What should be included in board minutes? Useful guidance from the joint statement by AICD and the Governance Institute

The Australian Institute of Company Directors (AICD) and the Governance Institute of Australia (Governance Institute) have recently collaborated to explore contemporary issues in board minute taking practices, and have outlined their perspective in a joint statement on board minutes (Joint Statement).

The Joint Statement summarises key principles, provides opinions on what matters should be included in board minutes, and considers the approach to board papers and document retention policies.  It also explores issues such as the status of drafts and notes, how to record dissenting views in minutes, and how to maintain legal professional privilege in board papers.

The Joint Statement provides useful guidance on minute taking practices for boards, individual directors and company secretaries. AICD and the Governance Institute have also obtained counsels’ opinion on particular issues, to add legal context to their conclusions and recommendations. The legal opinion from Dominique Hogan-Doran SC and Douglas Gration is attached to the Joint Statement.

We have summarised below some key takeaways and useful reminders from the Joint Statement and the legal opinion:

What should board minutes include?

• Board minutes are not a report or transcript of the discussion or debate during the meeting, or a record of an individual director’s contribution. Too much information can be as unhelpful as too little, and can cause a lack of clarity and stifle healthy boardroom debate.
   
• Minutes should include the key points of discussion and the broad reasons 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.

What level of detail should be included in board minutes?

• The level of detail in minutes is a question of judgment and may vary from company to company and between the matters being considered by the board. While there is no “one size fits all” approach, relevant factors to consider when incorporating key points of discussion and reasons for decision into minutes 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 that either the company or the particular decision is subject to; and
    
  • any perceived self-interest or conflict of interest on the part of management or the board in the decisions concerned.

• Minutes should be drafted in a clear and succinct manner, using plain English, and written in a way that someone who was not present at the meeting can follow the decisions that were made.
   
• The board acts as a collective, not as a group of individuals. Accordingly, the details of any robust discussion that takes place along the way should not be attributed in minutes. It is important to note the difference between a robust discussion that leads to a collective decision by the board, and the dissent of a director in discharging their individual duty to act with care and diligence.

The role of board papers and scope of document retention policies

• Well-written, concise board papers help to ensure that meetings are run smoothly and facilitate the drafting of minutes. They are also important in establishing that directors have discharged their duties. Therefore, directors should satisfy themselves that board papers are adequate, and that they have sufficient information on which to base decisions. If the board makes a decision that is not canvassed in the supporting board papers or is contrary to management’s recommendation, it is good practice to provide sufficient detail about the reasons for the decision.
   
• Companies should adopt and consistently apply a document management and retention policy, which addresses what documents must be retained (and in what format) and when they may be destroyed, and should cover material in any board portal.  This policy should also deal with the status of draft minutes and handwritten notes. Retention policies should also be consistent with any obligations to preserve evidence for actual or likely legal proceedings.
   
• Care should be exercised when taking personal notes at board meetings. It is important to bear in mind that like board minutes, directors’ notes can be discoverable and admissible as evidence in court, and can create risk if the notes are considered to be ambiguous, inconsistent or incomplete by the court.

Maintaining legal professional privilege in board papers

• Caution and judgment should always be exercised when determining the degree of detail of any privileged legal advice that is necessary to include in the minutes. In particular, if board papers containing the gist or conclusion of legal advice received by the company are disclosed in discovery to the opposing party during legal proceedings, there is a risk that privilege over the entire legal advice is lost.
   
• Any privileged information in the minutes should be clearly identified, and ideally included in an appendix or attachment. This will assist in any later discovery process and mitigate the risk of inadvertently disclosing privileged information.  It is also good practice not to provide minutes containing privileged information to third parties without first taking legal advice, as disclosure of the substance of the privileged information might result in the loss of privilege.

Reach out to the authors for more advice on what should be in your board minutes.

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