Board minutes

To help address members’ questions, the AICD and the Governance Institute of Australia came together to release a joint statement outlining our position on minute-taking and critical issues for boards and governance professionals, supported by a legal opinion from Dominique Hogan-Doran SC and Douglas Gration.

The intention was to provide a clear, practical statement to help directors navigate through some of the most vexed and topical issues.

We also hosted a webcast with the Governance Institute to explore minutes in further detail. A link to our joint statement and the accompanying legal opinion, as well as a recording of the free webcast can be found here.

As part of the joint minutes project, we briefed counsel, seeking a legal opinion on a number of contentious points including the purpose of minutes and the detail to be included, and the approach to recording challenging and dissent.

In brief, our joint position is that:

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.

While there is no uniform approach to minute taking, we encourage members to consider their current practices in light of our statement and barristers’ opinion. Minute taking is an important function in all organisations and the value of robust practices should not be overlooked.