Just a minute

  • Author : John Harper
  • Date : December 2012
ABOUT THE AUTHOR: John Harper TEP is a part-time lecturer, delivering face-to-face courses for the STEP International Diploma examinations all around the world

Most matters concerning the proceedings at directors’ meetings are governed by the company’s articles and, in default, by reference to the common law. In addition, the statute law of all jurisdictions requires every company to keep minutes of all proceedings of directors. Where physical meetings have not taken place, it is possible to make binding decisions as a result of written resolutions. Subject to the articles, unanimous consent of all directors for such written resolutions is required.

It would be a poor chair of a meeting who launched into action without ensuring that someone was taking the minutes. That individual will usually be the company secretary, as that is one of their core duties. It could also be another person who is competent and presumably has agreed to do so, keeping knowledge of all matters discussed confidential.

Unless the contrary can be proved, minutes of meetings are normally sufficient evidence that:

  • the meeting is deemed duly convened and held
  • all proceedings at the meetings are deemed to have duly taken place; and
  • all appointments at the meeting are deemed valid.

The minutes must be either in hard copy or, if not, capable of being reproduced in hard copy form. It is good practice to have hard-copy minutes kept in a minute book of some sort. All minute books should be kept in a safe place and precautions taken to guard against their falsification. In Hearts of Oak Assurance Co Ltd v James Flower & Sons (1936), a loose-leaf minute book was rejected as evidence on the basis that ‘anyone wishing to do so can take a number of leaves out and substitute any other number of leaves’. To guard against such possibilities, good practice includes:

  • sequential numbering of every page
  • every page should be initialled by the chair
  • the minute book should be kept in a safe place
  • minutes of board meetings should be kept in a separate place from minutes of general meetings (the latter being open to inspection by members); and
  • every set of minutes should be signed by the chair as evidence that they record a true and fair view of what transpired.

Copy (draft) minutes of a directors’ meeting should be distributed to directors along with the notice of the subsequent meeting and agenda. This will give all directors the chance to consider whether the minutes are accurate. Clearly, the faster they are prepared and circulated, the fresher everyone’s mind will be. Indeed, where, in an offshore context, the directors’ meetings will be predictable, in that no controversy or disagreement is expected, it is often sensible for the chair to conduct the meeting by reference to their ‘script’, which is, in effect, the draft minutes of that meeting prepared in advance. That way, no necessary business can be accidentally omitted and the minutes can be produced soon after the meeting, maybe with just one or two amendments.

The preparation of good board minutes tends to be an art, perfected over time with the benefit of experience. At their heart, the minutes should be an accurate record of the decisions taken, with sufficient background to the decisions. However, if the chair is not prone to operating in a particularly organised and disciplined fashion, allowing participants to go off at a tangent, spending an inordinate amount of time on trivia and giving insufficient time to more important matters, it will be the task of the secretary to distil all that they have heard into something more succinct. They will record the outcome of the meeting with the accuracy required by drawing out the more important issues and discarding the dross that was not key to the discussions.

Recorders will have to be aware of how directors will react when they read the minutes. Did they give sufficient weight to the proclamations of A or B, who have strong opinions on everything, while also allowing C’s more timid contribution to be properly recorded? Minutes should not be like parliament’s Hansard, repeating verbatim everything said. At the same time, however, they should not be too brief – mere corporate bullet points. A balance is required, and often the personal style of the chair will influence the final product.


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