The main function of a board member is to take part in board meetings. All major decisions are made at the ordinary meetings so it is impossible to be an effective member if you are not a regular attendee.
The primary reason for holding meetings is to allow the board to make decisions. However, meetings also serve a range of other important functions, providing a forum where:
- Board members are regularly brought together to focus on their roles and responsibilities, identify problems and plan for the future.
- Members are encouraged and motivated.
- Ideas are shared and discussed and then discarded, improved or implemented.
- Tasks are allocated and reported on.
- Regular updates about relevant issues are provided.
- Members can get to know each other, professionally and personally.
Organisations must conduct meetings in accordance with legal requirements that apply to the type of meetings being held, and also follow requirements set out in organisations rules (but note that if requirements in rules are inconsistent with the law, the legal requirements apply).
A well-planned meeting schedule identifies the year’s key issues and helps directors to ensure that matters requiring their attention are addressed in a timely and logical manner.
A strong board calendar, unique to the organisation, is a valuable planning tool to help a board govern more effectively. Ensure that sufficient meetings are scheduled; it is easier to cancel a meeting and move its business into the next one than to call an extra meeting. If a board meeting is scheduled in January as a standby only, no significant matters should be included
Most directors have a wide range of commitments. The earlier the dates of meetings are scheduled and confirmed the more likely it is that directors will be free to attend.
Types of Board Meetings
- General Meetings
- Special Purpose Meetings
- Committee Meetings
Procedural Requirements for Board Meetings
A company’s constitution or shareholders agreement will usually set out the minimum amount of board meetings that directors need to hold each year.
Certain procedural requirements must also be met for a valid board meeting, such as:
- How the board meeting will take place (i.e. in person, over the phone or by using other methods of technology including audiovisual);
- The minimum number of directors that will need to be present (quorum);
- What will happen if a quorum is not present (delaying or postponing the meeting); and
- The appointment of a director to chair the meeting.
The chair is responsible for ensuring the agenda is followed, and decisions are recorded in the company’s minute book.
Meetings can vary considerably from board to board. Some are quite formal, adhering to strictly defined rules and ensuring all members are addressed by their correct titles (“President Smith,” “Madam Chair,” and so on). Others are far less formal – usually it will depend on the make-up and function of the board, how it was set up and how it has evolved.
- Meetings can be held in a boardroom, or in a more social setting such as a member’s house or even a local restaurant.
- Decisions may be made through a range of means, by formal voting or a more informal show of hands or verbal agreement.
- Some meetings are held behind closed doors and are subject to strict rules of confidentiality; others are fully open to the public. Even open meetings may sometimes move into confidential mode, asking observers to leave while certain sensitive issues are discussed.
A Meeting Code of Conduct or Procedure can provide guidance to board members on the acceptable conventions within the organisation that will; improve efficiency, decision making, and board dynamics.
A meeting agenda is a list of items that participants hope to accomplish at a meeting. The purpose of a board meeting agenda is to improve the effectiveness of board meetings. It is the tool the chair uses to keep boardroom discussions focused and along with board papes, provides notice to directors as to the purpose and desired outcomes of the meeting so that they can adequately inform themselves in order to participate effectively and contribute to board discussions and decision making.
Although each board will have an agenda that reflects specific topics of relevance to a company at that time, a number of general items will be included on most agendas. The following board agenda example illustrates an acceptable standard for Board Meeting Agendas. The AICD publication AICD Director Tools – Board Agenda provides a useful detail about Board Agendas.
A Board Agenda is often accompanied by Board Papers prepared by subcommittees, executives within the organisation, specialist outside resources and other nonboard members.
Board members gain a great deal of information about the decisions they need to make through the papers they receive prior to a board meeting. Papers cover a variety of functions, from providing general information to a call for action. Due to the variety of types of information that can be presented and individuals preparing board papers, it is useful for boards to set a standard for how they would like information to be presented. This improves the effectiveness as those preparing the board papers are more likely to be mindful of the information that they are preparing and board members are more effective as they do not have to interpret or make assumptions due to variations of standards and quality.
Below is an example of a Board Paper. The AICD Tool for Board Papers is a useful guide for more information on board papers.
Board minutes are used to record the decisions of the board. They are used to convey board decisions to the executives who will implement the decisions and serve as a reference for the board if it wishes to revisit a decision. Board Meeting Minutes are an official company record.
In public companies, the company secretary is the usual minute taker. Although not required by law to have a Company Secretary, most proprietary companies will have a company secretary (who is the usual minute taker), although proprietary companies are not required by law to have a company secretary. It is acceptable for proprietary companies in the absence of a company secretary to ask another person such as someone from within the organisation or an independent minute taker such as a solicitor or accountant.
It is not advisable for the CEO or chair to take the minutes, as they should be participating in the meeting rather than creating a record of it.
Companies are looking closely at the level of detail in their board minutes from two angle. First, they are examining how they reflect the care and diligence directors exercised in their discussions and decisions. Second, how they may be viewed in hindsight and from an external perspective
“The Royal Commission has raised the possibility that if something isn’t included in the minutes, then whether it occurred at all can be questioned. That turns the approach to minutes, established by the James Hardie case, on its head. Minutes aren’t just evidence of what did happen, but can also be evidence of what didn’t happen.” https://aicd.companydirectors.com.au/membership/company-director-magazine/2019-back-editions/june/board-minutes
The following Director Tools produced by the Australian Institute of Company Directors provides a good overview of the legal requirements for meeting minutes and things that boards and directors should be mindful of.