Corporations Code Section 1500 establishes the basic rules governing corporate minutes. The statute requires California corporations to "keep minutes of the proceedings of its shareholders, board and committees of the board". It also requires that minutes be kept in "either [sic] in written form or in another form capable of being converted into clearly legible tangible form or in any combination of the foregoing". Nowhere does the statute explicitly require that minutes be signed. Yet, we find that minutes are often signed. Is there any legal significance to signing the minutes? I can think of at least three reasons for signing the minutes.
First Impressions Can Be Important, But They Might Be Hearsay
Corporations Code Section 314 bestows the status of prima facie evidence on minutes certified to be a true copy by a person purporting to be the secretary or an assistant secretary of the corporation. But evidence of what, exactly? The statute says "the due holding of the meeting and of the matters stated therein". Students of evidence may question whether Section 314 is an exception to the hearsay rule. I'm not aware of any published decisions on the matter, but the unpublished opinion in People v. Greenlaw, 2010 Cal. App. Unpub. LEXIS 1122 (2010) illustrates how the hearsay rule may impact Section 314.
No Notice? No Problem
Unlike some other states, California provides that notice of a board meeting need not be given to a director who provides an approval of the minutes in writing. Corporations Code Section 307(a)(3). A similar provision with respect to shareholders meetings can be found in Corporations Code Section 601(e). If called upon to give an opinion as to due authorization, having minutes signed by the directors or shareholders (as the case may be) goes a long way in addressing concerns about the validity of notice. (I understand, of course, that obtaining written approval of the minutes in a widely held corporation isn't practical.)
Disagreements Are So Disagreeable
Another reason to have directors sign is to make it more difficult for those directors to challenge later actions taken at a meeting. Imagine, Mr. Sinon denies that he approved the purchase of a wooden horse as gift for the CEO. At trial, you present him with the minutes reflecting the Board's unanimous approval of the gift horse. It will be much more difficult for him to disavow his approval if he signed the minutes.
More Fun With Modal Verbs
I captioned today's post as a follow-up to my discussion on "shall" versus "will". "Should", "must", "shall" and "will" are categorized as modal verbs. They are used to express obligation, intention, and obligation. In legal writing, I find that these modal verbs are often confused or used indiscriminately. Use "should" to say that an action is correct, recommended or not certain to occur. Thus, if my title had been simply "Should Corporate Minutes Be Signed?", my question would be is whether signing is correct or recommended. If, on the other hand, I had used "must", then I would be asking whether signing is required.