One line missing from the minutes nearly cost a London founder her company

The situation

By the time Zeynep called our office, a lawyer's letter was already sitting in her inbox threatening to unwind a decision her company had made three months earlier, and she had no idea the letter was coming until it arrived. Zeynep had started her business a few years earlier as a side project in London, Ontario, alongside her job as a call-centre representative, and it had grown steadily into a real company doing roughly one hundred thousand dollars a year in revenue, enough that she had recently brought on two directors, Ayse, a transit operator who invested some of her savings early on, and Ramon, to help govern it as it grew.

The decision under challenge was a board resolution approving an exclusive supply arrangement with a small manufacturer, a deal that gave Zeynep's company priority access to a product line a larger, well-resourced competitor also wanted. That competitor, once it learned the arrangement had been finalized, began looking for a way to unwind it, and its lawyers found one: the minutes of the board meeting that approved the deal recorded that Ramon had participated, but never stated whether he had attended in person or by phone, and if by phone, whether the by-laws' requirements for remote participation had actually been met.

It was a small gap. Ramon had, in fact, called into the meeting from out of town, using a phone connection that let him hear and be heard by the other two directors in real time, which is generally what governing rules require for a valid remote attendance. But the minutes simply said he was 'present,' with no note of how, and the competitor's lawyers argued that without that detail on the record, there was no proof the meeting had been properly constituted at all, and therefore no proof the resolution approving the supply deal was valid.

The competitor had a legal budget Zeynep's company could not begin to match, and its lawyers made that fact plain in their opening letter, suggesting the dispute would be expensive and slow regardless of its merits. Zeynep's business depended on the supply arrangement holding. Losing it to a technical challenge over how the minutes were worded, when everyone in the room, or on the phone, agreed on what had actually happened, felt to her like an absurd way to lose something real.

The gap nobody had noticed

The underlying rule is not complicated. Ontario corporate law allows directors to participate in a board meeting by telephone or other communication facility, provided all directors consent to that method and the technology allows everyone to hear each other and participate in real time. If those conditions are met, a director attending by phone counts as present for quorum and voting purposes exactly as if they were in the room. The rule exists so that a business does not need every director physically in one place to govern itself properly.

The gap in Zeynep's company was not that the rule had been broken. It was that the company's minutes had never developed a habit of recording how each director attended, only that they had. For a company with one office and directors who mostly showed up in person, that gap had never mattered before, because there was rarely a question about how a meeting had been conducted. It only became a problem once a well-funded outside party had a financial reason to go looking for exactly that kind of gap.

The competitor's argument, stripped down, was procedural rather than substantive: it was not claiming the supply deal was a bad decision, or that Ramon had not actually participated, or that anyone's rights had been violated. It was arguing that because the record did not affirmatively show the technical requirements for remote attendance had been met, the resolution could not be relied upon, and should be treated as invalid until Zeynep's company could prove otherwise. That is a real legal position, even when the underlying facts are not actually in dispute, because corporate decisions are supposed to be provable from the record, not simply asserted after the fact when challenged.

What made the imbalance particularly uncomfortable was that the competitor was not really trying to win a governance argument. It was using a documentation gap as a lever to create enough cost and delay that Zeynep's company might abandon the supply arrangement rather than fight to keep it, a strategy that depends less on the strength of the legal point and more on which side can afford to see it through. The competitor's letter made that calculation explicit, noting that the matter could 'proceed as far as necessary' and inviting Zeynep's company to consider whether contesting the point was worth the cost, language that read less like a genuine legal position and more like an invitation to fold.

What we did

1. Confirmed the facts of the meeting directly with Ramon, establishing exactly how he had attended, what technology was used, and whether he could hear and be heard by the other directors throughout, since the entire dispute turned on facts that had simply never been written down rather than facts that were actually in question. Getting Ramon's own detailed account first, before responding to the competitor's letter, meant we could commit to a factual position with confidence rather than have to walk anything back later.
2. Checked the company's by-laws for a standing consent to remote participation, which we found had been included when the company's governing documents were first drafted, meaning the directors did not need meeting-specific consent for Ramon's phone attendance because the by-laws already authorized it generally for any meeting going forward. This closed off the competitor's strongest possible follow-up argument before it was ever raised, since a challenge to whether consent existed at all would have been far harder to answer than a challenge over how that consent was recorded.
3. Prepared sworn statements from all three directors confirming Ramon's attendance by phone, the quality of the connection, and his active participation in the discussion and vote, creating contemporaneous-style evidence of the facts even though the minutes themselves had not captured them at the time. Each statement was specific about the technology used and the quality of the connection, so the record could not be dismissed later as a vague, after-the-fact recollection assembled to fit the legal need.
4. Responded to the competitor's lawyers directly and firmly, setting out the by-law authorization for remote attendance, the sworn confirmation of the facts, and a clear statement that the company would defend the resolution's validity rather than negotiate around a documentation technicality, signalling that the cost-and-delay strategy would not succeed as easily as the opening letter had assumed. The letter was deliberately factual rather than defensive in tone, so it read as a company confident in its position rather than one scrambling to explain a gap.
5. Prepared a ratifying board resolution as a belt-and-suspenders measure, formally confirming the prior meeting's validity and the supply arrangement it approved, so that even if a decision-maker eventually took a stricter view of the original minutes than we expected, a clean, properly documented resolution already existed covering the same ground and the same commercial terms. This gave the company a fallback position that did not depend on anyone accepting our reading of the original, imperfectly recorded meeting.
6. Advised Zeynep against making any early settlement offer, since an offer at that stage would have signalled the challenge had real weight, when in fact the underlying facts were straightforward and the company's position, once the by-law and the sworn statements were on the table, was strong rather than merely defensible. Settling early also would have rewarded exactly the cost-and-delay strategy the competitor's letter was built around, inviting the same tactic again the next time a documentation gap turned up.
7. Rebuilt the company's minute-taking template going forward, adding a required field noting each director's method of attendance at every meeting, so the same gap could not recur even if a future meeting again involved remote participation. We also recommended Zeynep review the template with any future director before their first meeting, so recording attendance method properly became a habit built into the company's process rather than a rule only Zeynep herself remembered to apply.

The outcome

The competitor's lawyers withdrew the challenge within about five weeks of our response, without the dispute ever reaching a formal proceeding. Once the by-law authorization and the sworn confirmation of Ramon's attendance were on the record, the documentation gap that had looked like a real opening no longer supported a credible challenge to the resolution, and the supply arrangement remained fully in place throughout. The competitor never formally abandoned its position; its lawyers simply stopped responding after our second letter, which is a common way this kind of leverage-based challenge ends once it becomes clear the other side is prepared to defend the point rather than negotiate around it.

The company did not walk away entirely unscathed. Zeynep spent real time and legal cost defending a decision that everyone involved agreed had been made properly, simply because the paperwork had not kept pace with how the meeting was actually run. That cost was modest compared to what losing the supply arrangement would have meant for the business, but it was not nothing, and it was avoidable. Zeynep also lost several weeks she would rather have spent on the business itself, pulled instead into reviewing old emails and coordinating sworn statements from directors who had done nothing wrong but still had to account for a meeting from months earlier in careful detail.

Zeynep has said the experience changed how she thinks about her company's minutes, from a formality she used to leave to whoever remembered to type them up, to a document she now treats as the company's evidence of itself. The new minute-taking template has been used at every meeting since, and Zeynep credits the episode with prompting a broader review of the company's governance habits well before the business reaches a size where a gap like that could do real, lasting damage rather than just costing five uncomfortable weeks.

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