It’s not in the Tea Leaves
It’s in the Minutes
Brian Herd
Carne Reidy Herd Lawyers
Level 10, 193 North Quay
Brisbane Qld 4000
P: 07 3236 2900
E: bherd@crhlaw.com.au
Carne | Reidy | Herd
Carne | Reidy | Herd
Carne | Reidy | Herd
Carne | Reidy | Herd
Carne | Reidy | Herd
Outline
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Meetings and memories
The power of meetings
Agendas
Law of minutes
Role of minutes
The Good and the bad
Minute Issues
The future of minutes
Carne | Reidy | Herd
Meetings and Memory
• Memory
– Encoding, storing and retrieving information
• Problems with memory
– Degrades with time
– Distorts with stress
– Fades with age
– Reactivates unpredictably
eg by odour
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Meetings & Memory (cont)
Collective –v- Individual memory
• Collective not as good as individual
– Free riding
– Meeting loafing
– Collaborative inhibition
• Inadequacies of collective memory
– Der! Groups unable to recall previously made
decisions without the aid of written record (minutes)
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Power of Meetings
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Proposition
– The larger the meeting – the dumber it is
– Compare the public rally and the private meeting
Do you agree?
More people means more types of people
– Garulous idiot
– Silent genius
– Polariser
– Referee
– Fair minder
– Me tooer
– Foolishness fearer
– Brinkmanshipper
– Disdainer
– Epicurian
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Power of Meetings (cont)
• A good meeting is about:
– talking to discover collective wisdom;
– making decisions; and
– solving problems
• That is the moving force for minutes
• Record of:
– Discoveries
– Decisions
– Solutions
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The Parents of Minutes
The Agenda
• Minutes are the progeny of the agenda
– Pedigree of your minutes depends on the genetics of
the agenda
– Good agenda means good minutes
not minutae
• Does your agenda reflect your governance role
– Govern not manage
– Strategy/compliance/review/policy
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Basic Agenda
1.0
Welcome and Apologies
2.0
Disclosure of Interest
3.0
Minutes of Previous Meeting
4.0
Priority item A
5.0
Priority item B
6.0
Reports
7.0
Other Business
8.0
Next Meeting
9.0
Evaluation of the meeting
10.0
Adjournment
Action
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Minutes and the Law
• No legislation on agendas but there is on minutes
• S.251A (1) Corporations Law
• Company must keep minute book in which it
records
– Proceedings & resolutions of directors &
members meetings
– Resolutions of directors and members passed
without a meeting
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Minutes and the Law (cont)
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Minutes must be lodged in minute book within one month of meeting
– If not – may not be used in evidence
After meeting
– Secretary responsible for compiling
– Then send to Chair
– Chair to sing within ‘reasonable time’ but will want verified by
attendees
– For monthly board meetings – at the next board meeting
– For less frequent meetings – circulate to attendees for verification
before month elapsed
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Minutes and the Law (cont)
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Once signed – only clerical errors can be amended
Corrections to be passed at a future meeting
Must keep minutes safely and indefinitely at main office
Can be stored in bound, loose leaf or electronic format
– Eg can scan copy of signed minutes
• Must be able to be reproduced in printed form
• Falsification is a criminal offence
• Members rights:
– To inspect minutes of general meetings but not directors meetings
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Minutes and the Law (cont)
• Minutes as evidence
– S.251A(6) Corps Law
– “A minute … is evidence of the proceeding, resolution or
declaration to which it relates unless the contrary is proved.”
• Minutes are increasingly being used as a way of holding
Directors accountable
– James Hardie
– The Disney case – the ‘case of the century!’
• These laws apply to NFP corporations!
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Role of Minutes
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Always assume they will fall into the hands of “A Current Affair”
Never to be assigned to:
– Regurgitated ritual
– A humble piece of parchment
– No value
– Near enough is good enough
A legal document & contract between directors
Record of governance
– Evidence of your:
 Functionality
 Decisions
 Duties
 Responsibilities
 Accountability
 Compliance
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Good Minutes
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You need to have a policy on the style and content
Is less better?
– Traditional view but wave of litigation against directors suggests not
Three broad types of minutes
1. Minutes of action
 Intro remarks to an item and action outcome
2. Minutes of narration
 Intro remarks, key discussion points and action outcome
3. Minutes of resolution
 Just action outcomes
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Good Minutes (cont)
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Minutes should:
– Follow the agenda generally
– Be a true and accurate record of a meeting
– Have clear and concise notes of main discussion points
– Be an accurate and clear register of decisions
 a record of what was decided
 Ps not all meetings make decisions
– Record any independent advice received or any additional information tabled at the
meeting
– Note who is responsible for actions and by when
– Not be a job for amateurs
– Be written in the third person
– Be dull (not the meeting)
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Bad Minutes
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‘Five Frogs’ Minutes
Dithering document
– “It would be great if…”
– “Someone should…”
– “Do we all agree to…?”
– “Can you try to…?”
Opinions and judgements
– “an excellent report”
– “a heated discussion ensued”
Criticisms or accolades
– Unless by formal motion
Recording views of individuals
Direct speech or quotes
Who said what and when
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Bad Minutes (cont)
• “Mr Poindexter, an experienced business man with an elderly mother
he is caring for, thinks that the budgetary surplus should be directed
more towards delivering home care in order to keep up with the pace
of today’s consumer care needs and that the organisation has
selfishly ignored this aspect in favour of other initiatives”
OR
• “It was suggested that the budgetary surplus should be directed more
towards home care in order to meet the care needs of consumers”
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Bad Minutes (cont)
• “Pursuant to the agreement, Mr Wendt received a cash payment
of $45,000,000 at signing which amount was partial compensation
for benefits he was forfeiting from a prior employer.”
– Minute of meeting of Directors of Conseco (huge USA corporation)
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Bad Minutes (cont)
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Meeting Item – Meals
– Chair – “One of the issues that came up while you were away, Bronwyn
(CEO) is that when you step in as a chef if you like, the residents really
enjoy the meals”
– Bronwyn “ I haven’t done that for a while”
– Chair “Perhaps the general cooks need a bit of tutoring from you”
– Bronwyn “I think that is to do with the flavour and overall I don’t have
any issue with the food as I eat here several times a week although
there are things I don’t like ie the vegetables…”
And on and on it goes…
Carne | Reidy | Herd
Bad Minutes (cont)
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Meeting Item – Maintenance Report
“Price lists from 3 mower places were received and approval given to
purchase the Cox Ride On from Barry’s Mower Centre for $4990”
“Room 23 has a water leak”
“Generator is not starting”
• Meeting Item – Constitution
“All amounts of $20 or over shall be paid by cheque and signed by any
two of the Chair, Secretary or Treasurer. So we need to review our
Constitution.”
• Meeting Item – Correspondence In
“Fair Work Ombudsman – Wages Audit”
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Bad Minutes (cont)
Minute of a Board meeting of a healthy lifestyle organisation
(USA):
Item – Membership of Board of Directors
“It was discussed that, as advocates for a healthy lifestyle, the Board
members should be seen as good examples of such a lifestyle.
“It was resolved that a motion be put to the next general meeting of the
organisation that a qualification for all Board members to be, or remain,
a board member was to have a body mass index (bmi) no higher than
22”
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Minutes Issues
• Who takes the Minutes?
– Secretary responsible
– Can be someone appointed by the Board
– Can be a director or employee or even an
outsider
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Minutes Issues (cont)
• Should reasons for decisions be recorded?
– Two schools of thought:
1. Recording of general discussion sufficient
2. Accountability & due diligence requires
summary of reasons
– My view is a brief outline of factors is adequate
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Minutes Issues (cont)
• Should directors take their own notes?
– No legal obligation to
– Can be evidence in a court issue
– Helpful as a defence mechanism
– Dangers and can create unintended
consequences
– Once minutes approved a directors notes are
moribund
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Minutes Issues (cont)
• Should there be minutes of ‘in
camera’ meetings?
– Eg without the CEO or if a Director has a
conflict
– you should record especially if there could
be consequences eg sacking of CEO
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Minutes Issues (cont)
• Should a dissent be recorded in the minutes?
– If you attend a meeting then you are assumed to have
agreed with a resolution or the action taken unless your
dissent is recorded
– In this day of director accountability recording dissent is
important
– If you don’t attend a meeting you are assumed to have
consented to the actions of that meeting unless you
provide a dissent within 7 days of becoming aware of the
resolution
Carne | Reidy | Herd
Minutes Issues (cont)
• Should Board Minutes be made public?
– No legal requirement unless required by Constitution
– Most NFP’s don’t and there are good reasons
– Transparency has risks ranging from dissension in the
ranks to breaches of privacy and confidentiality
– Your are entrusted by the organisation to govern the
organisation and your accountability is at the AGM
– Note the “Sunshine Laws” in USA
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Minutes Issues (cont)
• Should a Board Committee meeting be minuted?
– Yes
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The Future of Minutes
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What minutes tell us
Board Policy
Technology
ACNC
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What Minutes tell us
• What minutes tell me:
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The quality of governance
The quality of contributions
Awareness of obligations
Minutes which are a morass of minutae
 Struggling organisation
 No strategic focus
– Organisations who have a contemporary and considered policy
on agenda setting and minute taking
 successful
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Policy on Minutes
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The law treats minutes very seriously now
They are evidence of the functioning of a board
They are used to assess directors liability
‘Less is more’ may no longer be appropriate
policy
• Summarising discussions and giving beef to the
minutes is the new trend
• Encapsulates the ‘business judgement rule’
Carne | Reidy | Herd
Technology
‘eGovernance’ & ‘Digital Directors’
• Technology is changing how boards operate and who sits on
board
• The How
– The use of Skype
– The paperless Board
– I Pads for Directors
• The Who
– Boards starting to look beyond the usual suspects and see the
advantage of digitally smart Directors
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ACNC
Governance Standards
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Must comply with to ensure continuing registration
– “mechanism which may enliven the enforcement powers” of the
ACNC (The Regulations)
Five standards
1. Maintaining not for profit purpose
2. Accountability to members
3. Compliance with the law
4. Suitability of responsible entities (eg Directors)
5. Duties of responsible entities
• Impact on minutes?
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ACNC (cont)
Governance Standard 5
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Organisation must ensure its responsible entities (Directors) comply with their
duties
– Act with care
– Act in good faith
– Not misuse their position
– Not misuse information
– Disclose conflict of interest
– Manage financial affairs
– Not operate while insolvent
What is the best evidence of this?
– THE MINUTES!
Carne | Reidy | Herd
The Price of Good
Governance is Eternal
Vigilance
(and great minutes)
Brian Herd
Carne Reidy Herd Lawyers
Level 10, 193 North Quay
Brisbane Qld 4000
P: 07 3236 2900
E: bherd@crhlaw.com.au