Your ‘no’ should be in the board minutes

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Bothwell P. Nyajeka

THERE is an old saying that the pen is mightier than the sword. In the boardroom, few things demonstrate the truth of that saying more powerfully than the minutes of a board meeting.

In my earlier article, “What happens when a director says no?”, I argued that psychological safety is foundational to effective corporate governance. Directors must be able to say “no” to shareholders without fear of intimidation or retaliation. Furthermore, precise minute making is not just an administrative task, but a spe­cialised skill vital to safeguarding that psychological safety.

Corporate minutes do not merely re­cord boardroom proceedings, they serve as a director’s first line of defence against personal liability, regulatory scrutiny and, in serious circumstances, criminal prose­cution. Recognising this critical function should fundamentally change how board members view and approach board min­utes.

Under Zimbabwe’s Companies and Other Business Entities Act, companies are required to maintain written records of board meetings and executive deci­sions. These minutes establish a defini­tive documentary history of a company’s governance. They can provide evidence of whether directors exercised their re­sponsibilities with appropriate skill, care and attention and whether decisions were taken in what directors considered to be the best interests of the company.

The importance of minutes often be­comes apparent only when something goes wrong. I usually remind boards that where an unlawful or reckless decision comes under investigation, an individual director’s position may depend signifi­cantly on the evidence showing whether that director participated in, supported or opposed the decision.

Imagine, for example, months or years after a transaction was approved, regulators determine that the transaction was unlawful or reckless. If the minutes demonstrate that a director was absent when the problematic decision was taken, that fact may absolve the director from personal liability. If the director attended but voted against the proposed course of action and requested that the dissent be recorded, the minutes may provide crit­ical evidence distinguishing that direc­tor’s conduct from the collective decision of the board. Conversely, if the minutes show that the director was present, par­ticipated in the deliberations and voted in favour of the problematic decision, that record may become evidence considered in determining whether the director acted unlawfully or recklessly.

This is why a director should never treat minutes as something belonging only to the company secretary. The min­utes are part of a governance process, and every director has an interest in en­suring that they accurately reflect what occurred.

In my years in corporate life, I have experienced situations where board minutes had to be produced during in­vestigations involving tax or exchange control authorities. In those situations, the minutes became our shield. They helped demonstrate the authenticity of the representations being made about de­cisions that had been taken several years earlier.

Given the immense legal weight of corporate minutes, their drafting de­mands precise documentation of where and when the meeting took place, who attended, the agenda considered, mat­ters submitted for decision or voting, the outcome of each vote where applicable, and the resolutions adopted by the board including the thinking upon which the de­cision was based.

Where a director declares an inter­est, abstains, recuses themselves, votes against a proposal or asks for a concern to be recorded, the minutes should accurate­ly reflect that.

There are different schools of thought on minute writing. Some organisations prefer detailed minutes capturing sub­stantial portions of the deliberations. Others favour concise minutes focused primarily on resolutions, decisions and directives. Whichever style an organisa­tion adopts, someone reading the minutes later should be able to understand the ma­terial issues considered, the broad nature of the deliberations, the decisions or reso­lutions reached, and any directives issued by the board.

In today’s world of artificial intelli­gence (AI), companies increasingly have the ability to maintain much more com­prehensive records of meetings. Subject to the company’s policies and applicable legal and confidentiality requirements, there may be value in retaining an au­thorised detailed recording or transcript while preparing formal minutes that summarise the deliberations and clearly capture resolutions and directives. Where such detailed records are legitimately maintained, the company’s records man­agement framework should determine how they are stored, protected, accessed and retained under the custody of the company secretary.

The discipline surrounding minute making begins immediately after the board meeting. As good governance practice, the company secretary should prepare the draft promptly and submit it to the chairman for initial review before circulating it to directors for comments and correction. I generally favour com­pleting this process within 14 days of the board meeting.

There is a practical reason for this. Two weeks after a meeting, directors can usually remember the context of a discussion. Several months later, recol­lections become less reliable. Directors receiving draft minutes should therefore not simply acknowledge the email and move on. They should read the document while the meeting is still relatively fresh in their minds and identify discrepancies, omissions or errors.

The process by which minutes are approved is almost as important as what is written in them. In many boards, ap­proval of the previous meeting’s min­utes appears near the beginning of the agenda, commonly after confirmation of quorum and declarations of interest. Unfortunately, because it is routine, di­rectors sometimes treat it as a procedur­al inconvenience. That approach can be dangerous.

When directors approve minutes as a true and correct record, they are collec­tively authenticating the official account of the previous meeting. Directors should therefore satisfy themselves that the re­cord is indeed accurate before approving it. After approval, the minutes should be signed by the board chair and maintained as part of the official company record. If the board subsequently changes its mind about a decision, the previous minutes should continue to show what was actu­ally decided at the earlier meeting, while the minutes of the subsequent meeting re­cord the amendment, reversal or replace­ment of that decision.

Over the years, I have developed a few practices that I have found helpful when serving as a director.

First, take your own notes during im­portant board discussions. I am not sug­gesting that directors create competing sets of formal minutes. Rather, personal notes can help a director remember the issues considered, questions asked, con­cerns raised and important decisions reached. When the company secretary circulates the first draft, compare it against your recollection and notes. Ask yourself: Does this accurately capture my understanding of the deliberations? Is the resolution correct? Was an important qualification omitted? If I opposed some­thing significant, has that opposition been recorded where appropriate?

l Nyajeka is a business consultant and board advisor. He has vast experience as a corporate executive and has sat on various boards in Zimbabwe, Botswa­na, South Africa and Uganda. He is currently chairman of ACR Solutions and is also a seasoned trainer and fa­cilitator for the Institute of Directors Zimbabwe (IoDZ). For business con­sulting, board advisory and executive coaching services Email him on: bnya­jeka@acr4solutions.com