Board Minutes - Administrative Matters

What are minutes of meetings of the board?

Minutes of the meetings of the board, or simply “board minutes” are the official notes from any meeting of the board of directors in a company. Whilst it is not necessary for every word to be recorded, the main purpose of the minutes is to record all resolutions, and, depending on the importance of the resolution, the discussions leading to the decision. The board minutes are usually prepared by a company secretary (if one is appointed) or a member of the board. It is then approved and signed by the chairperson of the meeting (who is often also the chairperson of the board). 

When should you use Board Minutes?

Board minutes should be prepared, signed and kept after each board meeting. The minutes should, amongst other things, confirm which board members attended the meeting as well as attendance by any non-board members, the chairperson of the meeting, the place, time and date of the meeting, which resolutions were adopted, how each board member voted in relation to each resolution, and if any board member was restricted from voting due to a conflict of interest.

Even if the company consists of a sole director, formal minutes of the sole director’s deliberations and resolutions should be documented.

Why are Board Minutes important?

The board of directors are responsible for the management of the company’s affairs. As such, it is important that resolutions and decisions made by the board are properly recorded in the minutes. As mentioned above, the minutes list the board members in attendance, and how they voted (in particular if there were any directors that abstained or recused themselves), allowing readers to ascertain whether proper quorum was established (i.e. if the meeting was properly convened, allowing the board to make formal decisions), and if any board member voted against a resolution.

It is a legal requirement to record the “minutes of all proceedings at meetings of its directors” and to keep such minutes “for at least ten years from the date of the meeting”. Failure to do so could result in every board member being personally liable and fined.

Board minutes are also a form of evidence of active and informed deliberations by the board in relation to business decisions made. This will aid in proving that the directors had considered and satisfied their fiduciary obligations and duties towards the company. Additionally, board minutes serve as a guide as to the structure of board meetings. Whilst the content of the meetings will differ, the general format and proceedings of the meetings should, by and large, remain consistent and board minutes serve as a reminder and guide of the proceedings. 

What are the common pitfalls of Board Minutes?

The most common pitfall is probably not having the minutes at all. The boards of smaller orn mid-sized private companies often manage and run their companies more informally, thereby occasionally omitting formal board meetings (and so board minutes). As mentioned above, it is a statutory requirement to create and keep board minutes and this responsibility and potential liability is shared by every board member. 

The procedure for convening and running a board meeting is usually set out in the company’s articles of association. Therefore it is important that the meeting is called and carried out in accordance with the company’s articles to make sure that the meeting is validly held and that the resolutions were appropriately passed. Additionally the shareholders’ agreement may also contain certain requirements - for example a minimum number of board meetings to be held per year, specific board members having veto rights etc. Ensure that such requirements are met to establish properly constituted board meeting. 

It is uncommon to get the format and content of the board minutes wrong, as they should simply reflect what was discussed and resolved at the board meeting. However, it is fairly common to forget to include differing opinions and votes, declaration of any conflict of interest of any board member as well as any restriction on such board members from voting. 

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