Franklins First For Your Success: What’s the point of Board Minutes?

As any director should be aware, under s248 of the Companies Act 2006 the board of a company are required to keep minutes of proceedings of directors. They must be retained for at least 10 years and a failure to comply is an offence by any officer in default. It is easy to picture a large corporate boardroom full of directors who account to the shareholders for their actions and to understand the requirement for Board Minutes in these circumstances. However, when it comes to SMEs, owner-managed and family run businesses the requirement for board minutes often seems draconian and an unnecessary burden on the individuals involved. Nevertheless, they remain equally as important to evidence due procedure and ultimately the reason behind your decision-making.

It’s an Offence!

Firstly, failure to maintain board minutes is an offence under the Companies Act 2006. However, this is not the only potential consequence of failure to maintain appropriate minutes.

They are a Defence against Proceedings

I would hope that it never comes to this, however litigious proceedings can be an unfortunate part of business. You can be forced to defend a claim even if it is unfounded and certain claims, such as fraud or misrepresentation, could all hinge on whether or not there was the requisite authority to enter into a contract. See our Case Study on how Board Minutes can impact proceedings.

Similarly, you may find yourself relying upon them in winding up proceedings to justify your actions and decision making. Whilst Board Minutes are not a defence to any decisions made, they can certainly evidence why you made a decision and what you consider to be in the best commercial interests at the time and reduce your risk of exposure.

Ultimately, maintaining board minutes might be a chore, but they go a long way to protecting you as an individual as they evidence due process and compliance if the decision in question is ever challenged in any capacity. If you would like to know more about the process for convening a board meeting, please see our How To guide.

If you would like to know more about directors duties, decision making and maintaining appropriate minutes contact Holly Threlfall at holly.threlfall@franklins-sols.co.uk or on 01604 828282 / 01908 660966.