A board must meet, and report on those meetings, at regular intervals throughout the year. These meetings set the strategy, identify risks and review operational matters as required.
The regular, ongoing cycle of board and committee meetings (and related reports) comprises most of a board’s time over a typical year.
The board monitors strategy implementation, risks and operational matters and makes informed decisions in these areas.
This aspect of the annual governance cycle is concerned with monitoring:
- strategy implementation
- risks and operational matters
- promoting appropriate management behaviours, systems and processes
- driving the public entity to achieve agreed outcomes more effectively.
It includes consideration of the following:
- Performance: Internal performance reporting/forecasting on both the public entity’s operations and its financial statements; scheduled management presentations on all aspects of the public entity’s activities; and stakeholder monitoring.
- Compliance: Ongoing monitoring of compliance and risk management matters.
Board meetings are a fundamental governance process. They provide the main opportunity for directors to obtain and exchange information and to consider and make decisions. The board should allocate adequate time to board meetings so all business brought before the board can be properly considered.
The board should develop clear procedures based on the governance principles of transparency, integrity, honesty and accountability. This provides a framework to conduct meetings and record decisions.
When making decisions, the board must consider all aspects of an issue and seek advice to help directors understand the full implications of the decisions they make. The board should ensure that the decisions it makes are legally valid, comply with government policy, and are ethically sound and fair.
Attendance and Time Commitment
Directors must understand the time commitment of serving on the board, including taking the time to prepare for and attend a minimum 75 per cent of meetings and for serving on board committees.
For effective decision-making at board meetings there needs to be:
- a carefully prepared agenda
- papers relevant to particular items on the agenda
- frank and open discussion
- an outline of the way the board conducts its business, including whether decisions are taken by consensus or vote
- accurate, timely records of decisions, discussion and dissent which are included in the minutes of the meeting
- rules about access to information
- access to independent and external professional advice at the public entity’s expense subject to the written consent of the chair to seek such advice.
Some establishing legislation sets out aspects of meeting procedure, such as who needs to attend and how often, how votes are taken, the roles of office bearers and notification rules. A board may develop additional meeting procedures, which can be documented in the board charter and/or governance policy.
Types of Meetings
Directors attend regular board meetings, committee meetings, retreats or planning days and annual general meetings.
The frequency of board meetings depends on any specifications in the enabling legislation, any guidelines or policies from the portfolio department or the particular circumstances in which the public entity is operating at any particular time.
The dates for board meetings should be set well in advance with the agreement of all directors and confirmed in writing directly to the director.
Access to Board Papers
Directors have a right of access to the board’s documents, such as the board meeting papers, minutes and declarations of private interests, to assist them in performing their duties.
Directors are permitted to retain their papers at the end of a board meeting, but must treat them as confidential.
It has become common practice in Australia for companies to enter into a deed of access with each of their directors and officers.
The deed provides the individual with access to company documents and records while they hold the office of director. It also gives them access after a specified time after they cease to hold this office should a claim ever be made against them in relation to their office now and in the future (subject to the Limitations of Actions Act 1958). Some public entities make use of deeds of access.
All public entities should consider making use of deeds of access to clarify the rights of directors and former directors when they accept an appointment.
An agenda listing matters that will be considered must be prepared for each board and committee meeting. The agenda should be sent to directors at least five days ahead of the meeting.
Most public entities also send out supporting information including explanations, related documents and who will address each agenda item and recommendations.
The following is a typical process for preparing an agenda:
- chief executive officer drafts the broad agenda in consultation with the chair, usually following a template
- directors are asked whether they have any agenda items
- board secretary or chief executive officer prepares the draft agenda
- chair approves the final agenda.
At the beginning of the meeting the chair should check for any items of other business that directors wish to raise and alter the agenda order if required. Important items requiring significant discussion should be considered in the early part of the meeting.
A ‘starring’ approach is sometimes adopted, whereby only starred agenda items are discussed and voted upon. Otherwise the matter is taken as read and (if applicable) the recommendation of management is accepted. This can be appropriate at times where the supporting documentation provided by management comprehensively addresses the issue so there is no need to discuss further.
The chair or a majority of directors may request that specific people are invited to attend the meeting to assist the board’s decision-making. Examples are a senior manager, legal adviser, contractor or on occasion, or the minister.
The chief executive officer, board secretary or other senior manager is responsible for preparing and circulating board papers (sometimes referred to as the board pack).
Any board papers accompanying the agenda should be circulated an agreed minimum number of days before a meeting (usually five).
Papers should be clearly marked in the agenda as either papers containing information, or papers requiring a board decision.
All decision papers should contain a clear recommendation for action in the conclusion. Preferably this notes the options considered in coming to the recommendation in the body of the paper. The recommendation for action should clearly spell out the proposed wording of the board resolution management is recommending.
The board secretary or chief executive officer needs to file a complete set of board papers in accordance with the Public Records Act.
A quorum is the minimum number of directors who need to be present for the board to legally transact business.
The establishing legislation should spell out the number of directors required for decisions to be made. Otherwise the board should make a decision on what constitutes a quorum at its first meeting following its formation.
The board can still meet if a quorum is not present, but it will not be able to make a decision. A standard option is to require at least a majority of the directors who can vote to be present in order for there to be a quorum.
Role of Chair in a Board Meeting
The role of the chair is to ensure that business is conducted efficiently and effectively and that meeting rules are adhered to.
The chair needs to facilitate discussions, and keep directors on track and on time. When a topic has been fully discussed, the chair should summarise the discussion and seek agreement or vote on a decision.
Formalities at the Start of a Meeting
The board secretary or minute-taker notes meeting attendees.
The chair checks whether any of the agenda items raise issues of conflict of interest for any director. They also check whether there are any updates to any directors’ conflicts of interest already disclosed. Preferably any such conflicts of interest should be provided prior to the meeting.
If there is a lot of routine business, the board could consider having a consent or ‘for noting’ agenda. This is where routine motions will be carried automatically, unless someone asks the chair to move any of them to the regular agenda.
Subject to any amendments, the board approves the minutes of the last meeting (only for directors who were at the meeting).
Matters arising from the minutes are then considered – this is an opportunity for directors to raise anything not covered in the agenda. Matters arising, or action items, are a report on progress with actions following decisions at previous meetings.
Any decisions made are formally recorded in the minutes to give management clear direction.
Resolutions and Voting
A ‘motion’ is a proposal for action. ‘Moving’ a motion merely means putting the proposal forward to be voted on by directors.
It is common practice for a resolution to be agreed by the board without a formal motion or vote. Instead, led by the chair, the board discusses the recommended resolution proposed by management and agrees whether or not to endorse that recommendation.
In some cases a board prefers that a motion have a second director to indicate support for it. They are known as a ‘seconder’.
A motion that cannot attract a seconder fails.
Conclusion of Meeting
At the end of the meeting, directors can discuss any items not on the agenda.
Some boards nominate a director to provide a critique of the meeting at the end of each meeting (this role can be rotated).
The board may also use this time to discuss matters without management being present.
The chair then confirms the next meeting date and venue.
Minutes of the Meeting
Recording the outcomes of the board’s deliberations accurately is a critical part of governance in a public entity.
The board secretary or one of the directors will draft the minutes of the meeting. A draft of the minutes should be agreed by the chief executive officer and then sent to the chair within 24 hours of the meeting, if possible.
The draft minutes can be distributed to directors as soon as the chair has approved them, or included in the board pack for the next board meeting.
Matters arising from the meeting (or action items) are usually prepared in a separate document.
It is the responsibility of all directors to ensure the minutes are accurate. The minutes typically record the following:
- attendees, for what period and whether anyone left the meeting for conflict of interest reasons
- anyone who apologised for being unable to attend the meeting
- each agenda item
- the outcome of each discussion of an agenda item or paper, with a record of any dissenting viewpoints and the reasons for the decision
- any new procedures or policies agreed by the board
- actions to be taken, including outstanding issues to be progressed and re-considered at the next meeting
- a signature block for the chair to sign the minutes at the following meeting when directors have approved the minutes.
At the board meeting, the board should receive the following:
- reports updating directors on the public entity’s performance in light of its strategy and agreed targets from relevant members of management including the chief executive officer
- reports on the financial position of the public entity from either the chief executive officer or, with the decision of the chair, from the chief finance and accounting officer (CFAO)
- any reports from committees, including minutes of such committee meetings, presented by the chair of the relevant committee for information and any action required.
In reaching a decision, the board needs to consider the following questions:
- What do the establishing legislation and the Public Administration Act 2004 say on the matter?
- What are the constraints/conditions imposed by the establishing legislation or the Act? For example, the legislation may require ministerial approval before the board makes a decision if it is about to enter into a contract where the public entity will be required to pay more than a certain sum of money under the agreement.
- Does the establishing legislation or the Act require certain procedures to be followed when making decisions? For example, the establishing legislation and/or whole of government procurement policy may require a tender process.
- Who has the power to make the decision? Is it the minister, board, chair or chief executive officer?
- Is there a ministerial direction issued by the Treasurer, Minister for Finance or portfolio minister to the board that affects whether the board can make a decision, or how it is to go about making the decision?
Having taken the above factors into account, any board decision should be the fairest decision it can make in all of the circumstances.
The board needs to ensure that the various forms of external stakeholder reporting – including audit and financial reporting – are complied with and are effective.
Scrutiny of the performance of a public entity is primarily achieved through the tabling in parliament of an annual report.
Other mechanisms include:
- financial and performance audits conducted by the Auditor General
- review by the parliament’s Public Accounts and Estimates Committee
- performance information periodically released directly by agencies
- regular and/or ad hoc information to their portfolio department
- monitoring by central agencies such as the Department of Treasury and Finance.