In late July 2022 KPMG received a record UK fine from Carillion and Regenersis audits, after providing inaccurate and misleading information to the regulator via KPMG creating false minutes of year-end clearance meetings. The result is a £14.4million penalty.
Whilst this is an extremely high-profile company, it should not overshadow the importance of smaller companies understanding the significance of accurate minute taking. After all, every company must record minutes of all proceedings during board meetings as per Companies Act 2006 (the “Act”), S. 248(1).
How to accurately prepare minutes
We outline six steps for preparing an accurate set of minutes:
- Prepare the minutes in reported speech format.
This is a way of recording what was said without using quotation marks. Instead of stating Example said “I approve the proposed project”, reported speech would be written, Example expressed their approval of the proposed project.
- State the name of the individual in the following situations:
- Example presented a Board paper on….
- Example declared a potential conflict of interest for…
- Example was opposed to the proposed plan…
- Provide a summary of key discussions rather than recording the conversation word for word.
- Record the rationale for any decisions and if anyone objected.
- State specific board papers being discussed. In certain circumstances, it is also important to highlight a section of a paper that is debated at length.
- Note when board members or attendees join and leave the meeting and highlight any breaks called by the chair.
What happens after the minutes have been drafted?
Once a set of minutes have been drafted, they should be reviewed by the chair to confirm they are an accurate reflection of what occurred. The minutes should then be circulated to the whole board for comments and finally approved at the following board meeting.
It is important at this stage for all parties to ensure that any additional information that occurred at the meeting, but has not been included in the minutes, is now added.
How long do you need to keep minutes?
As per the Act, S. 249, the minutes of the meeting, which purport to be authenticated by the chair, is then deemed as evidence of the proceedings of that meeting. Where minutes have been recorded, until the contrary is proved, the meeting is deemed to be duly held and convened and all proceedings at the meeting are deemed to have taken place.
It is important to note that whilst S. 248(2) provides that companies should keep the minutes of the meeting for at least ten years from the date of the meeting, the Corporate Governance Institute (CGI) recommends that they should be retained for the life of the organisation.
The CGI also recommend that any written notes prepared by the company secretary should be retained until the minutes are approved, at which point the notes should be destroyed.
What are the consequences of not making accurate minutes?
Board minutes are the official history of a meeting and therefore there may be occasions when parties may need to rely upon the minutes to determine exactly what occurred during that meeting. For example, if a company comes under investigation, the board minutes will be examined to understand what occurred and therefore could be presented during any legal proceedings.
Minutes are also a good way to keep executives and non-executives accountable for key decisions and actions from the meeting. Should inaccurate minutes be taken, this could also result in a disagreement about what occurred during the meeting and subsequent confusion.
As taking minutes at board meetings is a legal requirement in the UK, directors can also be held criminally liable for non-compliance.
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