clock ticking

In 2019, the AICD and the Governance Institute collaborated to explore topical issues in minute-taking, and address some important legal issues.

AICD and Governance Institute joint statement

Our joint statement and supporting legal opinion – which can be accessed here - came off the back of heightened scrutiny of minute-taking, including in the context of the Financial Services Royal Commission.

It includes a number of key principles in relation to board minutes, and deals specifically with the purpose of minutes and level of detail; amendments; challenge and dissent; board papers and other supporting documents; and legal professional privilege.

Minutes during COVID-19

Fast forward to 2020, and boards of all companies will be making difficult decisions and judgment calls in relation to all types of matters – from strategy, to employees, corporate reporting, remuneration, liquidity and solvency and so on.

It is important to consider your approach to minute-taking at this time. While there is no “one-size-fits-all” approach and each company and board will need to actively consider and determine what approach best suits their organisation, two tips are particularly relevant during the current crisis and should be kept in mind:

  1. We advised including the key points of discussion and the broad reasons for decisions in the minutes on the basis that it 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.
  2. We also recommended actively considering 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.

As noted in the legal opinion from Dominique Hogan-Doran SC and Douglas Gration that accompanied our joint statement, if a director wishes to take advantage of the business judgment rule, it is desirable that the director’s ability to do so is established in the minutes recording the relevant decision or resolution.

Indeed, the minutes may be the best, and sometimes only, evidence that directors have complied with their duties in respect of the decisions that they have taken and in their general oversight of the company.

Challenges in the context of digital meetings

Of course, there are particular challenges in the context of digital meetings. Minute-takers (in public companies, usually the company secretary) have an important and potentially challenging role in capturing accurate and compliant minutes of a digital meeting. The Chair and other directors should be alive to the task of the minute-taker and the potential need to clarify key discussions points or reasons for decisions. If needed, the minute-taker should request such clarification.

Directors also have a responsibility to properly evaluate the minutes circulated after meetings. As noted in our joint statement, it is critical that each director actively reviews the minutes, and that the process of finalising and approving the minutes is managed rigorously by the Chair.

If the minutes are silent on an issue, a court may adopt a degree of scepticism as to whether the matter was indeed considered by the Board.

Particularly close attention to this process and the draft minutes may need to be applied in the context of minutes of digital meetings.

For more tips on effective digital meetings, see here.

ASIC’s position

The report of the ASIC Corporate Governance Taskforce on director and officer oversight of non-financial risk released in October 2019 specifically addressed approaches to board minutes and ASIC’s views on better practice.

The report referenced the AICD and Governance Institute joint statement, and emphasised the important role of minutes in helping boards to demonstrate that they have exercised active stewardship and performed their oversight and monitoring functions.

Other resources

Further material and guidance on minute-taking is available at:

Directors’ tools: Board minutes

Good Governance Guide — Board minutes: What to record, the business judgment rule