Is Your Company Record Book a Thing of the Past?

April 25, 2022  |  Carole Clark Isakson

Business operations are constantly modernizing, and certainly the most substantial changes in the last 50 years center on internet use and electronic data. With advancements in technology, is your company record book a thing of the past? Keep reading to learn more about how and where to retain business data, details, and information.

Updating Business Operations

Businesses are constantly modernizing, and of course much of that is made possible and based on internet use.  Interactions with customers, vendors and other parties are primarily electronic, as the use of actual paper to do business has declined.

Even prior to the imposition of COVID measures, companies held board meetings via video conferencing systems, saving significant time and money that would otherwise be spent on airline tickets and additional travel costs. Board materials are now shared via secure data rooms, preserving resources and providing greater protection for sensitive materials. Documents are signed electronically, adding greater efficiency, convenience, and reliability to the process.

Which brings me to this: Do you dust off your hardcover company record book – or toss it? Before answering that question, consider why the book exists at all.

Documenting the Particulars

By law every corporation in Minnesota is required to keep specific records. These are set out in Minnesota Statute Section 302A.461. In general, this list includes:

• Records of shareholder and board meetings for the past three years
• Names and addresses of board members and principal officers
• A current (not more than a year old) ledger showing company ownership – including the name and address of each shareholder along with classes of shares and date of issuance
• Governing documents (Articles of Incorporation, bylaws, and any amendments)
• Specific financial statements
• Shareholder reports
• Shareholders agreements, voting trust agreements, and similar documents

Limited liability companies are also required to maintain records; the list is slightly different.

Recordkeeping Practices

The traditional method of keeping all these documents in a single, easily accessible place has been to keep them in a physical record book. This practice dates back many, many decades, and a company that has been operating for a long time will have several volumes of corporate record books on its shelves (or with its attorney).

Our firm has hundreds of these books, and we maintain them for current clients and safeguard the originals of the required documents. Many clients opt for annual reminders on tasks that need to be done, and our staff assists with drafting minutes and actions. Many people leave the actual stock certificates in the corporate record book, providing a one-stop system for finding out who owns what, and what transfers have been made. While we could maintain scanned copies of the stock certificates, keeping the originals in a designated place allows complete control over those important documents.

Physical or Electronic

There is no legal requirement that all these records be included in a single book or location, simply that they be kept and maintained. If your company has a good system for retaining originals and gathering records electronically, there is no reason that your records can’t be maintained electronically.

However, there is an old-fashioned simplicity in using a physical corporate record book; for our current clients, I can easily at any time obtain documents a bank may need for a closing or a buyer may need for due diligence. And while we also provide our clients with a complete electronic copy of the physical book, for now I continue to appreciate the ease of the physical book on the shelf.

What Works for You

So, is your company record book a thing of the past? Only you can know what works best. If your processes permit electronic records (and you are maintaining the originals in a designated space), you may be able to do away with your hardcover book. For most companies, however, the old-fashioned method of keeping these special records together seems to continue to work well.

Contact the corporate department at Barna, Guzy & Steffen with questions on this and other matters.