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Keeping accurate records of your company’s board minutes is an essential practice for good corporate governance. Not only do your records need to be true and accurate, but you must also take steps to store them correctly. This article covers the legal requirements for documenting board meetings and the best practice principles your board can implement to stay on top of its record-keeping obligations.
What are Board Minutes?
Board minutes are a true, accurate and official record of meetings of a company’s board of directors. They contain clear and concise notes of key discussion points and the resolutions which are proposed and passed at board meetings. Accurate board minutes are critical to ensuring that your company has a record of key business decisions that directors make. Keeping accurate board meeting minutes likewise ensures good corporate governance. In effect, this facilitates accountability in respect of the management of the company.
Does My Company Board Need to Take Board Minutes?
The Corporations Act 2001 (the Act) requires all companies (even companies with a sole director) to keep a minute book. Likewise, your company must record the proceedings of directors’ meetings, including:
- any resolutions passed at those meetings;
- a meeting of a committee of directors; and
- any resolutions passed by the directors without a meeting.
You must record the minutes of your board meeting within one month of the meeting. Alternatively, it can be within one month from the date on which the resolution was passed, if a resolution was passed without a board meeting.
Continue reading this article below the formWhat Should Be Included in Board Minutes?
Importantly, board minutes record the resolutions and proceedings of the board as a whole. They should not record the individual votes of directors. However, the minutes should record dissenting votes or abstentions by a director.
Additionally, your company constitution may specify items that you must record in board minutes. For example, you may need to record the names of individuals who propose and second a motion. It is also common to record conflicts of interest in board minutes, as well as in the company’s Register of Conflicts of Interest. While there is no set requirement for the contents of board minutes, they should accurately and concisely record:
- all issues discussed;
- any decisions made; and
- action items arising from the meeting.
How Are Board Minutes Signed and Approved?
Where draft minutes are complete, your chair must approve them. Likewise, ensure you circulate the draft minutes to all board members for review. Importantly, do so within the one-month deadline for submitting the minutes in the company’s minute book.
By law, the chair of the meeting or the chair of the next meeting must sign the minutes within a “reasonable time” following the meeting. Generally, it is best practice to sign minutes on or around the time they are entered in the minute book or at the next scheduled meeting. However, there is nothing in the Act preventing a company from reviewing, discussing and amending the minutes before signing them at a later time. So long as there is no unreasonable delay between the meeting and the date on which you have your minutes signed.
Additionally, it is important to note that there is no precise definition of “reasonable time” in this context.
If the board meets infrequently (for example, once annually), companies should implement procedures to ensure the chair signs the minutes within a reasonable time of the meeting. For example, you can do this between meetings electronically.
Where Should My Company Keep Its Minute Book?
Additionally, there are requirements of how your company must keep its minute book. If you are physically storing it, you must keep your minute book in any of the following locations:
- the company’s registered office;
- a principal place of business in the relevant state or territory; or
- another place approved by the Australian Securities and Investments Commission.
Alternatively, your company may store its board minus electronically. In that case, ensure you have a secure document management system in place. Likewise, take measures to guarantee that only approved personnel can make edits to the minutes.
Can I Use the Meeting Agenda as Board Minutes?
A meeting agenda is a document circulated to participants of a meeting before the meeting takes place. It summarises the key items to be discussed at the meeting.
It may be tempting to recreate board minutes using the meeting agenda as a guide. However, note that board minutes record the key outcomes of a board meeting. They intend to serve as a contemporaneous record of the meeting (or as near and practical).
Legally, directors must ensure that minutes are not false or misleading. Generally, Courts adopt a strict application of this rule. By retrospectively preparing minutes using a meeting agenda, important details of the meeting or the decisions made may be overlooked or inaccurately recorded. This is particularly the case if you hold a meeting some time ago and attempt to sign in retrospectively. For this reason, you should not create board minutes using the meeting agenda.
Key Takeaways
Taking and keeping accurate board minutes is an essential management process for all companies and ensures good corporate governance. To avoid creating false or misleading board minutes, companies should prepare board minutes immediately following the board meeting or as soon as possible after the meeting. Likewise, ensure you record them in your company’s minute book within one month of the meeting. You should also circulate the minutes to all directors for approval. Further, the chairperson of the meeting (or the chairperson of the next meeting), should sign the minutes.
If you assistance with corporate governance or taking board minutes, 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 1300 544 755 or visit our membership page.
Frequently Asked Questions
Board minutes are a true and accurate record of meetings of a company’s board of directors. They contain clear and concise notes of key discussion points and the resolutions which are proposed and passed at board meetings.
Your chair must sign and approve the minutes. Importantly, ensure you circulate the draft minutes to all board members for review. You must record the minutes of your board meeting within one month of the meeting.
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