Board meeting minutes templates can improve the consistency of your meeting minutes. Board meeting minutes templates come with several pitfalls if not used properly. Avoid these seven mistakes to take better board meeting minutes and improve corporate governance.
The organization documents - Articles of Incorporation and By-Laws - specify the minimum number of board members that must be present for a board meeting to have a quorum. Without a quorum, the board can take few, if any, actions related to the company. Decisions made without a quorum are subject to challenge.
How many directors constitute a quorum? That depends principally on what the organizational documents of the company say. If they are silent, then the relevant state law determines the quorum. Before the meeting starts it is important to know the quorum number required.
The meeting minutes should identify the number required for a quorum, the director attendees, and state whether a quorum is present or not.
There are cases where a quorum is present at the start of the meeting, but a board member leaves causing a loss of quorum. The loss of a quorum has consequences for the actions and voting requirements for subsequent board actions. Those consequences are a matter of the relevant state law and the organizational documents for the company.
The board meeting minutes should certainly note any change in attendance during the course of the meeting. Votes or actions the board takes after a loss of quorum should be carefully noted in the meeting minutes.
Meeting minutes need to accurately reflect the issue and decision under discussion. Accuracy of meeting minutes is the first priority.
Meeting minutes must capture the wording of resolutions accurately. This is the first step to avoid vague meeting minutes.
When the minutes taker is not a member of the board or the board’s lawyer, it might be useful to prompt a board member to state the resolution so it can be captured accurately in the minutes.
Boards address many issues that do not require a vote on a resolution. It is important to capture these issues in concrete and specific language.
Concrete and specific language is not the same as detailed meeting minutes. Boards and their lawyers differ on the amount of the discussions that should find their way into the meeting minutes. Meeting minutes can be brief or detailed, but in each case the wording should be clear.
Take attendance! The meeting minutes need to name the directors who are at the meeting. If the organizational documents allow remote participation (via phone or web conference), then it is helpful for the minutes to reflect that fact.
The attendance records should also identify non-voting and non-director participants at the meeting. Include their names, titles, and purpose for attending the meeting.
If the committee enters executive session (see mistake #6 below), it is useful to state explicitly who left the meeting. For example:
The board has two agenda items: financial review and litigation review. A representative from the Finance department attends the meeting to present the financial information and answer questions. The company’s lawyer also attends for the litigation review. The lawyer and finance employee are both present for the financial review.
The board then enters executive session to discuss the litigation because it is covered by attorney-client privilege. The meeting minutes should note that the board excused the Finance representative.
Taking attendance is a basic but critical function of the board meeting minutes.
The meeting minutes serve as the record of the board’s decisions. The board’s decisions depend on votes of the members attending the meeting.
Meeting minutes that do not accurately reflect the vote of the board of directors have failed their essential purpose. To catch these mistakes, boards conduct a review of the minutes and explicitly vote on the meeting minutes at the next meeting.
There is, however, a simple change that the minutes taker can make to reduce the risk of an error. First, capture the numerical tally of the votes. Second, include the names of the directors voting for and against the resolution in the description.
This technique provides the benefit of allowing your meetings system to automatically calculate vote results while giving the board the means to check their vote in the minutes description.
Not all board resolutions are created equal. The organizational documents of most companies, including corporations, partnerships, and limited liability companies (yes, this means non-profits too), identify a certain class of decision that require a “supermajority” of the board to pass.
Supermajority decisions can vary significantly across organizations. Commonly, they include dissolution (closing the doors), mergers, and acquisitions. This list can be longer.
The supermajority provisions in the organizational documents will also specify the percentage of votes that constitute a supermajority. A regular majority is, of course, more than 50%. A supermajority can be any percentage above fifty and at or below 100%. Requiring a unanimous vote is rare.
The meeting minutes need to flag whether an issue requires a supermajority vote and whether that supermajority was satisfied or not. A resolution requiring a supermajority might pass with a simple majority but fail to pass under a supermajority. It is helpful to show both results.
Your meeting management and meeting minutes system should automatically calculate and flag votes that pass or fail under a supermajority vote.
Executive sessions are meetings of the board of directors closed to non-directors. An executive session excludes even the CEO, unless she is a member of the board as well or is explicitly invited to attend.
Executive sessions help preserve attorney-client privilege in the case of litigation. Executive sessions also allow the board to discuss issues that relate to the CEO or other senior managers so directors can discuss their views openly.
The entire board meeting can be in executive session, typically for special meeting. More often the board enters executive session for a particular item on the agenda. The board might review CEO compensation, for example, during an executive session.
The meeting minutes should state whether the board was in executive session for that topic.
Once the meeting minutes are complete, the minutes taker should review and correct any errors immediately after the board meeting. Then the meeting minutes should be circulated for review consistent with board’s policies and practices.
At the next board meeting, the board will likely vote to approve the minutes of the prior meeting. The meeting minutes are now final.
The final meeting meetings are an important part of the corporate record. Unfortunately, meeting minutes are often saved in a file directory know only to one or two people and not easily accessible to the board.
A better approach is to save the final meeting minutes as a corporate document along with other corporate documents. This method allows future board members to access meeting minutes from one location while preserving the confidentiality of the meeting minutes.
Avoid these seven common mistakes to improve corporate governance and minimize disagreement over corporate actions in the future.