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The importance of minutes in ensuring compliance for companies

Companies take decisions on a daily basis and it is important to note that because these decisions have an impact on the developments in the business, it is equally important that the decisions be recorded in a written form. This written form is referred to as minutes.

Minutes are a formal record of discussions and decisions that took place in a meeting within a company.

The importance of minutes

The importance of keeping minutes is to have a record of what has been discussed, how it has been discussed and how decisions were reached in a meeting. Minutes provide a record of the people who were present in the meeting when decisions were taken.

Minute-taking is an important skill to have, especially if you are planning to enter any environment where you need to learn how to record decisions or take notes of a particular meeting. In most companies, a person responsible for taking minutes is a Company Secretary, minute-taker or anyone with the skills and knowledge of minute-taking.

Minutes must be properly drafted, reviewed, approved and signed off to be considered as a true reflection of what was discussed in the meeting or to be considered as the final minutes.

Minutes must be signed off by the meeting chairperson to be considered as final minutes.

Record keeping is a process that is legislated in the Companies Act and it is therefore a key business process that needs to be prioritised to assist any business to remain compliant.

Some of the important items to be noted in minutes are the welcome and apologies. If one or more directors did not send out apologies for not being able to attend the meeting, they must be marked absent from that meeting. The reason for this is that if there is a board-charter that dictates that when a director does not attend a certain number of meetings without an apology, they can be removed from being a director. This is a detailed process and should not be entered into lightly. Hence records are very important because they can and will most likely be requested during litigation. In short, minutes will speak for you, when you need them to.

Any declaration of interest by a member must be disclosed and noted in the minutes, and that member must not take part in the specific related item in the meeting.

The minute-taker must note the quorum and confirm that the meeting has been properly constituted.

If a member leaves the meeting, the minute-taker must note that a member has left the meeting, the time when they left the meeting must be noted. A decision needs to be taken whether the absence of that member will impact the quorum of the meeting. If there is no quorum the minute-taker (Company Secretary) is obliged to pause the meeting and inform the Chairperson that participants have left the meeting. This is because the Chairperson may be too busy and engaged in the meeting to note this.

The Chairperson can then decide what should be done, without a quorum, decisions cannot be taken. There has to be a record as to who was present in the meeting.

In meetings there are members, attendees and invitees, the minute-taker must understand the difference between these participants and must record it accordingly. Understanding the difference between all the participants in the meeting helps the minute-taker in understanding the quorum of that meeting.

The above is a brief synopsis of the importance and formalities of minutes. Companies are therefore encouraged to take note of this requirement and because of the time-consuming nature of developing minutes, it is important to ensure that properly skilled people are responsible for this process.

In the advent of AI, I have heard discussions on whether there is still a future for this skill. Nothing can replace the human element of nuancing and ensuring that discussions are captured in the spirit they were meant to be and in the correct order of events.

Mashobane Advisory Services is a proud NSBC Partner.

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