Your ‘no’ should be in the board minutes (Part 2)

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Bothwell P. Nyajeka

LAST week, I argued that board minutes should never be treated as an adminis­trative formality belonging only to the company secretary. They are part of the gover­nance process and may serve as a vital shield for both the company and individual directors should things go wrong.

I also shared a few practices that I have de­veloped over my years of serving on boards. The first was simple. Take your own notes during important board discussions. Your per­sonal notes are not a substitute for the offi­cial minutes. Their real value is that they help you interrogate the official record when it ar­rives.

If you raised a material concern, opposed a transaction or asked that certain information be provided before a decision was made, you should be able to confirm whether the minutes fairly reflect what happened.

This brings me to my second point. Read the draft minutes carefully. Too many directors de­vote hours to reading board packs and allocate only a few minutes to reading the minutes of the previous meeting. That is a mistake.

The board pack tells you what management wants the board to consider. The minutes tell you what the board actually did. When the company secretary circulates the draft, do not simply check whether your name appears un­der “Present”. Read the document as though someone unfamiliar with the meeting may one day have to understand what happened from those pages alone. Most importantly, if you voted “no”, does the record somehow make it appear that everybody said “yes”?

There is a tendency in some boardrooms to produce “polished” minutes in which every difficult discussion becomes “the board delib­erated” and every contested decision ends with “the board approved”. I do not think this is cor­rect.

Whilst minutes do not need to become tran­scripts, if directors seriously challenged a pro­posal, the record should capture the broad na­ture of that challenge. If material alternatives were considered, that should be reflected. If a director expressly votes against an important resolution and requests that their dissent be re­corded, that dissent should be reflected in the final minutes.

Imagine a board considering an acquisi­tion. You challenge the valuation assumptions. You question whether adequate due diligence has been performed. You raise concerns about funding. You ultimately vote against the trans­action. Two weeks later the draft minutes read as follows. “The board considered the pro­posed acquisition and unanimously approved the transaction.” Would you allow those min­utes to be approved? My answer is no.

This is why approval of minutes at the next meeting matters. If the draft does not accu­rately record a material matter, request a cor­rection before approval. The amendment need not contain a lengthy defence of your position. Something as simple as the following may be enough. “Following discussion of the valua­tion, due diligence and funding risks, Director X requested that his dissent from the resolution be recorded.”

Third, when the final draft comes back in the next board pack for approval, read it again. Do not assume that the version in the board pack is identical to the version previously circulated. If there is an inconsistency, raise it before the minutes are approved at the board meeting. If the disagreement is material, ask for your con­cern to be recorded.

Fourth, use technology. Artificial Intelli­gence tools (AI) can assist directors and com­pany secretaries in comparing versions of minutes, identifying inconsistencies, check­ing spelling and grammar, and testing wheth­er references in draft minutes corre­spond with information contained in the board papers. For directors, this process is important because a poorly drafted sentence can distort what hap­pened. An ambiguous resolution can create uncertainty over what the board actually authorised.

Ultimately, when corporate gover­nance is scrutinised during regulatory investigations or litigation, well draft­ed minutes become the shield. These board minutes may serve as the vital evidence that vindicates both the com­pany and the courageous director who stood his ground and said “no”.

That is why directors should take their own notes, carefully review the first draft of board minutes, read the final version again, use AI tools to identify inconsistencies and insist that material dissent is accurately record­ed.

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