Holding board meetings is an important part of running a business. Learn more about your responsibilities, the documentation you’ll need, and how to arrange efficient meetings.
What you’ll discover:
What does a board meeting accomplish?
What papers must be prepared prior to the meeting?
What papers are being utilized during the meeting?
What papers are utilized in the aftermath of the meeting?
Although each state has somewhat distinct corporate laws, several essential needs, such as conducting regular board meetings, are the same. State regulations often demand maintaining accurate and comprehensive records for board meetings, as well as ensuring that specific papers are produced before and after the meeting. A company might face severe legal and tax issues if these discussions are not properly documented. These are some often asked questions regarding what you need for productive board meetings.
What does a board meeting accomplish?
A company is required by law to have a board of directors. The board of directors is an elected group of individuals that represent shareholders. Stockholders are individuals who possess shares in a corporation. The frequency with which board meetings must occur varies by state, however all states require meetings at least once a year.
A board meeting is a formal gathering of the company’s board members, who have the responsibility of overseeing and guiding the organization. Meetings may be planned at a certain day and time, or they can be called as needed. Board members plan for the organization, vote on significant choices, and approve other plans at board meetings. Board meetings adhere to the organization’s guidelines as well as any rules established by the board members.
Companies often establish rules that regulate how board meetings are handled. Such guidelines may be included in the Articles of Incorporation. These rules may specify how many meetings are held each year, when elections are held, who takes over when a leader steps down, and how decisions and plans are made. They also establish additional regulations, such as when meetings may be canceled.
A quorum, or a minimum number of board members, is normally required before a meeting may begin; otherwise, the meeting is invalid. Various states have varying standards regarding what constitutes a quorum, and smaller boards may just need a few members.
What papers must be prepared prior to the meeting?
In most circumstances, multiple paperwork must be completed prior to a board meeting.
Notice
First, the corporation must usually provide members with enough notice of the meeting. Although state rules vary, many require meetings to be notified a specific number of days in advance. The corporation may send a Notice of Meeting to board members, informing them of the meeting’s date, location, and time, as well as if it is a special meeting. If the corporation is unable to provide sufficient notice in a timely manner, the board members are normally required to sign a Waiver of Notice. According to this paper, the board members are OK with not receiving official notice of the meetings.
Agenda
Before holding a meeting, an organization’s regulations, or bylaws, may require the board to have a specified list of topics to discuss. Even though it is not compulsory, preparing a topic plan before to meetings may be beneficial to board members. An agenda informs the board of what the meeting will address and helps them to prepare efficiently. An agenda may also assist in keeping meetings structured, efficient, and on schedule.
Minutes
After the meeting begins, companies are often required by law to keep minutes. Minutes are simple records of what was stated and agreed during the meeting. These regulations normally do not require specific material to be included in the minutes, although well-written minutes are usually rather extensive.
Minutes generally capture all board resolutions and other significant actions. If they fail to incorporate these critical judgments, board members or the corporation may face legal consequences. At each meeting, the secretary for the board of directors normally signs the minutes. Companies may wish to utilize a Corporate Minutes template to ensure that their meetings are properly documented. It is best practice to allow board members to see the minutes from the previous meeting either immediately after it concludes or before the following meeting begins.
Proxy
If a board member is unable to attend a meeting, they may appoint someone to vote or speak in their place. The word proxy may apply to both the person selected and the formal declaration granting that individual the right to vote. General and particular proxies are available:
A general proxy allows the proxy to vote on their own behalf.
A particular proxy, also known as a limited proxy, specifies how the board member wants their proxy to vote.
State laws and the rules of the company typically govern how proxy voting works, such as whether the proxy must be in writing.
Packet for the Board Meeting
It might be beneficial to compile all of the materials into a packet to assist board members in preparing and staying on track. Other materials that may be included in a board meeting package include:
The present business strategy.
Information sheets.
Reports on human resources and management.
Performance evaluations.
Financial statements.
Legal documentation for litigation and compliance.
Budgets that have been approved.
Committee reports are available.
Highlights of the program.
The bylaws of the organization.
Important transactions and communication.
What papers are being utilized during the meeting?
Many papers are used by board members during the meeting. The meeting minutes are one of the most crucial. They usually need to be a genuine and accurate record of what transpired at the meeting.
Before or during a meeting, board members may review the minutes from the previous meeting. Reviewing the minutes ensures that everyone is aware of what occurred and that the meeting proceeds well. Once approved by the board of directors, the minutes become part of the organization’s records.
Reports
Board members may also review reports provided by staff, the CEO or president, other board members, or consultants during board meetings. These reports may explain crucial corporate news or developments. They may keep board members up to speed on how the firm is performing and what transpired in previous meetings. They are usually kept as part of the company record.
Resolutions
Other significant board meeting papers include resolutions. A Board Resolution, also known as a Corporate Resolution, is a mechanism for a company’s board of directors or investors to memorialize a decision taken for the business. After a board meeting, this paper documents the facts of that decision in writing.
A Corporate Resolution is an essential compliance document that documents any key decision taken by shareholders or a board of directors at a meeting. This document is often used by the board when a new board member is elected, or when the firm employs a new employee, sells stocks, or takes other major choices. It is often a written record of a required corporate activity. Company resolutions may offer the essential documentation of board actions and leaders. The Internal Revenue Service (IRS), state regulators, investors, and business executives may subsequently review them to ensure that the firm is adhering to rules, tax laws, and its own bylaws.
Information Sheets
Fact Sheets may also be created by businesses for their board members and other interested parties. Fact sheets often summarize facts in an easy-to-understand style. These papers consolidate company information and serve as a fast reference for other topics such as legal difficulties, debts, financials, and more.
What papers are utilized in the aftermath of the meeting?
After meetings, firms should ensure that all Board Resolutions are documented and filed in the company’s records. Meeting minutes should also be provided, and all meeting records should be securely preserved. Other papers to consider utilizing after a board meeting, although not generally legally needed, include:
Action items to be followed up on by board members or company executives.
Post-meeting questionnaires to solicit input in order to improve future sessions.
Compliance documentation that may be required by federal or state legislation.
The next Meeting Announcement.
It is essential to keep company documents like the ones stated above in order to avoid legal, tax, and financial problems. Effective record-keeping may also aid your company’s responsibility, growth, and appearance to possible investors, partners, or purchasers.