4.6 Philosophy of Board Meeting Minutes

Minutes are the records of the proceedings of a meeting. A corporation is required under corporate legislation to prepare and maintain minutes of meetings and resolutions of directors, committees of directors and shareholders. Minutes are typically prepared by the Secretary of the corporation or the person designated as secretary at a particular meeting.

Accurate minutes avoid future misunderstandings, serve as guides in implementing decisions taken at meetings and provide a written record for evidentiary purposes.

1. Content of Minutes

Minutes should commence with the name of the corporation and give the type of meeting (e.g. directors or audit committee). The minutes should also record the date, time and place of the meeting and the persons in attendance at the meeting and the manner of attendance (e.g. in person, by telephone, or by video conference). Please see related document Sample Board Meeting Minutes.

Minutes should be written in the past tense (eg. "The Chairman advised the Meeting that ….") to record events at the meeting and in the past perfect tense to record events prior to the meeting (eg. "The Chairman reported that he had completed his survey ….").

Corporate legislation provides little guidance on the content of minutes. There are two schools of thought with respect to minute keeping: the "bare-bones" type with little narrative and the more informative narrative style.

There is a clear choice for " bare-bones " approach. In this approach, the minutes briefly indicate:

  • The nature of the issue,
  • That a "brief" or "full" discussion ensued, and
  • Any motion that was adopted as a result of the discussion.

For example, the Board might have a vigorous discussion about a matter of company policy, with different and conflicting viewpoints articulated. Eventually the Board might come to a decision and adopt a course of action. The minutes should read: "The Board reviewed the company policy with respect to x. A full discussion ensued. ON MOTION DULY MADE, SECONDED AND CARRIED, IT WAS RESOLVED THAT the following course of action be adopted: xxx ".

A narrative approach to minutes would provide a more complete record of the discussion and perhaps demonstrate that the Directors exercised their fiduciary duty by fully exploring the options before deciding on a course of action. The argument against this approach is the absence of discussion on a particular consequence or motivation might indicate a lack of full consideration and thereby expose the directors to action from a disgruntled shareholder. The more that is documented, the greater the opportunity to find fault.

For this reason, the discussion of particular questions or alternative actions considered at a meeting but not authorized normally does not form part of the minutes. That said, there may be some instances where the alternative courses of actions should be included to protect the participants if their conduct is later questioned.

A director, however, may specifically request that the person's view be made part of the record if he or she feels strongly that their stated position be part of the official record.

Minutes should also include reference to specific instructions given by the board to officers or other employees of the corporation.

It is not necessary that the names or person who propose or second resolutions be recorded. Indeed to do so may be misleading: To move or second a motion implies support. However, a Director may move or second a motion only to ensure discussion and may vote against it later. It is also not necessary in most instances for the names of the persons voting in favour of resolutions to be recorded, unless this information is required by statute, regulatory authorities or a director requests that the director’s dissent be recorded in the minutes.

A report records what is said at a meeting while minutes set out only the resolutions and decisions taken. A report made to the meeting is normally only referred to and not set out in full in the minutes. The secretary should maintain a file of documents or reports for each meeting. A simple notation in the minutes indicating that the document or report was submitted is normally sufficient.

2. Right to Dissent

Corporate legislation permits directors to register their dissent if they are not in agreement with certain actions taken by the corporation. A dissenting Director is exonerated from potential liability that might arise by reason of contravention of corporate statute. A Director wishing to register dissent must announce at the meeting that the director wishes the secretary to have the minutes record opposition to a resolution and the reasons for the opposition. Dissent rights are not available if the director votes for or consents to the resolution. Merely voting against a resolution is not sufficient to exercise a right of dissent; a director absent from a meeting is deemed to have consented to business approved at the meeting unless the director within seven days of learning of the business advises the corporation of the director’s dissent.

3. Disclosure of Conflicts.

A Director or Officer who is a party to a material contract or transaction with the corporation must disclose the nature and extent of their interest and have the minutes must reflect the disclosure. Subject to certain exceptions, a conflicted director may not vote on the contract. Exceptions include contracts relating primarily to remuneration as a director, officer or employee of the corporation, and contracts for indemnity and insurance of the directors.

4. Approval of Minutes

Minutes or previous meetings are commonly circulated in advance of and approved at a meeting, however, there is no legal requirements to approve minutes of a meeting at a subsequent meeting. The minutes should be carefully reviewed by the participants in the meeting to ensure that the minutes accurately reflect what transpired at the previous meeting. The approval of the minutes at a subsequent meeting is the approval of the minutes as a true record of the proceedings at the previous meeting, not the approval of the proceedings themselves. The failure to approve minutes does not invalidate the minutes.

The Chair and the Secretary normally sign the minutes, and the signed copy kept in the Corporate Minute Book.

5. Disclosure of Board Minutes

Secretaries and Directors need to remember that minutes are a permanent part of the corporate record and may be read by many people long into the future. For example, the company’s auditors read the minutes as part of their annual audit or review. Also, a professional investor contemplating an investment or a company pursuing a merger or acquisition will read the minutes as part of their diligence on the company. With this in mind, the Secretary should use discretion in writing the minutes. For example, if the CFO reported that a financial transaction was being hampered by the reticence of a potential investor, it would be embarrassing for the a close colleague of that investor to subsequently read this disclosure in the minutes.

Apart from the minutes, Board deliberations are confidential1. This allows the Directors to be completely forthcoming in all deliberations, as there is no record of their contributions unless the Director specifically requests it.

However, if the company or Board are being sued, then all deliberations can be brought to the surface in the process of discovery. On examination for discovery, the minutes, the directors’ personal notes, and even the otherwise confidential oral Board discussions are all fair game. Some companies request directors to destroy their notes immediately after a meeting to avoid contradictory records should they become part of a discovery, but nonetheless, the oral deliberations are also discoverable1.

In sum, apart from a litigation, the Board minutes are the only documentation that can be reviewed. Bare-bones minutes leave the minimum basis for later recriminations.

Remember, however, that a Director’s best protection is the integrity of his deliberations and actions. Provided that he exercises a reasonable amount of care and diligence relative to his experience and training, and acts reasonably with the best interests of the company in mind, a Director should be protected, whatever appears in Board minutes, or is discussed at Board meetings and in-camera sessions.

1There is an exception when conflicts are disclosed in the minutes: a shareholder has a right to see that written portion of a Board meeting or resolution where a conflict is disclosed by a Director.

2Legal advice given with respect to the litigation is not discoverable as it is protected by solicitor client privilege.