Admittedly, one of the more mundane tasks of a director, in-house lawyer or company
secretary is keeping board minutes; often written up in haste, circulated for approval, and
then forgotten about. However, like many things mundane, they don’t matter until they do.
Below I set out why they matter, the consequences of failing to keep proper records, and
practical tips for drafting good minutes. Please note that most of the below applies to English
incorporated private limited companies.
Keeping a record
Under English law it is a statutory requirement for companies to keep a record of director’s
meetings and to keep those records for at least ten years from the date of the meeting. Such
records may be stored in hard copy or digital form, however if they are in digital form they
must be capable of being reproduced in hard copy (e.g. printed on paper).
There is no statutory requirement to keep records of informal director decisions. However,
the company’s articles of association (“articles”) might have specific requirements for
informal decisions. For example, the Model Articles for private companies require that
directors must ensure that records are kept of every unanimous or majority decision taken by
the directors.
Consequences of not keeping a record
Decisions by directors will not necessarily be invalid if they are not properly recorded (a
question we are often asked by clients). However, if a company fails to keep proper records
of directors’ meetings, a statutory offence is committed by every officer of the company (not
the company itself) who is in default, which may lead to fines being imposed. If the
company’s articles contain provisions on keeping records of meetings and the directors fail
to do so, then such directors may be in breach of their duties to the company, including the
duty to act in accordance with the company’s constitution.
The other side of the coin is that board minutes matter most where bad decisions are made
in good faith (having followed all relevant procedures). Board minutes that comprehensively
record proper procedures being followed and considered decisions being made, can prove
incredibly valuable in difficult situations (e.g. having a complete record of decisions made
during the weeks and months leading up to a company’s insolvency).
What should board minutes look like?
There is no prescribed form for board minutes/resolutions, however in a large corporate
group it is often preferred to use the same format across all group companies. The look and
feel of a company’s board minutes will depend on various things, such as the nature/size of
the company, the business being discussed at a particular meeting, and whether the
company is private or public. Certain transactions (e.g. a share buy-backs) will require
bespoke and often complex minutes to be drafted (often by the company’s solicitors).
In any event, and as a rule of thumb, board minutes/resolutions should record formal
discussions and (crucially) all decisions made at a meeting. Minutes do not need to read like
a transcript of the meeting. Commercial discussions that do not result in a formal decision
being made need not be recorded. However, some companies use board minutes as a
catalogue of such discussions (which can be a helpful historical reference tool). There is an
interesting difference here between UK/EU companies and US companies, which is that
EU/UK companies tend to record discussions that lead to formal decisions in far more detail
than their US counterparts (the latter typically recording simply that “discussions ensued”,
for example).
Practical tips (for good minutes)
Irrespective of the nature/business/size of the company and what is being discussed/decided
at a particular meeting, a good set of minutes should include most, if not all, of the following:
- 1. Pre-meeting. Ensure that all directors receive an accurate, up to date board
pack (agenda and reading materials) ahead of the meeting and with sufficient
time (5-7 days) to prepare for the meeting. This doesn’t need to be recorded in the
minutes, but it sets the tone and expectations for the meeting. - 2. Company details. Company name, number and registered address.
- 3. Meeting details. Date, time and place of where the meeting was held.
- 4. Attendee details. Name those who were in attendance (whether in person or
remotely), who was absent, and indicate who was nominated as chairperson. - 5. Quorum. Note that the meeting was duly convened and that a quorum was
present. - 6. Purpose and background. Describe the purpose of the meeting, i.e. that it was
convened to approve a specific action or transaction. Explain the commercial
rationale for the proposed action/transaction, and the financial and/or legal
advice received in relation to it. Use this as an opportunity to define important
terms. - 7. Declaration of directors’ interests. List the directors and their respective interests in the
business being transacted in the meeting. Check the articles for
approving director conflicts and whether interested directors may count in
relation to quorum and voting. - 8. Documents. List the material documents (and whether in draft or final form) produced
and considered at the meeting. - 9. Resolutions. Clearly record the formal decisions (resolutions) taken by the directors. Take care to explain that the proposed action/transaction is in the best interests of the company. Note, resolutions may be conditional on something else occurring, such as a shareholders’ resolution being passed.
- 10. Practicalities. For example, where a transaction is approved, note that the
company (not the directors) will be entering into that transaction and that the
directors are authorised to execute the relevant documents (whether by simple
contract or deed). - 11. Administration. The directors, secretary or external solicitors should be
instructed to carry out relevant administrative tasks in relation to the director
resolutions, e.g. Companies House filings, updating statutory books, issuing share
certificates etc. - 12. Sign and date. Ensure that (i) the chairman or all directors (where unanimous
decisions are required) sign the minutes/resolutions, and (ii) that the
minutes/resolutions are dated. Unsigned, undated board minutes is incredibly
common, and an easy fix to keep your records in good order.
If you would like to discuss any of the above in further detail, please contact Albert Mennen
(Albert.Mennen@twobirds.com) at Bird & Bird LLP, or any other member of the Bird & Bird
LLP corporate team.
This article was written by Albert Mennen, Senior Associate at Bird & Bird
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