Board minuting life-savers
Board chairs will agree that minutes are the unsung heroes or, in some cases, the quiet villains. Many directors feel these are boring administrative work or a tick-box exercise at the end of a board session. Far from it. Minutes are not mere paperwork but a governance cover, a legal anchor and a transparency tool. With SEBI tightening governance norms and shareholders becoming more vocal, good board minutes are essential to build credibility.
Leahy’s ‘minutes for your minutes’ offer eight deceptively simple yet powerful tips:
Use the meeting agenda as guide: It sounds obvious until it isn’t. A well-designed agenda should be your blueprint for the minutes. But board discussions can wander, especially in heated debates about financials or cyber security. A couple of years ago, a mid-cap manufacturing company faced shareholder scrutiny, because its minutes reflected an extended discussion on executive compensation that wasn’t on the official agenda. The mismatch raised governance concerns and even a SEBI query. The lesson: align the minutes with the agenda, noting deviations clearly to avoid future suspicion.
Never omit the mundane essentials: Items like date, time, place, chair, minute-taker’s details, etc, may be mundane basics, but if omitted, the credibility suffers. A Mumbai-based real estate JV got into legal tangles recently and the absence of the chair’s name in certain minutes gave the opposing party grounds to challenge their authenticity. Small omissions can open big cracks in the governance structure.
Confirm the quorum – especially online: With hybrid and virtual board meetings becoming the norm post-Covid, quorum tracking is trickier than normal. Directors may log in late, step away, or drop off due to connectivity issues. Under the Companies Act, 2013, quorum is mandatory for validity. A fintech firm learnt this the hard way when its resolution to onboard a strategic investor was declared invalid because quorum wasn’t consistently maintained during the board meeting, which was virtual. The meeting was fully recorded, but the minutes omitted the quorum issue. Capture the chair’s confirmation of the same and any changes.
Record the fate of all motions: No matter whether defeated or withdrawn, all motions must be put on record. Many directors assume only passed resolutions need to be recorded. For historical or legal reference, this is highly helpful. A withdrawn motion to sell surplus land by a PSU resurfaced years later when the new board revived the plan. The records of earlier deliberations helped shape the revival of the plan for unlocking value.
Capture all motions with accuracy: Ensure that every motion is recorded with details of the mover (full name) and the exact wording as per the presiding officer’s confirmation. With the rising shareholder activism, ambiguous wording can invite disputes. A listed IT services firm felt the ire of shareholders during its AGM on a resolution on ESOP allocation. The reason? The minuted motion differed subtly from the notice circulated. Such issues can end up as an expensive oversight for the legal team.
Documentation with reports & signed copies: When executive officers or committee chairs present reports, take care to record their names and signed copies of the same in the minutes. This strengthens accountability and preserves the integrity of the record. SEBI guidelines on audit committee disclosures make it critical to have verifiable documentation, especially when it comes to financial or ESG-related reports. Signed annexures in minutes have saved many Indian boards from accusations of misrepresentation.
Show all the votes – aye and nay: Instead of noting a vague ‘approved by the board’, phrase it with the counts for, against and abstentions. While you needn’t name individual voters, naming abstainers (particularly when due to conflict of interest) adds transparency. The Tata Sons board famously disclosed abstentions in sensitive strategic decisions. Such high standards are a guideline for others.
Explain special committees explicitly: Occasionally, special committees are formed for specific purposes. Minute its name, members and purpose, including charter, if any. Some committees have mundane tasks, such as silver jubilee celebrations, but include total details nevertheless. In regulated industries like banking, committees handle risk or compliance reviews; clear minutes ensure there’s no ambiguity about scope or membership. This is critical if regulators like RBI raise queries.
The boardroom chair comes with many responsibilites that are fiduciary, strategic and symbolic – not just ceremonial. And the minutes that record what happens in that chair are more than just memory aids. They are governance essentials, capable of shielding directors from risk while building enduring shareholder trust.
M. Muneer is MD, CustomerLab and co-founder, Medici Institute, a non-profit organisation. Ralph Ward is a global authority on boards; both of them drive board alignment for corporations. Contact: Muneer@mediciinstitute.org