Proof, clarity and compliance

I recall apologising to a senior politician once for troubling him to pose for a photo with my office bearers. His reply was disarmingly direct – “If there’s no photo, it didn’t happen”.

A similar message was offered in the newly published Joint Statement on board minutes from the AICD and the Governance Institute. My ‘take away’ was – “If it’s not minuted, the board didn’t discuss it or decide it“.

The Joint Statement is a four page commentary on principles guiding the preparation and retention of board minutes and associated board papers. It also advises on legal professional privilege where the board has held confidential communications with, and received advice from, their lawyers.

This updated advice was triggered by the recent Financial Services Royal Commission, which highlighted the importance of accurate minutes. While the Joint Statement is mainly for organisations with compliance obligations under Corporations Law, the advice is equally valid for not-for-profit entities such as associations and charities.

I suggest you include the Joint Statement in your board papers, and ensure that it has been drawn to the attention of your directors, secretary and senior management. The record of board directions to management is a key mechanism supporting strategy execution of course. Your risk committee is also a suitable audience.

A legal opinion prepared by D Hogan-Doran SC and D Gration is provided as an appendix to the statement. This 10-page paper responds to the brief from AICD and the Governance Institute, addressing the following questions:

(a) What is required to be included in board minutes to satisfy a company’s legal obligations and what is the purpose of board minutes?
(b) What other matters should be included in board minutes? Should reasons for decisions be minuted? What should be included in minutes to assist directors in taking advantage of, for example, the business judgment rule?
(c) What obligations do a company and its officers have to retain draft minutes and handwritten or other notes of board meetings? What is the evidentiary status of such documents if retained?
(d) How should a company record amendments to draft minutes or to minutes that have been entered in the minute book before they have been considered and approved by the following meeting of the board?
(e) How should minutes record challenges to management by a board or dissent between directors on a board?
(f) To what extent can minutes refer to and not repeat the contents of board papers and other supporting documents?
(g) What steps should be taken to protect legal professional privilege when preparing minutes

Make sure you minute that your board considered the Joint Statement. If you don’t … it didn’t happen.

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