were made and that none of the many copies circulated to the directors is authoritative (Robert’s, ibid, p. 457). The minutes should be signed by the secretary and the chairman. While not so provided in the Revised Corporation Code, it is good governance practice to circulate the minutes for the signatures of the participating directors. It would also be good practice for each director to maintain his personal file of all the minutes to preserve the record of his participation in the board meetings.
The above comments are the personal views of the writer. His email address is [email protected]