Board minutes record the decisions of a company board. They are used to convey decisions of board members and accurately record motions proposed and passed by the board. Section 251A of the Corporations Act 2001 (Cth) sets out the requirements for companies to keep minute books in which companies record the proceedings of directors’ meetings.
The legislation provides that a company must produce records within one month of the meeting, and must include the resolutions of any decisions made. The chairperson must sign the previous meeting’s minutes within ‘a reasonable time’ as evidence of the proceedings and resolutions passed. We explain below how companies sign and approve board minutes as well as the Company Secretary’s role in corporate governance.
How are Board Minutes Signed and Approved?
Most companies sign minutes at the subsequent meeting. Where boards meet less frequently, companies need to have procedures in place to satisfy the s 251A requirement of formally approving the minutes. This can also be done between meetings electronically and confirmed at the next meeting.
Where draft minutes are complete, they should be approved by the chair and circulated to all board members. The draft minutes should be sent to directors within the one-month deadline for submitting the minutes in the company’s minute book. Once the draft is approved, it can be formally accepted at the next board meeting. The Act also sets out how the company must keep record books. If physically stored, it must be kept at any of the following locations:
- Company’s registered office;
- Principal place of business in the relevant jurisdiction; or
- In another place approved by ASIC.
If stored electronically, board minutes should be securely stored in a document management system that can only be edited by approved personnel.
What is the Role of a Company Secretary?
A company secretary plays a critical role in the governance of the company. As the chief administrative officer of the company, the company secretary must follow current best practice corporate governance requirements and adhere to directors’ duties under the Corporations Act, including meeting procedures and board reporting. A company’s constitution also binds a company secretary, and, if applicable, may have to adhere to the Australian Stock Exchange Listing Rules.
Company secretaries may also carry out some other corporate administrative tasks including:
- Preparing reports to the Board of Directors;
- Organising annual meetings and general meetings; and
- Guiding Directors and management on corporate governance.
What Should the Board Minutes Record?
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 if asserted by a director. A company’s constitution may specify items that must be recorded in board minutes, for example, who proposed and seconded a motion. It is also common for conflicts of interest to be recorded 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 the issues discussed, decisions made and action items arising from the meeting. Board meetings should not contain redundant information nor be a verbatim recording of the dialogue at the meeting.
Questions about corporate governance? Call us on 1300 544 755.