Making Compliance Work: A short overview of Board Minutes

This post considers:

• The types of meeting minutes
• why companies should keep board minutes;
• what is typically discussed at a board meeting;
• what should go into board minutes; and
• how to draft, sign and store board minutes
• Why do we need board minutes?

Board minutes are needed for both legal and practical reasons.

Under the Companies Act 2006, every company is required to take minutes of all proceedings of its directors, which must then be retained for 10 years from the date of the meeting.

The company’s articles of association (its constitution) may also require this to be done. For example, the current form of government-prescribed articles for UK companies (which many companies choose to adopt) require directors to keep records of their decisions.

Aside from the legal requirement to do so, there are good practical reasons for having board minutes including:

• having a record of decisions – useful as a reminder to attendees, to brief any director who couldn’t attend the meeting, and for long term internal record purposes;
• showing that the directors took their decisions properly, in accordance with their duties – especially if the decision might be called into question in the future.

What is typically discussed at a board meeting?

Executive Directors will make decisions about the day-to-day management of the company at a board meeting, often following an agenda or sample meeting minutes format. They will typically:

• consider the minutes from the last meeting and any matters arising from them;
• review the company’s activities and performance since the last meeting (e.g. sales reports, ongoing projects, product or technical developments, issues arising out of the company’s operations);
• discuss the outlook for the business and strategic matters arising;
• review the company’s financial position including performance against budget;
• deal with any procedural matters e.g. appointment of a new board member;
• Visiting specialist information providers, (invited in at certain key and relevant points) i.e., solicitors, compliance experts etc
  consider risks and their management (e.g. competitive landscape, supply chain issues).

 

From time to time, it may be necessary to have a one-off board meeting to approve a key business decision such as the acquisition of a new business, the sale of one of the company’s subsidiaries, changes to the company’s share capital structure, or the taking out of a new business loan.

Any decisions made at a board meeting would normally be made by a simple majority, with voting on a show of hands. But you should always check your company’s articles of association as these determine the voting rights at meetings.

What should be in the board minutes?

Although there is no set minutes of meeting format for board minutes, the following should be included as a minimum;

• The registered name and number of the company.
• The date, time and place of the meeting.
• The names of the directors (and any others) that attended and details of any who sent apologies.
• The name of the person acting as chairperson (if any).
• Confirmation that notice of the meeting has been given and a quorum is in attendance.
• Declarations of the directors’ interests in the matters being discussed, where required.
• Approval of minutes of previous meeting.
• A short narrative recording the matters discussed or approved and decisions taken at the meeting. If a resolution was passed, the minutes should record the exact text of that resolution.
• A note of any investigation or research required by any of the company’s officers, and a precis of the remit and/or authority. For larger projects a terms of reference should be agreed as an addendum to the minutes.
• A note of any instructions to the company’s officers e.g. to make any filings with Companies House or any other regulatory authority, or changes to the company’s statutory books and registers.
• A note of the time limits of the company officers instructions, i.e., when they have to report back or confirm completion. If confirmation of completion is required, by what medium or process is it to be socialised within the board?

Tips for drafting, signing and storing board minutes

Board minutes should not be a verbatim record of everything that was said or debated. Rather, they should refer to any briefing papers considered and set out a concise description of the key points of any discussion, with enough detail for someone not present to have an understanding of the reasons for the decision.

The board minutes can be signed by any of the directors, but are most commonly signed by the chairperson of the meeting.

Subject to any specific requirements in a company’s articles of association, board minutes can be kept in

(a) hard copy or
(b) electronic form

so long as the paper copy can be produced.

If the minutes are not kept in bound books, the company must take precautions against falsification of the records.

Lee Werrell, Chartered FCSI and owner of Compliance Consultant states, “As with all good compliance; it’s not what you do, it’s what you wrote down that you did and why”.

Lee Werrell is a Governance, Risk & Compliance professional with 30 years experience in the financial services industry, including roles at board and senior executive level for banks and other distribution channels. Contact Lee on 0207 097 1434 or through the website at https://www.complianceconsultant.org.