Mastering Minutes

The importance of accurate board minutes came under the spotlight at the Financial Services (Hayne) Royal Commission. Governance professionals and their professional bodies, have been reviewing their minute taking practices to ensure they remain fit for purpose and meet the relevant legal obligations as a result.

The Australian Institute of Company Directors and the Governance Institute of Australia have collaborated to release a joint statement, supported by a barristers’ opinion, to outline their position on best practice in minute taking.  You can download a free copy here.

The key principles can be summarised as follows –

  1. Board minutes are a record of board decisions and the process, or proceedings, by which those decisions have been made. As well as being a legal record, the minutes convey these decisions to the executives who implement them, and serve as a reference for the board if it wishes to revisit them.
  2. Board minutes are not a report or transcript of the discussion or debate during the meeting, or a record of an individual director’s contribution. This level of detail is not required by law, would be inconsistent with the established practice of minute taking, and may stifle healthy boardroom debate. Too much information can be as unhelpful as too little, and can cause a lack of clarity. While minutes can facilitate regulatory oversight, this is not their primary purpose. Minutes are not a purely compliance exercise and a ‘tick box’ approach should be avoided.
  3. It is advisable to include the key points of discussion and the broad reasons for decisions in the minutes. This may help to establish that directors have exercised their powers and discharged their duties to act with care and diligence and in good faith, for a proper purpose and in the best interests of the company. It is also advisable to consider the principles of the business judgment rule when preparing and approving minutes. If judgment is required and directors are balancing a number of competing risks and considerations in their decision-making, it is prudent to actively consider whether the minutes capture them adequately but succinctly.
  4. Directors, governance professionals and management each have an important role to play in the board reporting process. A well-written board paper will complement the minutes, and can often demonstrate the reason a decision has been taken with little, if any, further elaboration required in the minutes. It is appropriate for board minutes to refer to, without repeating, the contents of board papers and other supporting documents.
  5. An important issue is the way in which boards ‘challenge’ management and the extent to which this is reflected in minutes. While it is a matter for judgment in each case, it is appropriate that the minutes record significant issues raised with management by directors and the responses received or action promised. It is neither necessary nor desirable to record every question put and every response received. It will normally be sufficient to record the thrust of significant issues raised in non-emotive and impartial language.

The Australian Institute of Company Directors also has a free webinar on minutes which looks at:

  • the relevant legal obligations
  • the level of detail that should be included in minutes
  • the status of drafts and notes.
You can access the webinar after registering here.