Insights from Williams + Hughes
Minutes of Board Meetings: more than just a "box ticking" exercise
Post by Matthew Lenhoff | Posted 3 months ago on Thursday, August 15th, 2019

The importance of minute taking at Board meetings was recently highlighted by the Financial Services Royal Commission.  The Governance Institute of Australia and the Australian Institute of Company Directors have collaborated to publish a Joint Statement of Board Minues (Joint Statement, available on the AICD’s and the Governance Institute's websites), which outlines key principles and best practice approaches to minute taking and document retention.

In many ways, the Joint Statement provides a “best practice” guideline for recording decisions and discussions at Board meetings. Company officeholders would be wise to carefully review the Joint Statement and ensure they are adequately recording minutes of Board meetings and complying with their statutory obligations. We have summarised below five key takeaways from the Joint Statement.

1. Board minutes are a legal record 

Board minutes are a legal record of Board decisions. The minutes may be the best, and sometimes only, evidence of the decision making process at Board meetings. Minutes may help to establish that directors have satisfactorily exercised their powers and discharged their duties.

Minutes should include the key points of discussion and detail the issues and risks the Board has considered. If judgment is required and directors are balancing a number of competing risks, it is prudent to consider whether the minutes capture them adequately. This is important where directors wish to rely on the “business judgement rule”.

2. Balance the level of detail 

The Joint Statement highlights the importance of ensuring the information recorded contains a sufficient level of detail.  Too much information can be unhelpful and too little can cause ambiguity. The right balance needs to be struck. 

In summary, Board minutes should record:

  • the general thrust of issues raised and the general response of the Board; 
  • the rationale for the resolutions and decisions passed by the majority, and the risks and issues which have been considered by the Board;
  • the collective decision; and
  • significant issues raised by directors and any votes by directors against or abstaining. 

However, Board minutes should not record:

  • every director’s contribution, discussion or debate – minutes should not be viewed as a transcript as this will likely contradict the long standing principle that the Board is to act as a collective; and
  • the details of “robust discussions” that take place – documenting “who said what” can negatively impact the perception of Board dynamics. 

The Board paper and supporting documentation used in the decision making process should influence the details in the minutes. Where appropriate, minutes should refer to the Board paper and supporting documents, but avoid repeating the contents. In that regard, directors should take an active role in reviewing Board papers and satisfying themselves that they provide adequate information on which to base decisions. 

3.    Stick to a particular style 

The Joint Statement provides some helpful stylistic tips for drafting minutes, including that minutes should: 

  • be drafted in a succinct and clear manner in plain  English;
  • be consistent – using a template is advisable; 
  • not use emotive language; 
  • be impartial; and 
  • not repeat the contents of the Board paper.

4.    Consider regulatory and statutory compliance 

It is a requirement of the Corporations Act 2001 that a company keep a minutes book in which proceedings and decisions at Board meetings are recorded within one month of the meeting. It is important directors understand the statutory obligation - failing to do so is an offence of strict liability.

Minutes must be signed by the chair of the meeting, or by the chair of the next meeting, within a reasonable time after the meeting takes place. All directors should be given an opportunity to review and discuss the minutes before they are approved and signed.

Companies should implement (or review their current) document retention policies. It may be necessary to seek legal advice regarding what policies should be implemented and the obligations to safeguard evidence.  

5.    Be wary of Legal Professional Privilege 

It is common for Boards to consider legal advice. A cautionary approach should be taken in determining the degree of privileged information to include in the minutes. In many cases, it may be sufficient to document that the Board considered relevant legal advice when making a particular decision. Any privileged information in the minutes should be clearly identified and ideally be included in an appendix. Importantly, where minutes refer to privileged advice they should not be provided to third parties without first obtaining legal advice as this may waive privilege. 

If you require further advice about conducting Board meetings or corporate governance or advice generally, please do not hesitate to contact Matthew Lenhoff on matthew.lenhoff@whlaw.com.au or Cassandra Bailey on cassandra.bailey@whlaw.com.au at Williams + Hughes. 


 

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