WHAT ARE BOARD MINUTES APPROVING A SHARE ISSUE?

The Board minutes approving a share issue are the actual minutes from the board of directors meeting convened for the purpose of approving the issuance of shares. There must be an actual written account of the meeting of the board of directors; verbal or technology-based communication should never be substituted for the meeting minutes.

WHEN DO YOU NEED BOARD MINUTES APPROVING A SHARE ISSUE?

Board minutes approving the issuance of shares are needed in order for the issuance to be considered as valid. In recent years courts have held that when shares have been issued without the written board meeting minutes approving the issuance; the shares are to de deemed as void. The board of directors must approve the issuance of shares in order for them to be valid. Written board minutes are the primary way to prove that the board of directors approved the issuance.  Spreadsheets, verbal agreements, and any other substitute for the board of directors’ meeting minutes will not suffice.

WHAT IS INCLUDED IN BOARD MINUTES APPROVING A SHARE ISSUE?

The board minutes include the following:

• A summary of the rationale for the offering of the shares and the intended use of the new capital that will be generated by the issuance of the shares.

•  A statement of the number of shares to be issued; including the type of stock to be issued

•  The subscription price of the shares

•  A statement as to the allotment of shares

•  Information regarding the conversion of other security into shares

•  Information explaining the preparation of share certificates for the issued shares.

•  Subscription period for the shares

•  Explanation of any deviation of the shareholders ‘preemptive rights of subscription

•  Statement as to the registration of the new shares.

•  An explanation of the rights of the new shares

•  A statement as to dispute resolution