For boards and committees, minutes are a clear legal requirement, mandated by the Companies Act. Yet, ask what information they should contain or how much detail to add in and the picture gets blurrier, with the stock answer tending to be “As much or as little as you need.”
That is valid advice to an extent. But as board decisions come under mounting scrutiny from regulators, it’s no longer sufficient, so we’ve asked Peter Swabey, policy & research director at the Chartered Governance Institute, for his take on the matter — as well as for a few top tips.
Minutes are an internal record of what decisions were taken in the boardroom, and how those decisions were reached, as well as a way for directors to ensure that they all share the same recollection of the events. But their focus can vary. For example, a charity or public sector organisation that will have its minutes in the public domain may focus more on ensuring that there is clear accountability visible through the minutes. Meanwhile, a financial services company will focus on providing the regulator with evidence that matters were given appropriate consideration, particularly around risk.
When we were preparing our guidance on minute taking, we talked to company secretaries — including some who act as company secretary for a number of different organisations — and what they told us was that their minutes can look completely different from one board to the next. There’s no “one size fits all” about this, so don’t feel that you have to follow rigid rules. Rather, find a format and a level of detail that feels appropriate for you.
One corollary of the above: you shouldn’t be writing minutes for regulators. And that’s for two reasons. First, because you’d be missing out on the benefits that minutes tailored to your organisation can bring — including ensuring alignment between board members. And second, because that’s approaching the problem the wrong way. The well-written minutes of a well-managed board meeting will give the regulator the assurance it needs that the board is doing its job properly. So, improving your board governance as a whole will be more effective than trying to “bulletproof” your minutes.
Good minute taking is an art. And part of that art is winnowing that huge volume of data down to a relatively short but clear exposition of what actually happened at the board meeting. But how much is that?
Theoretically, minutes are a record of what the board has done, but I think you should also have some context for those decisions — a little bit of a flavour of the discussion. A rule of thumb that I find quite useful: should you have a new director come onto the board, if your minutes give sufficient context that that person can understand not only what the board did, but why it made the decisions that it did, then you’ve probably struck about the right level.
Another thing to keep in mind is that whenever two people have a conversation there is a tendency to go off point — as I’m likely demonstrating right now! That’s obviously exacerbated with eight or ten people around a boardroom table. So, the role of the person taking the minutes is not to follow those tangents but to make them a coherent whole, so that they create a record of what the decision was and of how it was reached — capturing challenge as well as a flavour of the points in favour.
“These past years, the regulatory trend has been to make individuals at the top personably accountable — for example in the financial services industry with the Senior Managers and Certification Regime or more recently with the Consumer Duty which requires firms to act to deliver good outcomes for retail customers. That is, understandably, making decision-makers more cautious. And, it has led minutes increasingly but mistakenly to become transcripts of the entire discussion.
As a lawyer, however, I’d say ‘Don’t be fearful of being succinct.’ Focus instead on minuting the essence or substance of the discussion, recording challenge, focussing on outcomes for customers and other stakeholders, and making sure that your minutes are clearly capturing what the actions are, who is responsible for doing them, and when.”
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Charles Mayo is the general counsel of Secure Trust Bank. His specialisations include corporate governance, which in his words means “helping to keep people out of trouble.” |
A board meeting should not always be a comfortable place — constructive challenge happens at pretty much every board meeting and is really healthy. And capturing part of that tension around a decision being proposed is not just fine but absolutely important.
Contrary to challenge, dissent is relatively unusual, but there will be some situations where a board member remains against the consensus after the debate is over. In these cases, the chair will often directly tell you, “We should note that so and so was against this decision.”
Sometimes, board members may have been hoping that nobody would notice that they haven’t decided anything! But the critical thing that minutes are for is to ensure that you don’t end up with a situation where different people go away from a board meeting with a different understanding of whether a decision has been made or not, and what exactly that decision is. So, if a decision isn’t clear, don’t be afraid to ask for clarification.
As company secretary, an important part of what you’re doing is supporting the chair. And one of the key tips we’ve heard was having a pre-meeting chat between the company secretary and the chair, just to discuss what’s on the agenda, how the chair might tackle things, and what both the company secretary and the chair can do to make each other’s lives easier. That might include, for example, a summary at the end of each item of business of what the decision is, who’s going to execute that decision, and so on.
Traditionally, individual directors haven’t been named. The whole idea of a unitary board means that the board, despite having very disparate views, ultimately acts as one. So, it’s usually just, “The board noted XYZ.”
But increasingly, we’re seeing individual directors’ contributions being looked at individually by regulators, and so comments are starting to be attributed more and more — particularly in the financial services arena. It’s interesting to note, by the way, that the same regulators’ own published minutes don’t necessarily do that!
Unless it’s required in your industry, I’d advise against naming individual names. Demonstrating the challenge within the discussion that led to a consensus matters more than associating remarks with a particular director.
What if a director disagrees with your notes? Ultimately, responsibility for the accuracy of the minutes lies with the directors, not with you as the company secretary. But if there’s a real difference between what’s in your notes and what that director believes to have said, you should pick up that issue with the chair.
And the reason I say that is because notes are not always accurate. Sure, there are some directors who will wish to rewrite history, but it’s just as likely that there may be nuances to the discussion that you have missed. We’re not perfect.
Some people destroy their notes as soon as they’ve written them up. Some retain their notes until the board has approved the minutes of the meeting, so that they can refer back to their notes if there is, as alluded to previously, a debate about what actually happened.
But some people seem to keep their notes a lot longer than that. And in the event of, say, litigation, that means you now potentially have more than one version of the truth. So, my final bit of advice would be to destroy your notes once the minutes have been approved by the board. Responsibility for the accuracy of the minutes is for the board.
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Peter Swabey is Policy & Research Director at the Chartered Governance Institute. He is responsible for developing the profile of the Institute to members, regulators, policymakers, employers, and other stakeholders by delivering thought leadership and lobbying campaigns aligned to the Institute’s strategy and promoting strong governance as the vital ingredient for success in organisations. |