Could your board min­utes pro­vide the evi­dence need­ed to pro­tect you as a director?

In brief – Board min­utes can serve as cru­cial evidence

Hav­ing accu­rate min­utes is not just a for­mal­i­ty required under the cor­po­ra­tions law. Detailed min­utes may serve as the cru­cial evi­dence required to defend a direc­tor from charges of breach­ing of his or her duties, includ­ing charges of trad­ing while insolvent.

Def­i­n­i­tion and pur­pose of board minutes

A signed and record­ed minute is evi­dence of a pro­ceed­ing, res­o­lu­tion or dec­la­ra­tion to which the minute relates. Accu­rate board min­utes are an impor­tant resource for man­ag­ing the com­pa­ny and sup­port sound risk man­age­ment by pro­vid­ing a writ­ten record of board delib­er­a­tions and decisions. 

Board min­utes pro­vide evi­dence that a board has exer­cised care in deci­sion mak­ing. They also sub­stan­ti­ate that a board is oper­at­ing in accor­dance with legal require­ments, includ­ing the com­pa­ny’s con­sti­tu­tion and the reg­u­la­to­ry requirements.

Board min­utes assist in the man­age­ment of the company

Beyond being a legal pro­tec­tion, board min­utes also serve an impor­tant man­age­ment func­tion. Accu­rate min­utes are required in order to:

• Con­firm any deci­sions made
• Record any agreed actions to be taken
• Record who has been allo­cat­ed any tasks or responsibilities
• Prompt action from any rel­e­vant attendees
• Pro­vide details of the meet­ing to any­one unable to attend
• Serve as a record of the meet­ing’s pro­ce­dure and outcome

Com­pli­ance not universal

Despite the impor­tance of board min­utes, many com­pa­nies con­tin­ue to make inad­e­quate records of board meet­ings. This is regret­table because by neglect­ing this sim­ple task, direc­tors are depriv­ing them­selves of an impor­tant legal safeguard. 

In the event of legal action being tak­en against the com­pa­ny, min­utes of meet­ings can be used to prove that the direc­tors have tak­en all rea­son­able steps to act respon­si­bly, com­ply with legal require­ments and mit­i­gate risk. 

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