10 Tips for Board Governance Meetings: The Year in Governance

This is the first installment in the Year in Governance Series from the In-House Subcommittee of the ABA Business Law Section’s Corporate Governance Committee. Each month, the series will share key tips on a different corporate governance topic. To get involved in the Corporate Governance Committee, please visit the committee’s webpage.

As Chair of the Corporate Governance Committee, I would like to extend my sincere appreciation to the authors for this publication. The Corporate Governance Committee has ongoing opportunities for writing and volunteering with various projects whether it’s an article you want to publish or a CLE that you want to present. Our Committee is dedicated to helping you promote informative resources for corporate governance practitioners. You may contact me, Kathy Jaffari, at [email protected] to get involved.

Board meeting minutes establish the record of matters considered and actions taken by the board. They are evidence of compliance with legal and regulatory requirements and of directors’ discharging their fiduciary duties. They Minutes are often the first thing a plaintiff’s lawyer wants to see when challenging the company, and they can determine whether the challenge is limited to the company or whether the plaintiff can take action against board members personally. Draft them with this in mind.

1. Pre-draft the minutes: Use the board meeting agenda and presentation materials as a guide. Having a good starting point frees up the drafter to listen to the dialogue and capture questions and actions for follow-up. The pre-draft of the minutes should capture essential information such as where and when the meeting takes place, whether it is a regular or a special meeting, attendance, quorum, and what presentations were given and by whom. If an item is presented in response to a prior request from the board, the minutes should reflect that, particularly if the request was documented in prior meeting minutes.
2. Be consistent: If you note “unanimous” approval for some resolutions or “extensive” discussion for some topics, but don’t use those descriptors for others, this opens an avenue of inquiry that might otherwise be avoided. The same is true for being detailed in your notes about some topics but high-level for others. Think through whether you record time for each agenda item, ending time for the meeting, and whether and when various people enter and depart the meeting, including in executive session. Practices differ on these matters, but be consistent in your approach.
3. Be objective: Minutes should not reflect emotion, color commentary, or value judgments. They should simply and clearly identify topics discussed, actions taken, and follow-up requested. To this end, avoid jargon, make sure code names can be decoded, and keep the tone professional.
4. Be mindful in describing specific board action: The board should consider “approving” corporate actions but only “concurring” with significant actions taken by subsidiaries, to best protect corporate separateness. Use words like “agreement” and “support” if a formal approval is not required and you want to evidence alignment. Document a formal resolution if there might be a need for a certified copy of a board resolution later.
5. Avoid attributing questions or comments to particular directors: Doing so can provide a roadmap for plaintiffs’ lawyers seeking to drive a wedge between directors. The board acts as a body, and minutes themselves should align with this concept. Exceptions apply where directors must recuse themselves from a vote, and in the rare instance where a director wants their dissent recorded in the minutes.
6. Special situations require special attention: Privileged discussions between counsel and the board should be described as privileged. Consider not including privileged substance in the minutes, as minutes are generally not privileged. If a director has a conflict on a matter being discussed, the conflict should be disclosed and documented (further measures like recusal might also be appropriate).
7. Manage drafts: Ideally only the final approved minutes are retained, and all drafts are destroyed. This helps ensure there is only one record of the meeting—the right one. For this reason, it is risky to make an audio or video recording of meetings. If minutes are redacted for an intended purpose, ensure the unredacted version is saved appropriately.
8. Be timely in drafting and reviewing minutes: Memories fade. It is best to draft the minutes immediately so they can go through the review cycle while participants have a strong recollection of what happened. Draft minutes should be reviewed by the general counsel, the chairman/lead director, and perhaps presenters, then presented to the full board/board committee for approval at the next regular meeting of the board/board committee.
9. Manage access to minutes: Although minutes might not be protected by privilege, they should be treated as confidential. They should be accessible on a need-to-know basis by staff. Agree with auditors on terms by which auditors can review minutes, and redact anything protected by privilege. Auditors should not have access to drafts that have not yet been approved by the board.
10. Note only the essential in executive session: Generally, minutes are not taken in executive session, so as to encourage directors to speak freely. However, it is important to capture any formal action taken or resolutions passed in executive session, e.g., setting of CEO pay.