Meeting Management

Best Practices for Minutes of the Board of Directors’ and the Shareholders’ Meetings

Minutes of board meetings are legally required in Australia and New Zealand

In Australia, as per section 248G of the Corporations Act 2001, every company must keep a minute book and meeting minutes must be lodged in that book within one month of the meeting (or the company must provide an alternative procedure in its constitution). 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 entered in the book. Directors should thoroughly review the minutes before this as once the minutes are signed, only clerical errors can be changed.

Minutes must be “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,” according to Australian lawyer Brian Herd of the Brisbane-based firm CRH. This is why a tape recording will not replace minutes. The use of discrete selection, in selecting the discussion points for the record, as well as the careful indication of who took what side, and who voted for what resolution must all be part of the legal record.

In New Zealand, Schedule 3 of the New Zealand companies Act states the requirements to take official minutes of board meetings for registered companies.   For Not-for-Profits, the Incorporated Societies Act 1908 outlines the requirements of minute taking.

“The minutes of a meeting are an important part of ensuring good process and accountability and in order to record actions to be taken. They are a valuable tool for boards to refer back to and keep track of the progress being made. Minutes need only be brief (not verbatim) and before they are distributed to the board, the chair should have the chance to edit where appropriate to ensure accuracy. Minutes are also valuable in that they can be used to protect directors against accusations of bad practice,” explains the New Zealand Institute for Directors.

The use of board management software with a minutes-taking application provides key support to the general counsel or company secretary who is responsible for taking the minutes. The application helps to focus the minutes properly, and to redact them quickly.

More than a minute – How Diligent Minutes helps document board meetings

The complexity and skill involved in producing effective minutes is often underestimated. So is the time it takes to complete them. Good minutes are a cornerstone of effective governance. They provide a permanent record of boards’ decisions, priorities and key discussions, demonstrating how directors discharge their duties with care and diligence.

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What can happen in court when minutes are not accurate

There should be no misunderstanding: Directors in both Australia and New Zealand are libel for inaccurate minutes – the blame is not fixed on the company secretary alone, although that official may also be charged.

The James Hardie case made this very clear. “Although an Australian decision, Gillfillan v ASIC [2012] NSWCA 370 is a helpful reminder of the importance of good corporate governance for New Zealand boards. It is also likely to be relevant to a New Zealand court faced with assessing directors’ conduct at a board meeting,” writes the Auckland-based law firm Bell Gully in a note.

In this case, in which the High Court convicted directors of the Australian firm of breaching their duties of care and diligence, the failure to take accurate minutes was specifically noted. The judge pointed out that the minutes did not show who voted for a resolution, nor did some members of the board who were attending via televised conference even have access to reference materials.

The judge made a decisive statement about best practice for minutes-taking: “The culmination of the process must be such that it is possible to see (and to record) that each member, by a process of voting, actively supports the proposition before the meeting or actively opposes that proposition; or that the member refrains both from support and opposition. And it is the responsibility of an individual member to take steps to ensure that his or her will is expressed in one of those ways.”

But it is also the responsibility of the minutes-taker to record all of those actions.

Taking the minutes at a Shareholders Meeting

Sections 251A(1)(a) & (2) of the Australian Corporations Act require that a company must keep minute books in which it records, within 1 month, proceedings and resolutions of meetings of the company’s shareholders.  and the company must ensure that minutes of a meeting are signed ‘within a reasonable time’ after the meeting by the chair of that meeting or the chair of the next meeting.

New Zealand’s Schedule 1 of the Companies Act 1993 imposes what is effectively the same requirement.

A shareholders meeting is a much larger event than a board meeting, so identifying speakers and noting the progress of discussions may prove challenging.

Minutes should nonetheless include:

  • The minutes should reflect the decision or vote on each resolution, or the outcome of voting. If the vote was unanimous, that should be stated. If any member or director abstained or dissented, his or her name and vote can be listed.
  • A record of reports, if any, should be included, with copies attached (if the report is written). If no written reports are submitted, then the minutes should include a summary of the report given.
  • The results of any elections to the board.
  • Declaration of any conflicts of interest.
  • Indication of any important discussions or expressions of opinion.

Diligent Governance Cloud provides tools minutes-taking

Diligent’s Minutes software is a tool that takes the burden out of minute-taking. The board management software provides a secure board portal in which minute-takers can attach a minutes template directly to board books for shareholder meetings. The software is a minutes and action items software solution that also allows minute-takers to create minutes that aren’t attached to board books if they choose.

Minute-takers that use the feature that attaches minutes to board books gain the benefit of basic information automatically being transferred to the minutes software tool. The software transfers vital information, such as the meeting date, time, location and type of meeting, directly to the meeting template. The software also pulls in attendee information directly from the board book. For increased accuracy, the software automatically records the starting and ending times of the meeting.

Good governance isn’t just one thing – so why buy software that only manages your board documents? At Diligent, we empower leading organisations around the world to turn good governance into a competitive advantage for their business. In the ever-changing landscape of the world, governance hasn’t kept up with the fast pace of business. Quarterly board meetings, paper board books and not using secure communication tools for sensitive data have opened up numerous companies to risk.

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