Meeting Minutes, An Essential Guide for Directors

Meeting Minutes

 

Important decisions are made all the time in the boardroom and accurate meeting minutes are crucial as a record of those decisions and discussions. Taking minutes, though, can seem like a time-consuming chore. But, as high profile legal cases have shown, minutes are increasingly being used as a way to determine whether directors are properly performing their duties and responsibilities.

 

How to take good minutes

 

Lawyer Brian Herd summarises minutes as “a true and accurate record of the meeting”, which must contain “clear and concise notes of main discussion points, be accurate and a clear register of decisions”. Therefore, taking minutes isn’t just writing down verbatim everything that happens in a meeting. There are also legal requirements that must be met.

 

In Australia, every company must keep a minute book and meeting minutes must be lodged in that book within one month of the meeting. They must also be signed within a reasonable time by the chair. In practice, the minutes should be signed around the same time as they are lodged in the book. Directors should thoroughly review the minutes before this as once the minutes are signed, only clerical errors can be changed.

 

Minutes should also be kept safe and indefinitely. Electronic form is acceptable, but they should be able to be produced in hard copy form when required. They must also record attendance and apologies received ahead of the meeting.

 

In New Zealand, boards of companies, incorporated societies and charitable trusts must maintain minutes of all meetings and resolutions of shareholders, as well as meetings and resolutions of directors and directors committees, within the past seven years.

The minutes must record:

 

– that the meetings were duly convened and completed;
– that the minutes of the previous meeting were approved as correct;
– directors in attendance and absent;
– late arrivals, apologies and early departures;
– whether the meeting was in person or electronic.

 

According to Herd, there are, in general, three broad approaches to taking minutes:

 

  1. Minutes of action: this includes a general discussion, introductory remarks and an action outcome
  2. Narration: this is where you have introductory remarks, key discussion points and action outcomes
  3. Minutes of resolution: this is the least detailed one, where it’s just action outcomes.

 

Each organisation will be different and will need to adopt some form of a method according to their individual needs.

 

Minutes should follow the meeting agenda and be taken by the secretary of the board or a minute-taker. In general, they should only record matters of substance, such as who is responsible for what actions and when, as well as dissent.

 

With directors being held more to account, recording dissent is really important because if it isn’t recorded, then the default is that an action has been consented to. Directors have up to seven days to record their dissent once they become aware of a resolution.

 

Additionally, Herd recommends avoiding recording opinions and only note down criticisms or accolades if they are made through formal motion.

 

The minutes must be objective and as Herd puts it: “please don’t bring your minutes to life. Make them dull”.

 

 

James Hardie case: proof of the importance of meeting minutes

 

A 2012 case involving building materials company James Hardie showed the importance of a board getting meeting agendas and minutes right.

 

In 2001, James Hardie directors approved a public announcement about a corporate restructure that included the setting up of a foundation that would help compensate asbestos victims.

 

However, the company had stated in the announcement that the foundation would be fully funded, when it actually wasn’t. The Australian Securities and Investments Commission (ASIC) considered this to be misleading and brought claims against the directors of the company.

 

Initially the New South Wales (NSW) Supreme Court found that the directors had breached their duties and accepted the board minutes as evidence. After some directors appealed the decision, the NSW Court of Appeal overturned the Supreme Court decision.

 

After another appeal, the High Court ruled that the directors had broken the law and the board’s minutes played a significant part in the court’s final decision. One of the issues with the minutes was that they were signed by the chair after the legal one-month time period. The minutes also contained a number of errors and they had been amended after the meeting, but none of the directors noticed. The directors relied on these issues to try and argue that the minutes were admissible as evidence.

 

However despite these issues, the court held that the minutes were proof of what happened at that meeting, confirming the importance of using meeting minutes as evidence. It also shows the importance of directors taking care when approving meeting minutes to ensure they are an accurate reflection of what happens at board meetings.

 

Conclusion

 

As shown through the law, minutes are a direct representation of how well directors are performing their duties. Even if properly recording minutes can be time-consuming, taking extra care only works in a board’s favour to show directors are meeting their duties and responsibilities.

 

Further Learning

It’s Not in the Tea Leaves – It’s in the Minutes
Room to improve? The Importance of Getting Your Agendas and Minutes Right
Could Your Board Be Asking Better Questions?
Streamlining the Work of the Board

About Better Boards

Better Boards Australasia connects the leaders of Australasian non-profit organisations to the knowledge and networks necessary to grow and develop their leadership skills and build a strong governance framework for their organisation.

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