What should be included in Board minutes? Useful guidance from Australia

Some useful guidance on Board minute-taking has recently arrived in the form of a joint statement by the Australian equivalent of the IoD Institute of Company Directors and the Governance Institute of Australia.

The Joint Statement is quite comprehensive and contains opinions on matters that should also be of interest to lawyers (such as maintaining legal professional privilege in Board papers).

A distillation of key points from Joint Statement is set out below.

Contents

• (A personal long-time favourite) Board minutes are not a transcript.  Neither are they a record of each director’s comments.  Too much information can be confusing / lack the needed clarity about what was actually decided and (in extremes) may stifle healthy debate around the Board table.
• Instead, minutes should include the key points of discussion and the reasons (in broad detail) for Board decisions.  This may help to establish that directors have exercised their duties to act with care and diligence and in good faith, for a proper purpose and in the best interests of the company. Boards should consider also if business judgment rule applies to a decision – if judgment is required and directors are balancing competing risks and considerations in making a decision, these should be captured in the minutes.
• It is appropriate for minutes to record significant issues raised with management by directors and the reactions received (e.g. responses received or action promised by management). However, it is neither necessary nor desirable to record every question put and every response received; it would be sufficient to record the thrust of significant issues raised.

How much detail?

• Minute-drafting should be clear (and succinct), using plain English, so that someone who was not present at the meeting can follow the decisions arrived at (and, where relevant, the reasons for those decisions).

• This is often a matter of judgment and style (the later typically to be determined by the chair and the minute-taker).  Whilst there is no one size fits all approach, the factors to be considered when seeking to wrap up the key points of the discussion and the reasons for a decision include:

• the nature and importance of, and risks attaching to, the decision and discussions concerned;
  • the level of detail contained in any supporting Board papers;
  • the regulatory environment (affecting that either the company or the specific decision); and
  • any self-interest / conflicts of interest on the part of management or the Board (perceived or otherwise) in the decision concerned.

• A Board acts collectively.  Therefore, the details of any discussion around the Board table should not typically be recorded (or attributed to any Board member).  But, there is an important distinction between (robust) discussion that leads to a (collective) Board decision – and a dissenting opinion expressed by an individual director who considers that they must do so in order to discharge their duties.

A quick word about legal professional privilege

• Some care needs to be exercised when including details of any privileged legal advice in the Board minutes.  The minutes (and Board papers) are typically discoverable and if they contain (for example) the conclusions from that advice – there is a risk that privilege could be lost in respect of the totality of that legal advice.
• As a result, any privileged advice to be included in Board minutes should be clearly identified (and ideally included in an appendix or attachment).  Not only will this assist in with any discovery process but also help manage the risk of accidental disclosure.  (And as a practice point, do not provide Board minutes containing privileged material to third parties without first taking legal advice).

Further information

If you would like more information about any of the matters discussed in this note, please contact me.