Hang on a minute: the AICD and GIA release advice on best practice for board minutes

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By Tim Cox, Partner and Lucy Burke, Lawyer

Following the scrutiny of board practices at the Financial Services Royal Commission, companies are increasingly refocusing on ensuring that their board minutes are up to scratch. Earlier this month the Australian Institute of Company Directors (AICD) and the Governance Institute of Australia (GIA) released a joint statement addressing board minute taking practices.

The statement, a product of feedback from both AICD members and legal practitioners, covers key principles that should be kept in mind when preparing board minutes, and how boards can optimise their use of board papers and document retention policies.

Key takeaways include:

  • Less is more: board minutes are not a transcript of proceedings, but rather a record of board decisions and how those decisions were made. It is generally not appropriate to include every question put to the board and every response received. That level of detail is not required by law, and can lead to a lack of clarity and stifle healthy boardroom debate. Minutes should be clear, succinct and in plain English.
  • Tell me why: the material reasons for decisions should be included. Doing so may help to establish that directors have properly discharged their duties to act with care and diligence and in good faith, for a proper purpose and in the best interests of the company.
  • Corporations Act obligations: a timely reminder of a company’s obligations under section 251A to appropriately update their minute books within one month of a meeting. Minutes are prima facie evidence of the proceedings and resolutions passed, and may be crucial in determining that a company or its directors have met their legal obligations.
  • Document retention policies: minutes should be the sole and permanent record of proceedings at a board meeting. There is no obligation to retain any drafts or personal handwritten notes, and these documents should be appropriately disposed of as they can undermine the integrity of the official minutes.
  • Legal professional privilege: legal privilege is not usually lost by the board receiving a company’s legal advice. Even so, caution should be exercised when including any legal advice in minutes, and it should be specifically noted that the board has considered relevant advice when making a decision.

The statement also contains a 10-page legal opinion written by barrister Dominique Hogan-Doran QC and legal academic David Gration with further details about the legal requirements for board minutes. For those who want a deeper dive, the opinion can be accessed here.

In general the statement emphasises that there is no ‘one size fits all’ approach for board minutes. It will become a question of judgment, which will depend on the size and type of company and the particular matters being discussed.

Our team can assist in determining appropriate drafting and management of board minutes and any related governance queries. Please contact our Corporate Advisory team for further information.

 

For further information, please do not hesitate to contact us.

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