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Key20 Board meetings: art, science and requirements

Boards most commonly meet monthly, bimonthly or quarterly. Most boards have an established date for meetings to allow directors to plan their schedules. Corporation law requires that notices be posted of board meetings, but board members may choose to waive notice in the interest of holding an emergency meeting between regular meetings. Generally the corporate secretary’s office or office of legal counsel is responsible for the notice and scheduling of board meetings.

In most states board meetings can be held by telephone and all states require that a quorum, as established by the bylaws of the company, be present before the directors can begin conducting business.

The actual process of the meeting follows the rules of Parliamentary procedure and in situations in which there is disagreement and contention on the board, the rules of procedure can very often determine the results.

Board authorizations are required for everything from credit lines to securities offerings to the sale of land. Day-to-day business transactions such as contracts with suppliers can be delegated to the management team of the company but corporate-wide transactions require board authorizations. These authorizations come in the form of resolutions proposed, debated and then adopted by the board. Those resolutions can originate in committees. The resolution is the way the corporation, the artificial person, officially takes action. To authorize the use of this artificial person’s funds, the board must follow formal procedures and issue official directions in the form of the resolution, which is the corporation’s way of speaking to those who would do business with it.

All the procedural aspects of the board meeting are documented in minutes of the meeting kept by the corporate secretary. Board minutes should reflect motions, seconds to motions, discussions, abstentions and votes. The minutes should also reflect any entries and exits by directors and officers so that there is a permanent record of who was present during what discussions.

One thing board minutes need not reflect is the exact content of the discussions on issues. Board meetings are confidential for insider trading reasons as well as to ensure that discussions are candid and the board has the chance for free and open discussions.

Directors who vote against resolutions, abstain from voting due to conflicts or withdraw from meetings to avoid influencing board action should be certain that those actions are reflected in the minutes.