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Best practices for minutes of board of directors’ and shareholders’ meetings

February 8, 2019
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As the current environment continues to create liabilities for board directors, it's an opportune time to review and consider best practices for keeping minutes of board of directors' and shareholders' meetings. The annual general meeting (AGM) is typically the only time during the year when board members, executives and shareholders join together to collaborate on leadership and financial matters. When companies need to resolve problems between annual general meetings, they may call an extraordinary general meeting.

State laws generally require public and private corporations to have an annual general meeting while public companies are also beholden to securities regulations. The Securities and Exchange Commission (SEC) requires publicly listed companies to file annual proxy statements, known as Form DEF 14A, that show the date, time and location of the annual meeting, as well as other material information about executive compensation and board director nominations.

Shareholders who choose not to attend the annual general meeting in person are often invited to vote by proxy, which they can usually do by mail or through an online platform.

Minutes of Board of Directors and Shareholders Meeting

It's just as important for boards to record minutes of shareholder meetings as it is to keep records of regular and special board meetings. From corporation to corporation, there remains a small lack of consistency with how much detail minute-takers should include in board meeting minutes.

In simple terms, meeting minutes provide a record of a board's or committee's actions and deliberations. The most important thing to consider when taking meeting minutes at board of directors' and shareholders' meetings is that the minutes need to be able to stand the test of time. Minutes must accurately reflect the precise actions that board directors took, as well as indicate the care, consideration and due diligence they put into their decision to act. In fact, it's not uncommon for boards to record the actual time that boards spent on deliberations. Meeting minutes also need to indicate that the board is in compliance with procedural requirements, such as ensuring that they gave prior notice when appropriate, that they're following proper procedures for quorums, etc.

Board meeting minutes should contain certain details about the meeting, including the wording of resolutions passed by the board and a general description of agenda items and actions the board took on them. Fiduciary duties are an important part of board director responsibilities. Meeting minutes should reflect that board directors act with loyalty, care and good faith.

Board meeting minutes should also note participation in the meeting by advisors and whether the board relied on the experts' advice.

Minutes Software Enhances the Minute-Taking Process

Minutes software is a tool that takes the burden out of minute-taking. Diligent Boards 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.

In addition, the minutes software automatically pulls in the headings of the agenda items so that all the minute-taker has to do is record the actions and decisions of the meeting. Having a preset template pre-loaded with all of the pertinent details allows minute-takers the benefit of being able to focus more closely on the details of the meeting. There is less chance that the minute-taker will need to interrupt the meeting to get clarification on an issue or miss an important detail that should be included in the minutes.

Using Diligent Minutes, minute-takers can easily record members who leave and re-enter the meeting, including documentation of how long they were gone. The software records the time spent on each agenda item as well, which makes it easy to prove that boards are giving due diligence to every item.

Minute-takers can easily add online links to copies of resolutions and references to briefing materials so that attendees can look up information before, during or after the meeting.

As board directors agree to fulfill follow-up actions, minute-takers can set up online action items, complete with automated reminders to ensure that board directors complete follow-ups.

At the close of the meeting, Diligent Minutes allows minute-takers to export the final minutes document into Microsoft Word or add it to the next board meeting book for discussion and approval.

Best Practice Tips for Board and Shareholder Meeting Minutes

Board meeting minutes should be accurate and complete. In addition, minutes should be written using consistent language and a consistent approach. Meeting minutes can be called into court, so it's important that they contain clear, concise and unambiguous information so that court officials won't need to seek other sources to clarify or substantiate information. Use neutral language whenever possible and steer clear of adjectives and adverbs that reflect value judgments.

Minute-takers and the board chair or board president should carefully review and edit the minutes to correct any typographical errors and other misleading information, which could call the entire record into question.

Meeting minutes should disclose any conflicts of interest and how the board resolved them.

Minutes should reflect whether the board held privileged discussions with their attorney and, if so, simply indicate that the board participated with their legal counsel and provide the most general reference information available.

The NYSE requires board directors of publicly listed corporations to meet in regularly scheduled executive sessions in which management isn't present to allow for candid discussions among independent directors. Minutes should reflect that the board held this meeting, who attended it, when the meeting was held and how long the meeting lasted.

Excellence and diligence in minute-taking ensure that best practices for good corporate governance are linked to disclosure controls and procedures. The individual who takes minutes should have guidance and oversight by another individual who has the proper experience and education to employ best practices to foster excellence in governance.


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