BOARDROOM BEST PRACTICES

UK Board Meeting Protocol and Procedures

The rules governing the order at a board meeting in the UK are not defined by law (as opposed to a shareholders’ meeting, which is strictly regulated by the Companies Act of 2016). The only provision in law regarding board meetings is that minutes must be taken with accuracy.

It is up to the individual organisation to determine the rules by which board meetings are ordered; in the UK, this usually involves the use of Parliamentary Procedure. Parliamentary procedure is a set of well-proven rules which have come down from Westminster and are applied to business meetings. They are designed to move business along in a meeting while maintaining order and controlling the communications process, in which majority rules but respect for the minority is always maintained.

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The Purpose of a Board Meeting

The rules for conducting board meetings depend on the company’s articles. Most companies have the provisions of the Model Articles, guidance enacted at the time of the Companies Act.

The purpose of meetings should be clear at the outset: “The board of any organisation is the predominant mechanism by which strategy is agreed, performance monitored, and executive actions held to account on behalf of stakeholders. It is therefore essential that boards conduct their meetings with a view to optimising the use of the time and intellectual capital of their members. As such, boards need to focus on the purpose of the meeting, and all the elements that can contribute to an effective discussion, including the way board members interact and work together to ensure sound decision making,” explains the Institute for Chartered Secretaries and Administrators in a recent note.

Want to find about 2019 corporate governance priorities & challenges for your board? Read more here.

Calling a Board Meeting

A valid board meeting requires a quorum of at least two board members according to law, but the company’s articles can fix the number for the specific organisation.

Best practice for board meetings is for a formal notice to be sent to each trustee via the board portal’s secure messaging service, and the board pack may be provided as an attachment on the message. This will comprise concise backup information enabling effective preparation and use of meeting time. Board Members should be able to prove that they had sufficient information ahead of the meeting to enable compliance with their statutory and other duties.

The location for the meeting should be specified in the notice. The company’s articles may allow trustees to participate remotely, and there is no objection to this from the UK Financial Reporting Council which publishes the Corporate Governance Code, so long as the details are clearly spelt out in the company’s articles.

At least one board member should be physically present at the location indicated for the meeting. There is a danger that, if the majority of directors participate remotely, a challenge could be made to the validity of voting. The governing document should address that question, and there should be agreement on a policy on remote participation via telephone, Skype, WhatsApp, etc.

Clearly, it is in the interest of the organisation to structure board meetings, even though the Companies Acts leaves it to the directors to decide how they prefer to proceed.

“But if board meetings are not structured the meeting could result in just an informal discussion, which did not acquit the responsibilities of directors. The board is legally responsible for ensuring that the company complies with its Articles as well as other relevant legal, regulatory, and governance rules. And the board must set strategic goals for the organisation that management must try to achieve. It would be difficult to cover all this ground in an informal chat,” explains AccountingWeb in a note.

Preparation is key to a successful meeting and keeping to a set agenda will help to ensure that:

  • Matters needing to be discussed are discussed;
  • Enough time is allowed to reach each decision with the appropriate level of concentration;
  • Advance preparation by attendees is sufficient; and
  • Assistance as an aide memoire in the meeting itself and for minute-taking.

Then there are best practice rules as derived from the Parliamentary Procedure:

  • Only one person speaks at a time;
  • The speaker must be recognised before speaking;
  • All comments are made through the chair;
  • Comments are confined to the current issue;
  • The discussion should alternate between pro and con arguments;
  • No lengthy papers are allowed to be read during the meeting;
  • There should be no cross conversations;
  • There should be no verbal attacks of other members; and
  • All rules must be respected and obeyed.

Finally, arrangements for taking the minutes must be made.

Company Secretary Must Take the Board Meeting Minutes Expertly

Minutes that carefully reflect board meetings are a legal obligation in the UK. The company secretary should take care to include all relevant material, and especially all decisions, as well as a clear list of votes in each case. An electronic board portal makes taking the minutes easy and secure.

Need to take better board meeting minutes? Read our white paper to find out more –  How Diligent Minutes Can Improve Board Meeting Minute Taking.

Diligent Governance Cloud is the Most Highly Evolved Board Portal available.

The Governance Cloud, the only integrated enterprise governance management solution that enables organisations to achieve best-in-class governance, is an ecosystem of software tools that digitises the various activities and tasks for the board of directors. As organisations grow more complex and regulations more stringent, the scope of governance responsibilities evolves. The Governance Cloud allows boards of directors to meet the demands in the boardroom and beyond with the ability to select the products they need that help them perform their best and work within their allotted budgets.

Governance leaders, executives and board directors rely on the industry-leading Diligent platform for the most secure and intuitive solution to board material management and collaboration. Diligent Boards™ electronically stores a board’s agendas, documents, annotations and discussions within a secure board portal.

Company secretaries and board chairs can use the portal to put together board books in minutes. The portal also has designated virtual rooms for committee work. Administrators of the portal can designate permissions for users to access various areas of the portal to avoid unnecessary problems with confidentiality. The “Manage Meetings” feature consolidates board directors’ contacts, calendars and the logistics of meetings. The program is a secure and intuitive solution for managing board materials and collaboration.

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