Monday, July 13, 2015

Taking meeting minutes

What are meeting minutes? We spend a lot of time in meetings. We take a lot of notes in meetings. But what should we really be doing?

I want to start with the most structured aspect of meetings, namely meeting minutes. Theoretically, there should be some sort of agreement on what minutes should actually contain.

First, the basics. The EIU's collection Essential Negotiation has an annotated glossary. Minutes apparently record: who was present; when and where; notes on the agenda; summaries of party's main views; commitments to review specific topics; proposals; anything agreed to... I think we need more.

Let's take a look at a 2010 article from Administrative Professional Today entitled "Minute-taking: Should I write that down?" It tells us that discussions will go sideways. Write down actions, clarifications, or requirements. Don't record emotional reactions if someone gets angry; document the substance of their comments. Clarify acronyms.

Okay. A 2008 article from The Corporate Board by Beavers and Kinross provides different details ("When less is more").  They note: "Minutes have two purposes -- to inform and protect". There are a few questions we have to answer:
  • Who is the audience? Meet information needs without creating liability.
  • Who will rely on these minutes for protection under the business judgetment rule?
  • Who else may review these minutes? Basically, who else? The list could include investigators, plaintiff lawyers, etc.
Minutes become a record of meeting legal obligations. Consider:
  • Compliance with procedural matters (e.g., date, time, and place; attendance /w quorum; purpose of meeting; who presided; who recorded minutes)
  • Identification of matters considered. But you don't want to put in too much detail of discussions.
  • Decisions made. Positive decisions could be documented as: "RESOLVED, that each of theā€¦"
  • Recording of votes. You probably don't have to mention who voted what but you do have to record what was adopted or declined.
  • Abstentions. Directors that vote "no" and want their decisions to be recorded.
  • Factors considered in making decisions. Counsel may request that more detail is provided in the minutes. Overly detailed minutes, however, may give the impression that everything was documented. There might have been discussions that weren't. Another issue could be how expert opinions  or experts were qualified. Also, include descriptions of documents and supporting materials used in making decisions.
  • Privileged discussion. Omit them from the minutes but note that they occurred: "The board participated in a privileged discussion on the subject matter with counsel."
  • Minutes should be the only record. Members of a body should destroy their notes after validating the minutes. Most courts use a "best evidence" rule so that notes aren't admissible. Those notes can, however, be used to attack the "competence or integrity" of a witness by asking them to explain discrepancies.
  • Read the minutes prior to approving them. Poor minutes can be a basic attack vector. Review them for:
    • Factual inaccuracies
    • Confirm dates
    • Language. Concise, ambiguous language -- "principles of good drafting" -- applies.

A 2006 article from The Corporate Board by Chandler and Wardwell gives more advice ("Best practices for documenting board meetings"). The authors note that best practices for minutes actually protect directors and owners. There are two approaches: long-form and short-form. A hybrid strategy is appropriate.

Short-form minutes are concise, easy, and contain no ambiguity. They don't, however, provide evidence of informed decision-making. They really only capture the actions, motion, and decisions.

Long-form minutes contain details about the processes and exchanged information. They are, however, tough to draft and easy to misinterpret. Best practice is to use a long-form approach for decisions that are likely to result in litigation or shareholder concerns.

Committee meetings should also have minutes that are approved and reported to the entire board (and referenced in those minutes).

Executive sessions and privileged conversations should be documented by neither notes nor minutes. But the official minutes can state that these sessions occurred. If you need notes on privileged communication, they should be marked "Confidential and Attorney-Client Privileged".

Director's notes should not be considered records because there will be gaps when they were speaking or listening and they have not been approved. Retaining notes may actually weaken overall consensus and credibility.

A 2002 Office Professional article by Marilyn Halsall has a promising title: "Art of minute taking". It notes that you probably want to start with the agenda. It notes that the agenda should split out information items and action items. Your notebook should have an agenda item at the top of each page. You could prepare a skeleton based on the agenda, motion forms, attendance lists, name tents, etc. The list of extras could include attendance lists, pens, calendar, tape recorder, constitution/bylaws, guide to rules of order, past minutes, and the watch.

Include agenda topics, decisions on the topic, actions required on the topic, who will do what and when, etc. Avoid:
  • Personal comments
  • Judgements
  • Adjectives
  • Adverbs
  • Old material
  • Withdrawn motions
Don't attach names unless someone wants to "go on the record." Motions should be verbatim, moved, and seconded.  A motion is worded "that" + noun + verb. Motions can be included in a motion binder. Include name of the organization, time, date, place, whether the meeting was regular or special, name of the presiding officer, secretary, attendees (or a statement on quorum for a large meeting). Note that the minutes should be read and approved, reports of special committees/projects, unfinished business, decisions, actions taken, next meeting, adjournment, and signatures.

Presentation guidelines: heading should be centered, all caps, and should contain the word MINUTES and name of the org.

That was pretty good!

Bruce Collins wrote an article for Inside Non-Profits in 2008 called "Making minutes". Apparently, there are few statutes mandating non-profits to keep minutes but the IRS requires it.

Hayman et al. produced a 2005 paper called Corporate minute-taking: a general counsel's guide. Hmmm... I'm seeing a lot of what we have already mentioned: minutes can help, minutes can hurt, remember Disney. It does, however, give us on guidelines:
  • Tell the board that minutes are important
  • Be flexible about the length
  • Record the amount of time spent on agenda items and if discussion material had been distributed before the meeting
  • Carefully note the titles of presentations. Version control of PowerPoint can be challenging
  • Avoid recording meetings

Elizabeth Hinck gives us "Best practices for corporate minutes", from The Corporate Governance Advisor (2008). We get some more precedents about the importance of minutes and guidelines on production. There is considerable repetition from what we have already seen but there is an admonition to "reflect participation by advisors (legal, financial, accounting, tax, compensation consultants or other professionals)". Review is crucial and you have to demonstrate that review is done on an ongoing regular basis. Again, we see that committee work is important, particularly audit, compensation, and governance. The secretary may have to ask for qualification.

Hinck's gives us a new wrinkle. We need to set clear retention policies. Only the final minutes should be contained in the official minute book along with a clean copy of the board package and referenced materials.

Minutes must also be in accord with disclosure rules for publicly traded companies. For example, should an 8-k be issued? 

Informal discussions and executive sessions (as required by NYSE) may occur. They may not have minutes but the decisions should be referred to in official minutes. 

Let's see if I have anything else on minutes. Here's a reference: Schwartz-Ziv and Weisbach (2013). What do boards really do? Evidence from minutes of board meetings. Journal of Financial Economics 108, 349-366. So, 2/3 of the issues that board face are of a supervisory nature, they are given only a single option in 99% of issues, and disagreed with the CEO only 2.5% of the time. They requested more information in 8% of issues took initiative in response to 8.1% of them. In 63% of meetings, boards took at least one action or did not vote in line with the CEO.

Finally, there's "Avoiding the minutia of minutes" by Sharpe and Rose, appearing in the December 2014 edition of Corporate Directions. Apparently the Corporations Act 2001 says that minutes must be kept as per these conditions:
  • Recorded in the minute book within one month
  • Signed by the chair in a reasonable time
  • Stored as a record. Current and former directors generally have access company records and can make copies as per typical Deeds of Access and Indemnity

Australian regulatory entities such as APRA, ASIC, ATO, etc. have the right to examine books, including minutes.
Minutes must also be in accord with disclosure rules for publicly traded companies. For example, should an 8-k be issued?

Informal discussions and executive sessions (as required by NYSE) may occur. They may not have minutes but the decisions should be referred to in official minutes.


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