knowledge 3 October 2016 |

“Up to the Minute”: Record-Keeping in Board and Company Meetings

Minutes Matter

The ICSA Guidance confirms that the proper purpose of minutes is to provide a formal long-term internal record of the relevant meeting.

Minutes of meetings are important for companies from both a compliance and a record-keeping perspective. They also constitute a formal record of the particular meeting which can be used as evidence in legal and regulatory proceedings.

Minutes can also serve as valuable evidence that the company or its directors have fulfilled their obligations under company law or under the laws governing a particular activity or industry sector (such as health and safety or data protection). In short, minutes matter.

Content

What minutes should in fact contain will vary from company to company and from circumstance to circumstance. However, minutes should at least provide sufficient detail (such as background information and the rationale for the proposed decision) so that they can be understood by a person who didn’t attend the relevant meeting. As mentioned, special rules apply to certain companies such as banks and insurance undertakings (see below).

The Act does not specify exhaustively the content of minutes of company or board meetings. However, in relation to board minutes, it requires that minutes record (as relevant) the appointment of officers, the names of directors in attendance and all resolutions and proceedings at all meetings of its directors and committees of directors. While the level of detail in minutes may be individual to the company, the ICSA Guidance states that basic minutes should include:

• certain information in the heading (including the company name, the type of meeting and the place, date and time at which it was held);
• the names of those present and the quorum requirements;
• the name of the member or director who chaired the meeting;
• the resolutions proposed and the decisions taken;
• the title or description of any meeting papers or reports that were considered.

Where transactions involving the company and a director might give rise to a conflict of interest then details of such conflict should be recorded in the minutes.

Drafting: More or Less?

Sometimes companies struggle with the level of detail to include in their minutes. As mentioned, there are few legal or regulatory requirements and so the level of detail is generally a matter for the preference of the relevant board or company members.

Nonetheless, best practice in corporate governance suggests that minutes should:

• be concise yet also complete;
• capture all relevant information;
• be impartial and provide a balanced account of what was discussed and agreed; and
• reflect accurately what happened at the relevant meeting.

The level of detail actually required in the minutes will depend further on the type of transaction or resolution that is being approved and the level of challenge and debate at the meeting (and which may be anticipated afterwards).

Depending on the size and nature of the company, the company secretary is generally tasked with taking minutes. Whoever is so tasked needs to know the business of the company and, as the ICSA Guidance states, that person needs to be skilled in taking minutes.

Special Cases

Two special cases should be noted.

• Special considerations apply to the taking of minutes if it is suspected that the company may be trading into insolvency. In such a case, the board minutes should be extremely detailed and should, where relevant, reflect that the board sought and has been guided by external advisers such as accountants and lawyers. This is as much for the protection of the directors as it is to inform the members.
• The Central Bank of Ireland requires² that, in the case of banks and insurance companies, “detailed minutes of all board meetings shall be prepared with all decisions, discussions and points for further actions being documented. Dissensions or negative votes shall be documented in terms acceptable to the dissenting person or negative voter…” This is an exception to the general principle that boards and companies are not legally obliged to reflect dissenting opinions when recording their minutes, although of course any company or board may choose to do so and the ICSA Guidance suggests that it is normal practice to comply with a request to record a dissenting view.

Recording Minutes

The Act does not prescribe how the minutes should be recorded except that board minutes should be entered into the books as soon as may be after the appointment of an officer, the meeting has been held or the resolution has been passed. Minutes should be prepared as soon as possible following the relevant meeting.

Once board minutes have been prepared they are generally reviewed, verified and signed by the chairperson at the following meeting. The chairperson who signs the minutes need not have been present at the meeting that is recorded in those minutes.

It is good practice for a resolution to be passed at the meeting at which they are adopted, approving the adoption of the minutes. If it is noted that the minutes do not accurately reflect what was agreed at the previous meeting then they should be amended so as to be an accurate record, and then initialled at that time of amendment.

If a company fails to keep minutes or resolutions of a meeting, the company and any officer in default will be guilty of an offence and on summary conviction may be liable to a fine not exceeding €5,000.

ODCE Guidelines

The Office of the Director of Corporate Enforcement has published³ a set of nonbinding guidelines and recommendations for the taking of minutes of general (company) meetings.

The ODCE guidelines recommend that the views expressed by each person contributing to the discussion at the meeting should be recorded, along with questions put to the board and the subsequent responses. However, there is no statutory obligation to record questions that are put to the board or the general contributions by members at a meeting. Therefore, for example, a private company with a small number of members (which is not otherwise subject to regulatory minutekeeping standards) might wish to consult those members to determine what practice best suits their needs in terms of the detail that is to be recorded in minutes.

Inspection and Other Uses of Minutes

Although minutes are principally for the benefit of the company or board itself and for the company’s members, they may also be inspected by regulators and can be scrutinised by the statutory auditors. For example, the Act empowers the Director of Corporate Enforcement to require a company to produce its minutes of meetings and must allow the Director to inspect those books and to make copies. Further, minutes of meetings often are evidence in litigation or regulatory proceedings.

Further Information

Other briefings that address in part the taking of minutes are available on the McCann FitzGerald website.⁴ These include the implications of the Companies Act 2014 for Members’ Meetings and for Directors’ Meetings.