Minutes of board meetings and other governance bodies are documented evidence of decisions, and decision-making processes. When they are well drafted, they support good governance and demonstrate transparency. As auditors, we review minutes to help us better understand how those charged with governance discharge their responsibilities.
Recent events, such as the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, have increased the scrutiny around board minutes. The Governance Institute of Australia (GIA) and the Australian Institute of Company Directors (AICD) recently issued a Joint statement on board minutes. The paper outlines their position on minute-taking and critical issues for boards. While the paper was written for corporate boards, the key principles apply to all types of governance bodies.
Key principles from the joint statement
- Board minutes are a record of board decisions and the process by which decisions are made. They should capture the key points of the discussion and the rationale for board decisions. This may help establish that directors have exercised their powers and discharged their duties to act with care and diligence in good faith.
- Minutes record the resolutions of the board as a whole. It is not advisable to record the contributions of individual directors, or to transcribe every detail of the discussion or debate during the meeting. Writing minutes in an ‘x said’, ‘y said’ manner does not support the concept of directors acting as a collective.
- Minutes can demonstrate how boards challenge management. The minutes should record significant issues that directors have raised with management, and the responses received or action promised. Recording challenges helps show that the board as a whole, as well as individual directors, are discharging their duties, and may therefore reduce the risk of individual director liability. Challenges may be a simple request to management for clarification or further information, or an outright expression of dissatisfaction with information provided/omitted and dissent in minutes.
- The quality of board papers plays a crucial role in ensuring meetings run smoothly and facilitating drafting of minutes. The content of the board papers should also support the board decisions made. Therefore, directors should set expectations of management and continually provide feedback in relation to the quality and adequacy of the board papers.
What should be included in minutes?
There is no ‘one size fits all’ in terms of the right level of detail; it depends on the entity and the matters being discussed. It is important to note that minutes are not a transcript of the discussion or debate during the meeting, or a record of an individual director’s contribution. Too much information can be as unhelpful as too little.
The joint statement from AICD and GIA outlined typical details to include, such as:
- nature and type of meeting
- date and starting time
- attendees—including chair, invited guests, apologies and presence of quorum
- minutes of the previous meeting
- materials distributed before and during the meeting
- proceedings of the meeting and resolutions made
- key points of discussion and rationale for decisions made
- any perceived self-interest or conflicts of interest, and how they were managed.
Improving the quality of minutes can benefit all organisations. They are the single, permanent record of the meeting proceedings.
Entities should write minutes using plain language and ensure that someone who was not present at the meeting can follow the decisions that were made.
Those charged with governance should regularly review the quality of their meeting minutes and ensure they are reflective of their decisions and the processes that underpin the decision.