By Bill Dann
BoardGrowth™ Founder
Number of
words: 580
Time to read:
Two to three
minutes.
Over the years I have often been asked about how detailed minutes should be, and what should be contained in them. Not a trivial issue, as minutes are the official record of corporate action/commitments and can be subpoenaed by a lawyer in search of ethical violations or failure to meet fiduciary responsibilities.
Two schools of thought
Input from a number of lawyers over the years on this question falls into two camps:
- Only include the language of motions and amendments, and whether or not they passed.
- Include summary comments of the dialogue on the motion so that the rationale for the ultimate
decision of the board is clear.
Not real helpful because these are rather at polar ends of a spectrum of possibilities. (Maybe that is
what keeps lawyers billing hours. Can’t say.)
All agree, however, that verbatim quotes of
board members and reporting of the actual
voting of each member (except in a legislative
body that is accountable to an electorate)
should not be recorded.
Why exclude the dialogue?
There are a couple of reasons. First, actual
comments by directors are the most likely
evidence of unethical behavior of directors,
exposing them and the board to potential
liability. Personal biases based on
relationships or involvements related to the
decision may arise, be documented in the
minutes, and become a potential risk for the
organization.
Second, it is important that the record of the
board’s actions demonstrate that the group is
united behind its decisions and is acting as a
body of one vs. individuals with substantial
disagreements. Again, the record of
disagreements can become evidence used
against you by your enemies.
Sources of a challenge
What is known as the board’s “Duty of Care”,
a legal standard to be met, is that the board
considers vs. dismisses out of hand any
expert opinion provided to it. Input from
lawyers, financial experts, medical experts
and the like is what is being talked about here.
The board is not held by courts to a standard
of “no mistakes” or being required to be expert
in all areas. What is expected is that the
board will give due consideration, not
necessarily blind obedience, to advice from
acknowledged experts.
Thus, there may be wisdom to include
documentation that an expert gave a
presentation and that there was consideration
of the advice provided.
Language of a motion
One more item. It is VITAL that the board
author the language of all motions. You may
ask management to provide recommended
language and simply repeat that language in
your motion, but at all costs, avoid the habit of
allowing “I so move” to stand as the language.
Two reasons: first, it may not be clear to all
members what is being voted on and second,
it leaves to the board secretary the task of
crafting the language of the motion. Both are
bad practices. The chair should always read
the actual language being voted on before
calling for the vote on a question.
In summary
Recording minutes is one of those rare cases
in life where less is more. If you have
questions or concerns about your own
practice of minute-taking, contact us. If you would like to
attach a copy of your most recent board
meeting minutes, we would be happy to
review them and offer recommendations on
how you can improve your board’s
recordkeeping.
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