A Case Study in Board Minutes
“I want you to give some advice to my son, who is running his own business. What are the best steps he can take to make sure the business is successful?”
Well, although I have never met your son and don’t know his background, I am happy to tell you one thing that any businessman should implement into his business that will ensure its best chances of success.
Firstly, although there is an explicit requirement under the Companies Act for directors to hold meetings, it is difficult to demonstrate that decisions were made in a timely manner unless they are recorded in a properly formatted Board Minute.
Even if your son is the sole director, he should start as he means to go on, set aside time to meet with himself or a third party and get the minutes properly recorded.
“Quite frankly, that sounds ridiculous!”
I thought you might say that, but all I can tell you is that I have found this very helpful in assisting directors in managing their companies and in making decisions. Most decisions are emotionally based; a board meeting recording decisions provides an opportunity for reflection.
“I can’t think of one small business that uses board minutes.”
Quite. That’s why so many end up in trouble.
“So typically, what needs to go into these board minutes?”
Certain items should always be on the agenda. These consist of:
Date, time, and place of the meeting.
a list of the attendees and directors.
approval of a quorum.
Conflicts of interest disclosures
Documents supporting the discussion’s points are provided.
Plus anything that binds a company, so any contract with a supplier, lease agreements, bank mandate authority information, etc.
“We already hold all that information in files …”
Where are these files?
“Well, our bookkeeper has some, as she has responsibility for making payments of the rent and to making any regular direct transfers of money, and the other files are around here somewhere.”
So, what you are telling me is that her responsibilities and authority to make payments are fully documented in the Bank Mandate Minute.
“I am not sure that is true.”
A failure to implement this fairly basic security measure has just cost a UK company £1.6 million.
I assume your son is fully aware of the important dates and financial implications of the contents of the files that you cannot produce at this moment.
“More or less…”
So, what is the exact date the lease ends on the premises?
“He thinks that it is May 5th, 2025 …”
THINKS!
Promise me you will sort this out over the next few days, as you need to prove to me your son is in control of the business.
