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The Importance of Taking Board Minutes

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As a business owner, it is crucial to understand and implement robust corporate governance practices to ensure your company is well-directed and controlled. Corporate governance involves the principles, practices, and processes that shape your company’s operations. These practices help to build investor confidence. Within this framework, the board minutes play a significant role in maintaining and proving good governance. This article aims to provide insight into board minutes, their importance, the legal requirements in New Zealand, and best practices for documentation.

What Are Board Minutes?

Board minutes serve as a legal record that captures key decisions and discussions during board meetings. They help to ensure transparency, accountability, and protection for the company and its directors. Accurate and comprehensive documentation is essential for effective leadership and a legal obligation. 

The responsibility for taking board minutes depends on your company’s structure and practices. Typically, the responsibility of minute-taking falls on the board secretary or another designated individual within the organisation.

General board meeting minutes will include:

  • the subject of the meeting;
  • meeting location (if relevant);
  • date and time of the meeting, including start and finish times;
  • meeting attendees, including any absences or apologies;
  • agenda items discussed during the meeting; 
  • updates on action points assigned in previous meeting minutes;
  • next meeting details, including the date and time;
  • expected actions from board members before the next meeting; and 
  • items to be discussed at the next meeting. 

These important details in your meeting minutes help ensure everyone stays informed and on track.

In New Zealand, companies are bound by legal obligations and regulatory requirements regarding record-keeping. Accurate board minutes help demonstrate compliance with laws like the Companies Act 1993. Failing to keep proper minutes may result in legal repercussions and financial penalties.

Under the Companies Act 1993, the company must ensure that they keep minutes of: 

  • all proceedings at meetings of the board; 
  • shareholder meetings within the last 7 years at the company’s registered office; and
  • director meetings and director’s committees within the last 7 years. 
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The Importance of Taking Board Minutes

Board minutes play an essential role in corporate governance. The following reasons explain why it is important for you to take board minutes:

Protection from legal disputesThey provide evidence that directors have exercised due diligence in decision-making, which may help protect them from allegations of negligence or breach of duty.
Corporate transparencyDetailed minutes also enhance corporate transparency, allowing shareholders, investors and other stakeholders to gain insights into the rationale behind major strategic decisions. 
Acts as effective evidenceWell-documented board minutes can be valuable in risk management and dispute resolution. They provide a chronological account of discussions and decisions. 

For example, if your company is under investigation for potential wrongdoing, detailed board minutes can serve as evidence of adherence to legal requirements. This could potentially save your company from further financial and legal consequences.
Facilitates smooth transitions and informed decision-makingThorough board minutes can facilitate succession planning by providing a historical record of the company’s decision-making and strategic direction, ensuring a smooth transition when there are leadership changes. 

For example, when new directors join the board, they can review past minutes to understand the company’s priorities and decisions. This will enable a smooth transition onto the board. Likewise, minutes can help the new board member contribute to decision-making and, ultimately, the growth of the business. 

Best Practices for Taking Board Minutes

Taking accurate and effective board minutes is crucial for successful corporate governance and can enhance its quality and utility.

Before the Meeting 

To make the most out of your meetings, it is recommended to prepare in advance by familiarising yourself with the agenda and the main focus of the session. This will enable you to capture the relevant details during the meeting.

During the Meeting

It is advisable to use a structured format and to be concise by focusing only on key discussions, decisions, and action items. Avoid providing unnecessary details that may sidetrack the session. Including action items and specifying responsibilities and deadlines is also important. Doing so ensures accountability and facilitates follow-ups in future meetings.

Furthermore, try to use neutral language to focus on facts and avoid including personal opinions. 

Post-Meeting

To ensure effective meeting minutes, promptly review and approve them after the meeting. Format the minutes while the details are fresh, correct errors, and ensure clarity, readability, and past tense.

Further, note speakers and attach any discussed documents as an appendix. You should also organise the minutes in an accessible way by establishing a centralised and secure repository to store board minutes. This enables comprehensive record-keeping over time, which adheres to your company’s legal obligations.

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Key Takeaways 

Taking board minutes is a legal obligation and a crucial aspect of corporate governance. It can act as a safeguard against legal disputes, promote corporate transparency, provide effective evidence, and facilitate smooth transitions and informed decision-making. By recording precise and detailed board minutes, companies can tackle legal challenges and demonstrate their commitment to sound corporate governance practices.

For more information about your board meetings and ensuring corporate governance, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

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Helen Yu

Helen Yu

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