It’s not in the Tea Leaves It’s in the Minutes

Its not in the Tea LeavesIts in the MinutesBrian HerdCarne Reidy Herd LawyersLevel 10, 193 North QuayBrisbane Qld 4000

P: 07 3236 2900E: [email protected]

Carne | Reidy | Herd






OutlineMeetings and memoriesThe power of meetingsAgendasLaw of minutesRole of minutesThe Good and the badMinute IssuesThe future of minutes


Meetings and MemoryMemoryEncoding, storing and retrieving informationProblems with memoryDegrades with timeDistorts with stressFades with ageReactivates unpredictably eg by odour


Meetings & Memory (cont)Collective v- Individual memoryCollective not as good as individualFree ridingMeeting loafingCollaborative inhibitionInadequacies of collective memoryDer! Groups unable to recall previously made decisions without the aid of written record (minutes)


Power of MeetingsPropositionThe larger the meeting the dumber it isCompare the public rally and the private meetingDo you agree?More people means more types of peopleGarulous idiotSilent geniusPolariserRefereeFair minderMe tooerFoolishness fearerBrinkmanshipperDisdainerEpicurian


Power of Meetings (cont)A good meeting is about:talking to discover collective wisdom; making decisions; and solving problemsThat is the moving force for minutesRecord of:DiscoveriesDecisionsSolutions


The Parents of MinutesThe AgendaMinutes are the progeny of the agendaPedigree of your minutes depends on the genetics of the agendaGood agenda means good minutes not minutaeDoes your agenda reflect your governance roleGovern not manageStrategy/compliance/review/policy


Basic Agenda

1.0Welcome and ApologiesAction2.0Disclosure of Interest3.0Minutes of Previous Meeting4.0Priority item A5.0Priority item B6.0Reports7.0Other Business8.0Next Meeting9.0Evaluation of the meeting10.0Adjournment


Minutes and the LawNo legislation on agendas but there is on minutesS.251A (1) Corporations LawCompany must keep minute book in which it recordsProceedings & resolutions of directors & members meetingsResolutions of directors and members passed without a meeting


Minutes and the Law (cont)Minutes must be lodged in minute book within one month of meetingIf not may not be used in evidenceAfter meetingSecretary responsible for compilingThen send to ChairChair to sing within reasonable time but will want verified by attendeesFor monthly board meetings at the next board meetingFor less frequent meetings circulate to attendees for verification before month elapsed


Minutes and the Law (cont)Once signed only clerical errors can be amendedCorrections to be passed at a future meetingMust keep minutes safely and indefinitely at main officeCan be stored in bound, loose leaf or electronic formatEg can scan copy of signed minutesMust be able to be reproduced in printed formFalsification is a criminal offenceMembers rights:To inspect minutes of general meetings but not directors meetings


Minutes and the Law (cont)Minutes as evidenceS.251A(6) Corps LawA minute is evidence of the proceeding, resolution or declaration to which it relates unless the contrary is proved.Minutes are increasingly being used as a way of holding Directors accountableJames Hardie The Disney case the case of the century!These laws apply to NFP corporations!


Role of MinutesAlways assume they will fall into the hands of A Current AffairNever to be assigned to:Regurgitated ritualA humble piece of parchmentNo valueNear enough is good enoughA legal document & contract between directorsRecord of governanceEvidence of your:Functionality DecisionsDutiesResponsibilitiesAccountabilityCompliance


Good MinutesYou need to have a policy on the style and contentIs less better?Traditional view but wave of litigation against directors suggests notThree broad types of minutes1. Minutes of actionIntro remarks to an item and action outcome2. Minutes of narrationIntro remarks, key discussion points and action outcome3. Minutes of resolutionJust action outcomes


Good Minutes (cont)Minutes should:Follow the agenda generallyBe a true and accurate record of a meetingHave clear and concise notes of main discussion pointsBe an accurate and clear register of decisionsa record of what was decidedPs not all meetings make decisionsRecord any independent advice received or any additional information tabled at the meetingNote who is responsible for actions and by whenNot be a job for amateursBe written in the third personBe dull (not the meeting)


Bad MinutesFive Frogs MinutesDithering documentIt would be great ifSomeone shouldDo we all agree to?Can you try to?Opinions and judgementsan excellent reporta heated discussion ensuedCriticisms or accoladesUnless by formal motionRecording views of individualsDirect speech or quotesWho said what and when


Bad Minutes (cont)Mr Poindexter, an experienced business man with an elderly mother he is caring for, thinks that the budgetary surplus should be directed more towards delivering home care in order to keep up with the pace of todays consumer care needs and that the organisation has selfishly ignored this aspect in favour of other initiativesORIt was suggested that the budgetary surplus should be directed more towards home care in order to meet the care needs of consumers


Bad Minutes (cont)Pursuant to the agreement, Mr Wendt received a cash payment of $45,000,000 at signing which amount was partial compensation for benefits he was forfeiting from a prior employer.Minute of meeting of Directors of Conseco (huge USA corporation)


Bad Minutes (cont)Meeting Item MealsChair One of the issues that came up while you were away, Bronwyn (CEO) is that when you step in as a chef if you like, the residents really enjoy the mealsBronwyn I havent done that for a whileChair Perhaps the general cooks need a bit of tutoring from youBronwyn I think that is to do with the flavour and overall I dont have any issue with the food as I eat here several times a week although there are things I dont like ie the vegetablesAnd on and on it goes


Bad Minutes (cont)Meeting Item Maintenance ReportPrice lists from 3 mower places were received and approval given to purchase the Cox Ride On from Barrys Mower Centre for $4990Room 23 has a water leakGenerator is not startingMeeting Item ConstitutionAll amounts of $20 or over shall be paid by cheque and signed by any two of the Chair, Secretary or Treasurer. So we need to review our Constitution.Meeting Item Correspondence InFair Work Ombudsman Wages Audit


Bad Minutes (cont)Minute of a Board meeting of a healthy lifestyle organisation (USA):

Item Membership of Board of DirectorsIt was discussed that, as advocates for a healthy lifestyle, the Board members should be seen as good examples of such a lifestyle.It was resolved that a motion be put to the next general meeting of the organisation that a qualification for all Board members to be, or remain, a board member was to have a body mass index (bmi) no higher than 22


Minutes IssuesWho takes the Minutes?Secretary responsibleCan be someone appointed by the BoardCan be a director or employee or even an outsider


Minutes Issues (cont)Should reasons for decisions be recorded?Two schools of thought:1. Recording of general discussion sufficient2. Accountability & due diligence requires summary of reasonsMy view is a brief outline of factors is adequate


Minutes Issues (cont)Should directors take their own notes?No legal obligation toCan be evidence in a court issueHelpful as a defence mechanismDangers and can create unintended consequencesOnce minutes approved a directors notes are moribund


Minutes Issues (cont)Should there be minutes of in camera meetings?Eg without the CEO or if a Director has a conflictyou should record especially if there could be consequences eg sacking of CEO


Minutes Issues (cont)Should a dissent be recorded in the minutes?If you attend a meeting then you are assumed to have agreed with a resolution or the action taken unless your dissent is recordedIn this day of director accountability recording dissent is importantIf you dont attend a meeting you are assumed to have consented to the actions of that meeting unless you provide a dissent within 7 days of becoming aware of the resolution


Minutes Issues (cont)Should Board Minutes be made public?No legal requirement unless required by ConstitutionMost NFPs dont and there are good reasonsTransparency has risks ranging from dissension in the ranks to breaches of privacy and confidentialityYour are entrusted by the organisation to govern the organisation and your accountability is at the AGMNote the Sunshine Laws in USA


Minutes Issues (cont)Should a Board Committee meeting be minuted?Yes


The Future of MinutesWhat minutes tell usBoard PolicyTechnologyACNC


What Minutes tell usWhat minutes tell me:The quality of governanceThe quality of contributionsAwareness of obligationsMinutes which are a morass of minutae Struggling organisationNo strategic focusOrganisations who have a contemporary and considered policy on agenda setting and minute taking successful


Policy on MinutesThe law treats minutes very seriously nowThey are evidence of the functioning of a boardThey are used to assess directors liabilityLess is more may no longer be appropriate policySummarising discussions and giving beef to the minutes is the new trendEncapsulates the business judgement rule


TechnologyeGovernance & Digital DirectorsTechnology is changing how boards operate and who sits on boardThe HowThe use of SkypeThe paperless BoardI Pads for DirectorsThe WhoBoards starting to look beyond the usual suspects and see the advantage of digitally smart Directors


ACNCGovernance StandardsMust comply with to ensure continuing registrationmechanism which may enliven the enforcement powers of the ACNC (The Regulations)Five standardsMaintaining not for profit purposeAccountability to membersCompliance with the lawSuitability of responsible entities (eg Directors)Duties of responsible entitiesImpact on minutes?


ACNC (cont)Governance Standard 5Organisation must ensure its responsible entities (Directors) comply with their dutiesAct with careAct in good faithNot misuse their positionNot misuse informationDisclose conflict of interestManage financial affairsNot operate while insolventWhat is the best evidence of this?THE MINUTES!

The Price of Good Governance is Eternal Vigilance (and great minutes)Brian HerdCarne Reidy Herd LawyersLevel 10, 193 North QuayBrisbane Qld 4000

P: 07 3236 2900E: [email protected]

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It’s not in the Tea Leaves It’s in the Minutes

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