Decisions that are not recorded are difficult to rely on later

Board minutes, written consents and maintained records are what prove a decision was properly made. They matter most in disputes, financings and sales, when everything is examined.

10 min read · Level 5

The point

Records feel like bureaucracy right up to the moment they are the only evidence that something was done properly. I think the sensible standard for a private company is simple and consistent rather than elaborate: minutes for every meeting, consents properly signed, a register that matches reality. That much is achievable at any size and prevents almost all of the problems that surface in a sale.

What is it?

Corporate records are the evidence that decisions were taken properly. The main components:

Record What it does Board minutes record decisions, who was present, and the reasoning considered Written consents allow decisions between meetings, signed by directors Share registers record who owns what, the legal basis of the cap table Option grant records document grants, prices and vesting terms Conflict disclosures record that an interest was declared and how it was handled

Minutes should capture decisions and the substance considered, not a transcript. For conflicted decisions they matter more: recording that a conflict was disclosed, who abstained and what alternatives were examined is what demonstrates a proper process.

Poor records surface at the worst moments. In a financing or sale, buyers and their lawyers examine corporate records closely. Missing minutes, unrecorded option grants or an unreconciled share register can delay a transaction, reduce the price, or require indemnities from shareholders.

For investors, this is both a governance duty where you sit on a board and a diligence item where you do not. Asking to see the share register and recent minutes is reasonable before investing.

Why does an investor care?

Because the value of a decision's legitimacy only appears when it is challenged. A well-documented decision is defensible; the same decision undocumented may not be.

Record quality also signals operational discipline. Companies that maintain clean records usually run other processes carefully.

This is educational information, not legal advice. Rules differ by country and change — get advice from a qualified professional in your jurisdiction before acting.

Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.

Sources: UK Government - directors' responsibilities; UK Government - Companies House guidance; OECD - principles of corporate governance

Example

A sale delayed by records. During diligence on an acquisition, the buyer's lawyers found:

Issue Consequence Option grants approved by email, not recorded grants had to be ratified retrospectively Two years of minutes missing directors had to confirm decisions from memory Share register not reconciled to the cap table several weeks of work to correct

The sale completed about seven weeks later than planned, with part of the price held in escrow against the risk. Nothing improper had occurred; the records simply did not demonstrate it.

The common mistake

Treating minutes and consents as administration to be caught up later. Records created after the fact are weaker evidence and sometimes cannot be created at all.

How it works

Step 1: Ensure minutes are taken and approved

Confirm each meeting produces minutes that are circulated and approved at the next one.

Step 2: Record conflicts and abstentions explicitly

Note disclosure, who abstained and what alternatives were considered.

Step 3: Keep option grants properly approved and recorded

Confirm grants are board-approved with the price and terms documented at the time.

Step 4: Check the share register matches the cap table

Ask whether the legal register reconciles with the spreadsheet everyone uses.

Step 5: Review records during diligence

Before investing, ask to see recent minutes and the share register.

When to use this

When serving on a board, and as a diligence step before any private investment.

When not to use it

Do not require institutional-grade governance from a company that has just been formed. The expectation should rise with the company's stage and the amounts involved.

How investors actually did it

A recurring pattern: cap table and records clean-ups before financings

Startup lawyers routinely describe clean-up exercises before financings or acquisitions, correcting unrecorded option grants, missing consents and share registers that do not reconcile, with the work often falling immediately before a transaction when time is scarce.

Records maintained as you go cost little; reconstructed under transaction deadlines they cost time and negotiating position.

Do this now

Ask whether a company you are evaluating can produce its share register and recent minutes
Check that option grants in a company you serve are board-approved and recorded

Create a free account to read the rest and apply it to your own investing.

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