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In August, the Delaware Chancery Court issued opinions in two cases, City of Pontiac Police & Fire v. Dayforce, (Del. Ch.; 8/26), and NCP US Terminals v. Odjfell Terminals US Holdings, (Del. Ch.; 8/26), where issues surrounding board minutes featured prominently. This Duane Morris blog reviews those decisions and offers some tips to drafters about some lessons to be drawn from them:

To the extent your board is considering matters that will later require a stockholder vote, ensure that the minutes are sufficiently detailed to support the later drafting of a proxy statement. In the not-so-distant past, material discrepancies between the two was the “open sesame” for stockholders to demand the inspection of informal board materials in Section 220 litigation.

While the heightened standards of the revised Section 220 blocked that result here, best practices would still be to be mindful that the minutes adequately cover material matters that will likely need to be disclosed to the stockholders in a proxy statement.

Think of your entire package of board materials, the agenda, any board books, and the minutes of the meeting as materials that might someday be evidence in litigation where the board may need to convince a fact finder that it acted loyally and with due care on certain matters before it.

The Court of Chancery notes things like how long it appears (from the minutes) that certain matters were discussed and in what level of detail. Make sure your minutes reflect the relative importance of the matters under discussion. For instance, the minutes should not have a very robust discussion of something somewhat mundane (like whether to serve one brand of soda or another in the cafeteria) but a relatively miserly discussion of the merger transaction being considered.

If you’re looking for more guidance on preparing minutes, check out the resources in our “Board Minutes”  Practice Area, including a variety of checklists on minutes-related topics.

– John Jenkins