Minutes of board meetings: an important tool for the management body

Minutes serve a crucial function in a corporate governance context as they provide an accurate record of the decisions taken or recommendations made during meetings of boards of directors and board committees. However, once a meeting has been held, the importance of the minutes is often overlooked.

The Commission de Surveillance du Secteur Financier (CSSF) in its circular 12/552, as amended regarding the central administration, internal governance and risk management reminded the crucial function of the minutes by saying that:

“The work of the supervisory body must be documented in writing. This documentation shall include the agenda and minutes of the meetings as well as the decisions and measures taken by the supervisory body. The minutes are an important tool which must, on the one hand, help the supervisory body and its members monitor the decisions and, on the other hand, enable the body and its members to be accountable to the shareholders and the competent authorities. Thus, the routine items may be included in the minutes of a meeting succinctly, in the form of a simple decision, while important items on the agenda involving risks for the institution or jointly discussed must be reported in more detail, allowing readers to follow the discussions and to identify the positions taken.”

“The authorized management shall document its decisions by way of minutes of meetings, which must, on the one hand, help it monitor the decisions and, on the other hand, enable it to account for its management to the supervisory body and the competent authorities. Thus, the routine items may be included succinctly in the minutes of a meeting, in the form of a simple decision, while important items on the agenda involving risks for the institution or jointly discussed must be reported in more detail, allowing readers to follow the discussions and to identify the positions taken.”

Three takeaway points may be identified from the above:

1. Important items on the agenda must be reported in more detail. 

This point highlights the importance of the drafting of the minutes in order to allow the readers to follow the discussions and to identify the positions taken. Minutes must not only record the decisions taken but must provide enough background and materials to allow any manager, auditor or shareholder to understand the transactions at stake.

2. Minutes can be used as a monitoring tool regarding the decisions. 

Usually, the minutes of the previous meeting are approved by the management body at the next meeting. This process allows directors to (i) follow the decisions taken at a previous meeting and also (ii) have the opportunity to raise any issues regarding the previous meeting at the next. The work of the company secretary is thus crucial in this respect as it will provide consistency and continuity for this process. Anyone with access to the minutes should be able to see the evolution and monitor the decisions taken by the management body. 

3. Minutes will enable the body and its members to be accountable to the shareholders and the competent authorities. 

On this last point, it is worth mentioning that the management body has a duty of information towards the shareholders. The directors are mandated by the shareholders in order to carry out the mission they have been entrusted. Having well documented minutes will allow the management body to fulfil its duty of information. 

Drafting and finalising minutes takes more than a few minutes! You should never underestimate the crucial function of minutes once a meeting is held.