It’s Not in the Tea Leaves – It’s in the Minutes

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The ubiquitous Board Agenda and its progeny, the Minutes are often assigned to a spring back folder and buried on a shelf somewhere. A board meeting and its record, once distributed, approved and stored, can take on an inert, colourless and even meaningless hue only fit for the corporate archives.

 

The Minutes rarely engender much interest let alone controversy except for the anally retentive member who salivates over grammatical boo boos or misspellings. At best, they are usually only retrieved and poured over to determine who said what and when (which often rarely matters except in the pursuit of some personal agenda).

 

The relentless monotony of what is discussed and recorded or, at worst, not discussed and recorded, can expose the shallowness of board meetings which are often little more than repetitious rituals masking a terminal dysfunction in a board. As well, the control of the agenda and minutes can be a device to distort proper board decision making. Putting important items, for example, at the end of an agenda when eyes are glazing, energy levels sagging and everyone just wants to go home, is a tell-tale sign of meeting manipulation.

 

However, thanks to the law, the quality and comprehensiveness of minutes is being thrown more and more into the spotlight. The duties of board members are being targeted by the law generally and in the Australian Charities and Not-for-profits Commission (ACNC) legislation particularly and minutes can be powerful evidence of how well a board is performing in their due diligence role and how compliant it is with the law. For example, among the issues in the prosecution of the directors of James Hardie for failing to perform their duties, was evidence about the process and the accuracy of the minutes arising out of that company’s board meetings. While that case related to a for-profit company the same principles would apply to a not-for-profit entity.

 

Even more interesting is the importance of directors being able to understand that they can dissent from a board decision and how such dissent should be recorded in the minutes to protect the dissenting director from any future adverse consequences. Even not attending a meeting can have legal implications for an absent director, for example – is that director deemed to agree with the decisions of the board at that meeting or not?

 

In addition, there is little appreciation at board level of the marketing power of minutes. High quality prospective directors who are asked to join a board will often have a preliminary look at the board minutes to gain insight into an organisation’s condition and the professionalism of its governance. The often poor quality of the documents can, to use management speak, ‘disincentivise’ or, in every day parlance, be a proverbial ‘turn off’ to good candidates – something which few organisations can afford to do in this day and age when many do not, and cannot, even pay good directors as an incentive.

 


 

This article was originally published in the Better Boards Conference Magazine 2013

About Brian Herd

Brian is a partner with the Brisbane law firm Carne Reidy Herd.

He is also a part time member of the Queensland Law Reform Commission and chair of the Queensland Law Society’s Elder Law Section.

He spends a significant amount of his time and expertise in advising the not for profit and community sector on governance, restructuring and constitutional review, mergers and acquisitions, legal compliance and risk management. He has presented at many conferences on the changing legal dynamics and needs of the sector and what he calls their 3M’s – melding their mission, with margin and management.

He says working in the area gives him the unparalleled opportunity to mix his passion for the community sector with the love of his profession.

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