To many companies, taking and keeping minutes of either director or shareholder meetings may not be a high priority. However, minutes of both director and shareholder meetings are obligatory under Section 251A of the Corporations Act 2001 (Cth).
For both directors and shareholders ensuring that complete and accurate minutes are maintained can also provide some security to a company under a court’s scrutiny. For example, company minutes can be used to demonstrate that the directors have fulfilled their duties under the Act. At the same time, any privileged information, such as legal advice or communications, provided with the minutes or board papers should be clearly identified as privileged in the minutes to avoid its discovery by a court.
Correct and accurate minutes can also be used to establish that a board of directors gave sufficient consideration to the decisions put to them. Decisions that are routine in nature may not require intricate detail, however complex or complicated decisions that include detailed discussion amongst the board, may benefit from a more specific record.
Likewise, many discussions during meetings may include general thoughts on topics. Whilst these discussions may contribute to a decision, the detailed inclusion of these deliberations may have the effect of stifling the flow of conversation between directors and may therefore be omitted from the official record.
An appropriate medium position may be broadly noting that a resolution was passed following a thorough discussion. Most of the detail informing the board discussion should instead be included in the notices or board papers provided prior to the meeting. The minutes themselves should be concise and accurately envelope the material reasons behind a decision.
The Act states that minutes must be recorded within one (1) month of the meeting. It is best practice to circulate draft minutes to directors within one (1) week of the meeting whilst the recollection of the topics discussed remain fresh. Once minutes are approved by the board, any notes taken by board members should be discarded.
Draft minutes and notes may create ambiguity surrounding a key decision made by a board and they are discoverable by a Court under section 30 of the Australian Securities And Investments Commission Act 2001 (Cth) and section 69 of the Evidence Act 1995 (Vic). If however legal proceedings against the company have been commenced or are likely to commence, the relevant notes must be retained as it is a criminal offence to destroy what may become evidence. Companies should create a document management and data retention policy, to clarify how draft minutes and notes should be maintained.