BOARDROOM BEST PRACTICES

Don’t Make These Board Meeting Minute Taking Mistakes

Taking the minutes at board meetings is a challenge for Company Secretaries, as the quality of the minutes can have a critical effect on how a company evolves – the danger of poorly taken minutes is well illustrated by the failure of HBOS (Halifax Bank of Scotland) bank in 2008. Here are some mistakes to be avoided by Company Secretaries in minute taking; the use of a high-quality board portal like Diligent Boards supports and facilitates the process.

HBOS Failure Shows Why Minute Taking Matters

When minutes are not taken properly at board meetings in the UK, the consequences can be dire. In 2008, the UK bank HBOS failed – it was the second-largest bank failure in UK history at the time. There were a number of corporate governance failures at the bank leading up to the crash, but regulators cited the failure to have secured accurate board meeting minutes as one of the most serious of them.

The Right Hon. Andrew Tyrie, MP, of the Treasury Select Committee investigating the bank’s failure, said:  “we have noted that board and committee meeting minutes were frequently not sufficiently full [as to] to provide a definitive record of what happened, and in some cases are missing altogether. The failure to ensure that these minutes were extensive and accurate has robbed the regulators and the public of an extremely useful source of information, particularly because it was the Board of HBOS that was responsible for setting its disastrous business strategy.”

Meeting Minutes: A Challenge for the Company Secretary

This gives some sense of the vast challenge that taking the minutes at board meetings poses to the Company Secretary (who is usually in charge of minute taking at UK companies). The Companies Act of 2006 specifies board meeting minute taking as a legal obligation, and not just doing it, but doing it right, is required. But, apart from the legal requirement to take minutes, it should be understood that accurate and useful corporate minutes are a valuable tool for company directors. The ability to refer to key discussions and decisions easily allows board members to gauge progress for ongoing projects, and to evaluate if decisions made in the past are being implemented in the way that the board desired.

Here follow some mistakes that Company Secretaries should avoid in taking the minutes for board meetings, based on practice determined by the UK Institute of Chartered Secretaries and Administrators (ICSA):

  • Minute taking begins with planning

Don’t make the mistake of waiting until the board meeting starts; it’s essential to make plans for taking the next meeting’s minutes well before the actual meeting starts. You should get a good grasp of what subjects the board needs to discuss, as well as any issues from previous meetings that require further discussion. You also should be aware of any events or changes in the company’s marketplace that concern the board. If possible, have a discussion with the CEO and the CFO well before the meeting to ensure that vital matters are not missed. You should also have the full agenda drawn up, including the topics to be discussed.

  • Don’t miss the basics

With all of the activity around a board meeting, it’s easy to miss out on the basic information needed in the minutes – much of it can be obtained long before the meeting starts. Who’s attending? Got the names and titles right? Who’s going to be absent? Who will be giving presentations at the meeting, and about what? Directors should contact you well before the meeting if they wish to put items on the agenda.

Don’t forget to note if there is a quorum or not – many companies require a certain number of directors to be present if the meeting is to take place.

And don’t neglect to have the minutes from the previous meeting approved – most boards do this at the start of each meeting. This is an important formality, as the minutes are a legal document.

  • Don’t be too detailed, but don’t miss the important details

The concept of meeting minutes is centuries old, and it dates from long before electronic equipment was available to record or videotape board meetings. Today, a good board portal is all you need to make sure that every word said at a board meeting is preserved.

But board meeting minutes aren’t a transcript of every word spoken. That transcript would be far too long for practical use by those who need to consult the minutes.

The minutes must not miss anything essential, especially when the board votes on a decision, and should note who voted on each side. Then the gist of the board’s discussions should be carefully recounted in the minutes. If issues arise later with boardroom decisions, it should be clear from the minutes who supported the decision, and why.

 

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  • Don’t neglect taking care of the committees

Committees, like the Audit Committee and the Remuneration Committee, all report to the board as a whole. Committees may do a lot of work for the board, but it is the entire board that is responsible in the end. So the report of a committee to the main board is an important piece of business that must not be neglected in the minutes. This is particularly important if there are unresolved issues that must be acted upon in the future by the committees. If there are comments on committee decisions, future reviewers may need to know about them.

  • Don’t ignore the issues that stem from the company’s sector

Minutes should reflect the business and the sector. Larger, more complex companies and those in regulated industries have additional issues to consider and tend to have longer meetings, so the minutes should reflect this. Minutes of board meetings in some sectors, such as financial services, have become more detailed and prescriptive in recent years due to increased regulatory oversight and the need to demonstrate appropriate challenges by individual directors.

 

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Diligent Minutes Supports and Facilitates Minute Taking

Enhance your minute taking with Diligent Minutes, a tool that is integrated with Diligent Boards and that enables you to take meeting minutes more efficiently. You will also be able to easily assign action items, all with the trusted security of Diligent Boards.

Diligent Minutes is a critical component of Governance Cloud, Diligent’s ecosystem of integrated digitised tools that allow for end-to-end governance management. Minute taking is mandatory in board meetings, but the process is usually manual, insecure, or both. Minutes is a board meeting minute taking and action item management solution built directly into the Diligent Boards™ Administrator Client.

Diligent Minutes provides a tailored solution that effectively uses the data already in Diligent Boards™ to make minute taking easier than ever. Meeting dates, lists of attendees and meeting topics are added to the minutes document automatically. Action items can be added with just a few clicks, and assigned and monitored during or after the meeting. When minutes are completed, they can be pulled right into your next Diligent Boards meeting book for discussion and approval by your board of directors.

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