Writing minutes that protect your directors

Sylvia Groves is a facilitator and consultant and the founder of Governance Studio. She works exclusively with organizations that seek to apply good governance practices as a fundamental way to add value. Her expertise and no-nonsense practical advice have helped thousands of corporate secretaries and directors enhance the effectiveness of their boards and their organizations. The following is an excerpt from her book AAA+ Minutes™ – the three must-do fundamentals and 100s of practice tips for writing minutes that protect your organization and its directors.

A strong set of minutes demonstrates the due diligence of your directors, supports their business judgment and protects your organization. In this book you will find the most practical advice available anywhere on crafting AAA+ Minutes™ – minutes that are Accurate, Accessible (in plain language) and All the same (consistent).

Minutes are direct evidence of appropriate practice on everything from procedural matters, like calling an annual meeting or appointing an officer, to satisfying your auditors that you have proper entity-level controls over financial reporting.

The three AAA+ Minutes™ fundamentals are universal. They can be scaled to fit any organization. Just make sure you take into account the size and complexity of your organization when you apply the principles.

Every size and type of organization will make sure its minutes are accurate, but how specific and formal the minutes are will depend on the organization and the potential consequences of poor minutes.

A large, publicly traded company needs to be more particular about its resolution to call an annual meeting, for example. It may incur significant expenses if it needs to change or correct its notice of meeting or its shareholders could object to an improperly called meeting. This is less likely to be a concern for a not-for-profit professional society.

Accurate

For minutes to provide the best protection for your directors and your organization, they must, above all else, be accurate. This is the first fundamental. The minutes need to reflect what happened at the meeting – what decisions were made and who made them.

Best practices will include having relevant members of management comment on the first draft. In most organizations, it becomes very apparent who makes clarity-enhancing comments to minutes and who is just editing for style. Clarity comments are acceptable about 95 percent of the time, while style comments can be rejected in roughly the same proportion. This is especially important in order to ensure that minutes remain consistent from meeting to meeting.

Above all, resist every temptation to embellish minutes with discussions or actions that anyone wishes had occurred but didn’t.

Accessible

The second fundamental is to have minutes that are accessible – clear, concise and easy-to-read. Plain language is the key to accessible minutes. Plain language is all about making information useful to the reader. Important information is easy to find, easy to understand and easy to use. Plain language –

• Shows clear thinking
• Respects the reader’s time (and the reader)
• Builds trust.

The key elements of plain language that are well-suited to use in minutes are –

• Logical organization of information
• Short sentences
• Active voice
• Common, everyday words
• Easy-to-read design features.

These elements combine to make certain that those who look back at your minutes ten years from now will be able to find and understand exactly the information that they need.

All the same

Consistency, across broad categories, is the third fundamental of good minutes. To rephrase the familiar: ‘Keep It the Same, Sweetie’.

Use the same fonts, styles, formats and design elements in all of your minutes to make it easier to find specific information.

Include similar information when topics are reviewed regularly. For example, if net debt is important to your organization and is an update item whenever the financials are presented, include it every time.

Keep your processes consistent. If you only make changes to minutes when you have board approval, you don’t risk having the accuracy of the minutes come into question. If your management team always reviews the minutes before they go to the directors, there is one less question for the board to ask on procedure.

AAA+ Minutes™

Use these three fundamentals of Accurate, Accessible and All the same when you prepare minutes. You will have a strong foundation of practice and good process if your minutes ever come into question. Your board and management will appreciate how easy the minutes are to read and understand. Most importantly, you will make your own life easier, because –

• Research is simpler when resolutions are short, clear and stand out on the page
• Drafting is faster when you consistently include certain information
• Comments are fewer when language is clear and precise.

Purpose

The overall purpose of minutes is to preserve an accurate and official record of decisions made and actions taken. As such, minutes are direct (prima facie – ‘on the face of it’) evidence that a meeting was held, who attended and what happened.

A number of legal requirements and concepts support this overall purpose.

Statutory requirement

For most organizations the keeping of minutes is a statutory requirement. The Canada Business Corporations Act (CBCA) requires that the records maintained by the corporation must include minutes of meetings and resolutions of the directors and any board committees.

You may not be incorporated under the CBCA. If that is the case, find out what statute applies to your organization and see what specific requirements you have for minutes.

There may also be requirements or additional information set out in your by-laws.

Duties of directors

Directors in Canada have duties to the organizations they serve. These, again, are set out in the statute under which your organization was formed. In the CBCA the duties require every director to act honestly and in good faith with a view to the best interests of the corporation; and, exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Minutes provide critical proof that directors have diligently carried out these duties.

World-wide, the statutes and wording will vary in each jurisdiction. However, every incorporating law will set out the duties of directors and most will have some version of acting in good faith and exercising reasonable care.

The book is available from www.governancestudio.ca/shop.

Quick tips

• When you have several people commenting on the same set of minutes, you will get conflicting edits. Accept those that clarify the content and feel free to reject style edits.

• Minutes are your organization’s history, so think about whether your minutes will make sense to whoever is doing your job 20 years down the road.