Board Meetings – Anything But Boring

When a company is first set up, the founder decides what it will do, how it will do it and when. During this time, there is often a limited paper trail documenting these actions, but as a business grows the need to put in place proper systems for company decision making becomes more important. This is not only to engage staff and satisfy stakeholders, but also to allow founders and the company itself some protection against claims.

One of the key steps to help and protect a growing company is to appoint the right people as directors and then to hold effective board meetings. This can be quite a change for many organisations, but having the right people at board level and getting them together regularly for effective board meetings is the cornerstone of good corporate governance and will help any business to grow more quickly and more safely.

So, assuming have the right team in place how do you run effective board meetings?

Step One: Make sure attendance is high.

The first step is to make sure all the relevant parties are in attendance, so try to set dates well in advance to get maximum buy in. In person meetings are always more productive in the long term than those held online, so encourage directors to be physically present.

Step Two: Make sure everyone is up to speed.

The second step is to make sure all parties are up to speed with what is going to be discussed. At least a week or so before the meeting, send around an agenda detailing matters to be discussed and any supporting papers or information to allow directors to consider matters and prepare questions/answers prior to the meeting.

Step Three: Schedule accordingly.

The third step is to make sure you have allowed enough time for the meeting and that the chair of the meeting keeps it on track. A good chair will allow the views of all parties to be expressed and a decision to be reached all within the allotted time. Holding a meeting scheduled for an hour with several major items on the agenda is unlikely to be useful as getting past even item one on the agenda may be difficult.

Step Four: Take minutes of the meeting.

Finally, in accordance with the Companies Act 2006, board minutes should be taken – these should be in writing and are required to be retained by the company for 10 years. 

Clients often ask what needs to be in board minutes. In essence, they should accurately reflect the decisions reached by the board and any dissenting views. The aim is that they are clear enough and complete enough that a person reading them along with any supporting papers, can properly understand the issues discussed and why a decision was reached.

All board minutes should include the following standard items:

• company name and number;
• time, date and location of meeting or confirmation it is being held by phone/online;
• name of all directors present and other persons in attendance;
• any apologies;
• confirmation that a quorum is present;
• approval of minutes of the previous meeting;
• details of discussion in relation to each item on the agenda, including outcome of any proposed resolutions and any queries/objections raised;
• action points in relation to each item on the agenda with responsible persons named;
• details of any other business to be discussed/agreed at the meeting; and
• note of any filings to be made with Companies House, HMRC or any other regulatory bodies and named persons responsible.

The Company’s articles of association will set out a detailed process for how board meetings should be convened and how company decisions taken outwith board meetings should be documented. This process should be properly followed to ensure there is no argument that decisions have not been properly made.

To some organisations this feels overly formal, but having regular board meetings and keeping good board minutes is vital to keep everyone both in the loop and accountable. It will also protect the directors and the Company against potential claims. For example, it is difficult to defend a health and safety breach if the Board has never discussed the topic and cannot evidence the steps they approved to ensure staff have a safe working environment. Paying staff different bonuses could lead to a sex discrimination claim, which will be much easier to deal with if there are clear minutes detailing why bonuses were paid. In an insolvency situation, minutes can protect directors from personal liability if they show the directors took every reasonable step to protect creditors’ interests.

In all these situations and more, good board minutes are not just “nice to have” – they are essential to protect the Company and its directors. Failure to have them can be a costly mistake.

If you want advice on board meetings and how to deal with them effectively, please contact Catherine Feechan at catherine.feechan@dcslegal.com.

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.