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Documenting Decisions by Directors

Further to our recent article, “Does your Company Paperwork reflect your Company Practice?” this article tackles another fundamental aspect of company administration; the preparation of board minutes.  

Taking minutes is simply good practice as it provides a written record of those in attendance, issues discussed and decisions made.  Board minutes are an internal matter and are therefore governed by the company’s constitution (Articles of Association) but, the Institute of Chartered Secretaries and Administrators (ICSA) thought it important to review current practice and views were sought by way of a consultation in summer 2016. 

Following the consultation, the ICSA published a Feedback Statement and a Guidance Note.  The general outcome was that there were many differing views and there is no right or wrong way to draft board minutes.  Nonetheless, it was thought that the Guidance Note could prove useful, particular for those new to drafting.  

There are very few references to board minutes in the Companies Act 2006 but, particular note should be taken of directors statutory duties contained within sections 171 to 177.  Such duties include, the duty to act within powers, promote the success of the company, exercise independent judgement and reasonable care, skill and diligence, avoid conflicts, not to accept benefits from third parties and to declare an interest in any proposed transaction.  It is therefore important that board minutes are drafted in order to demonstrate that directors have taken account of their legal duties.  There is ‘no one size fits all’ however and much will depend upon the company, its operations and any other regulations that the company is subject to.  

The company secretary is very often the individual tasked with preparing board minutes.  The company name, date, time and venue, whether the meeting is held in person, on skype, telephone or other video conferencing, those in attendance (identifying the chairman and secretary) together with a note of any apologies received are common inclusions. 

Issues such as confirmation that the meeting has been convened in accordance with the Articles of Association, any declaration of potential conflicts of interest and the naming of particular individuals were debated and the general outcome was that inclusion in board minutes ultimately depends upon individual preferences and what matters are being discussed. 

The style of writing is important.  Someone not in attendance needs to be able to follow discussions and decisions made.  Generally, board minutes should be accurate, balanced, impartial and concise, but not verbatim.  The majority of companies choose to approve their board minutes at the next meeting but this is not a legal requirement and companies can choose to approve their minutes by any other means.  

The important point to note in relation to drafting board minutes is that there is no set standard that every company can follow.  If you have any specific queries in relation to the drafting of board minutes or any general company administration queries, please contact Kirstin Ejsmont or Graham Jones, or call 01224 632464.




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