Room to improve?

How to get your meeting agendas and minutes right

Better Boards Conference 5 July 2013

MELBOURNE SYDNEY BRISBANE1

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Agenda

Getting agendas and minutes right:

1.Why is it so important?

2.James Hardie Case

3.Putting it into practice

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1. Why is it so important?

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1. Why is it so important?

•Recent cases about the actions of directors send a clear message:

1. increasing trend of holding company directors accountable for the actions of a company

2. contents of agendas and minutes have considerable weight

•Same principles apply to boards of not-for-profit companies and to committees of associations

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• Consequences of poor agendas and minutes:

1. reputational damage

2. fines and penalties

3. potential loss of endorsements from the ATO or the ACNC.

Get your agendas and minutes right!!!

1. Why is it so important? (cont)

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2. James Hardie case

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2. James Hardie Case

• May 2012 James Hardie case highlights the importance of getting meeting agendas and minutes right

• Board meeting, February 2001 - directors approved announcement to the ASX about a corporate restructure, announcement released, part of restructure did not eventuate

• ASIC considered statement in the announcement was misleading and issued proceedings against the directors for breaching their duty of care and diligence under the Corporations Act

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• Court proceedings - High Court held in May 2012 that the former James Hardie directors had breached the Corporations Act.

• Decision essentially turned on:

• factual finding that the directors had approved the announcement; and

• signed minutes of the board meeting had a significant part to play in the Court’s decision.

2. James Hardie Case (cont)

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2. James Hardie Case (cont)

Getting the AGENDA right:

• Court said the directors had a non-delegable duty to approve the announcement as part of its responsibility to be involved in monitoring the company.

• Courts yet to fully consider the boundaries of non-delegable duties in relation to the obligation to approve certain announcements BUT

the Court indicated boards may be required to approve announcements/press releases that relate to matters that are of considerable importance to the company’s future and/or matters of importance to stakeholders.

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2. James Hardie Case (cont)

Getting the MINUTES right:

• Minutes were signed by the chairman at the next board meeting in April 2001 - breaching section 251A(1) of the Corporations Act because this was more than 1 month after the meeting

• The minutes therefore lost their special evidentiary status, highlighting the importance and probative value of minutes

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2. James Hardie Case (cont)

Getting the MINUTES right (cont):

• Court cautioned directors to make sure they read minutes properly before approving them.

• Accurate recording of events at a meeting is important.

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3. Putting it into practice

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3. Putting it into practiceGetting the AGENDA right:

• Purpose of the agenda is to set out the subject matters that are for discussion at your board/committee meeting

• Following on from James Hardie, it is clear that directors/committee members should:

1. read all board/committee papers – make sure you understand the underlying facts

2. speak up if you do not understand something

3. beware of non-delegable duties and how to mange them

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3. Putting it into practice (cont)Agenda checklist:

1. Put the organisation name at the top of the document and the fact that it is a board / committee meeting

2. List the agenda items in a table format – include item numbers, page numbers, person responsible, action required

3. Include:

4. welcome and attendance

5. declaration of interests

6. minutes of the last board/committee meeting15

3. Putting it into practice (cont)

Agenda checklist (cont):

3. Include (cont)

• matters arising from previous meeting

• action items

• circulating resolutions

• CEO report

• general business - matters that need critical and detailed attention

• date of next meeting

• time the meeting concludes

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3. Putting it into practice (cont)

Getting the MINUTES right:

1. Official record of proceedings and resolutions – primary evidentiary source of what occurred at meeting

2. Getting it right is two-fold:

• Protect the interests of the organisation

• Protect the interests of individual directors/committee members

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3. Putting it into practice (cont)

Minutes checklist:

1. Use the past tense and active voice

2. If minutes are prepared before a meeting, prepare them at the same as papers and include substance and amendments after the meeting

3. Scrutinise for accuracy, address concerns before approving

4. Enter minutes into minute book within 1 month after meeting

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3. Putting it into practice (cont)

Minutes checklist (cont):

5. Record details of discussions about:

• Attendance

• Welcome

• Declarations of interest

• Minutes of previous meeting

• Action items

• CEO, financial, committee reports

• General business

• Next meeting

• Closure

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4. Questions

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www.millsoakley.com.au

Vera VisevicPartner

Phone: + 61 2 8298 5812Email: vvisevic@millsoakley.com.au

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