- nature of entity & governance implications
- entity obligations & key relationships
- board composition & roles
- governance structure & policies
- winding-up or re-scoping an entity
internal reporting, meetings & decision making
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 the oversight/monitoring of strategy implementation, risks and operational matters, the promotion and monitoring of appropriate management behaviours, systems and processes, and driving the entity to achieve agreed outcomes more effectively. It includes consideration of:
- Performance: internal performance reporting/forecasting; scheduled management presentations on all key aspects of the organisation’s activities; stakeholder monitoring.
- Conformance: ongoing oversight/monitoring of conformance 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 make decisions. Adequate time should be allocated to Board meetings to allow proper consideration of business brought before the Board.
The Board should develop clear procedures, based on good governance principles of transparency, integrity, honesty and accountability that will provide a framework for conducting meetings and recording 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.
This topic is considered under these headings:
- An overview of Board (and related) meetings
- The process of preparing for Board meetings
- Conduct of meetings
- Reporting to the Board and related decision-making
- Good practice tips for improving Board meetings.
an overview of board (and related) meetings
attendance and time commitment
Directors must understand the time commitment of serving on the Board. This includes time to prepare for meetings and for serving on Board committees as well as attending Board meetings.
All Directors should attend all, or at a minimum 75% of Board meetings. If a Director misses more than two or three Board meetings in a row without permission from the Chair or the Board as a whole, then they may be required to step down as a Director. This may be specified in the public entity's establishing legislation.
For effective decision-making at Board meetings there needs to be:
- A carefully prepared agenda.
- papers relevant to particular items on the agenda. They should be circulated no less than 5 working days before meetings.
- Frank and open discussion.
- An outline of the way the Board conducts its business, including whether decisions are taken by consensus or vote etc.
- Accurate, timely records of decisions, discussion and dissent.
- Rules about access to information.
- Access to independent and external professional advice at the organisation's expense.
Some establishing legislation sets out aspects of meeting procedure, commonly who needs to attend and how often, how a vote will be taken, roles of office bearers and notification rules. Boards may develop additional meeting procedures. These should be documented in the Board Charter and/or governance policy.
types of meetings
Directors attend different types of meetings including:
- Board meetings: all major decisions are made at ordinary meetings of the Board.
- Committee meetings: different committees meet to consider particular issues and then report back to the Board. Procedures for committee meetings should echo the Board procedures. These may be set out in establishing legislation. If not, the Board should decide how it wants to run. (See linked module on Board committees).
- Retreats or planning days: these are often held away from the normal meeting location for a full day or weekend. They allow Directors to take part in deeper discussions about strategic challenges and directions for the next year or beyond.
- Annual general meetings: (where relevant to a particular public entity) these meetings are used to brief key stakeholders/shareholders on the year's activities and agree a direction for the future.
- Extraordinary meetings: (where relevant to a particular public entity) these are held between general meetings when urgent decisions need to be made.
frequency of meetings
The frequency of Board meetings will depend on:
- Any specification in the enabling legislation, subordinate instrument, constitution etc.
- Any guidelines or policies from the portfolio Department.
- The particular circumstances in which the public entity is operating at any particular time.
Meetings should be held regularly at the same place so that Directors and management (where invited) can plan their workloads and ensure that they are available.
Video and teleconference facilities can assist Boards where Directors are geographically dispersed. Face-to-face meetings are more effective than video and teleconferences for creating a cohesive Board team. Emergency issue meetings may be more suited to electronic communication due to short notice.
Sometimes Boards may wish to meet in different locations due to stakeholder considerations. For example, it may be useful to hold a meeting at the premises of a key stakeholder and include a meeting with the stakeholder's Board.
Some important but complex issues – forexample, a re-examination of the organisation's mission and strategic direction – shouldbe handled at a special meeting (or a retreat) where the Board can focus and talk through all aspects without having to break away and take up other business.
See the module on Determining the Board’s annual agenda/calendar. It is recommended that the Boards of public entities plan their annual activities in advance, by utilisation of an annual agenda/calendar of events.
access to board papers
Directors have a right of access to the Board's documents, such as the records of meetings 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.
It has become common practice in Australia for companies to enter into a deed of access with their Directors and officers. The deed provides the individual with access to company documents and records should a claim ever be made against them relating to their office now and in the future (subject to the Limitation 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 ex-Directors when they accept an appointment.
the process of preparing for board meetings
notification of meeting
Ordinary Board meetings should be set well in advance with the agreement of all Directors. Most Boards set diary dates for the following year in the December meeting.
All meetings dates should be confirmed in writing directly to the Director.
setting the meeting agenda
An agenda listing matters that will be discussed must be prepared for each Board and committee meeting. The agenda should be sent to Directors at least five days ahead of the meeting to ensure that everyone has a chance to think about issues before the meeting.
Most organisations also send out supporting information including explanations, related documents, who will address each agenda item and recommendations.
The agenda – and related Board pack – isimportant as it shapes the information flow and subsequent discussion. The following is a typical process for preparing an agenda:
- The Chief Executive Officer (CEO) drafts the broad agenda in consultation with the Chair, usually following a template
- Directors are asked for agenda items
- The draft agenda is prepared in detail by the Board secretary, or CEO if there is no secretary
- The Chair approves the final agenda, before papers are prepared by the CEO and senior management for each item.
The agenda may be taken in any order with approval of the Board, provided everything is considered. 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.
A “starring” approach is sometimes adopted by Boards, 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 sometimes where the supporting documentation provided by management comprehensively addresses the issue such that no Director feels the need to actually discuss the matter in the meeting. This approach obviously works on the basis that all Directors adequately review their Board papers in advance of the meeting.
Important items requiring significant discussion should be considered in the early part of the meeting so that decisions are not rushed.
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, for example, a legal adviser, contractor or on occasion, the Minister.
Senior managers scheduled to give presentations at the invitation of the Chair, should be prepared to attend the relevant part of the Board meeting.
prepare and distribute papers for the meeting
The CEO, Board Secretary, Executive Officer or other senior management staff are responsible for preparing and circulating Board papers (sometimes referred to as the Board Pack).
Where it is known that a Director has a conflict of interest, the paper for that item should not be provided to that Director. If the Director finds they have received such a paper they should immediately destroy or return it without reading it and let whoever prepared the papers know of the mistake.
Any Board papers accompanying the agenda should be circulated an agreed minimum number of days before a meeting. This is usually five working days. Most Boards choose not to accept papers tabled at the Board meeting if they require discussion. Updates may be considered. In exceptional circumstances, the Chair may seek the Board's permission for a new issue and accompanying papers to be tabled with reading time allocated.
Papers should be clearly marked as either information papers or decision papers. All decision papers should contain a clear recommendation for action, preferably noting the options considered in coming to the recommendation.
The Board Secretary or CEO needs to maintain a complete set of Board papers in accordance with the Public Records Act.
conduct of meetings
A quorum is the minimum number of Directors who have to be present for the Board to legally transact business. The establishing legislation should spell out what numbers are required for meetings to take place. Otherwise the Board should make a decision at its first meeting, after its formation.
A standard option is to require at least a majority of the Directors of the Board who can vote to be present in order for there to be a quorum.
role of chair in the 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, keep Directors on track and on time. When a topic has been fully discussed, the Chair should summarise the decision and seek agreement or a vote.
The Chair needs to be skilled at:
- Ensuring that everyone has a say.
- Managing the meeting appropriately.
- Ensuring that decisions are properly understood and well recorded. If necessary, the Chair will repeat the decision for the minute taker and ensure all Directors agree with the wording (See linked module on Roles: the Chair).
formalities at the start of the meeting
- The Board Secretary, or minute taker, notes attendance and apologies.
- Chair asks whether any of the agenda items raises issues of conflict of interest (See linked module on Managing conflicts of interest and duty).
- Chair asks if there are any additions to the agenda.
- If there is a lot of routine business, consider having a consent or 'for noting' agenda where routine motions will be carried automatically, unless someone asks the Chair to move any of them to the regular agenda. This allows the meeting to concentrate on issues that are either important, or new, or both. Such agenda items should be in their own section or marked with an asterisk to make sure their status is clear. As discussed above, this approach is sometimes referred to as “starring”.
- Sign off on the minutes of the last meeting, noting any amendments. Only Directors who were at the meeting should vote on this point (a show of hands is sufficient).
- Matters arising from the minutes are an opportunity for Directors to raise anything that is not covered elsewhere in the agenda.
- Action items are a report on progress with actions following decisions at previous meetings.
As explained in the Reporting and decision making module, the Board should be provided with a range of reports covering all relevant topics. Some information provided in the Board Pack for the meeting will be for information only.
There will be other matters where the Board will be asked to make decisions, based on the information provided by managementand having regard to other relevant matters.The decisions made will be formally recorded in the minutes and provide management with 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. Most Boards prefer 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.
Sometimes motions are amended or reworded before being put to the vote. If this occurs, a vote is taken first on the amendment. If the amendment passes the motion, as amended, is then put. If the motion is approved by the Board, it is referred to as a 'resolution' (i.e. the Board's decision).
With many Boards a resolution may be agreed without a formal motion or vote. Instead, led by the Chair, the Board discusses the recommendation proposed by management and agrees whether or not to endorse that recommendation.
conclusion of meeting
At the end of the meeting, Directors should discuss any items that were brought up at the beginning of the meeting without notice. If these matters will take a lot of time to be considered, they should be placed on the agenda of the next meeting.
Some Boards – as part of a commitment to continually improving the effectiveness of their Board meetings –institute a process whereby a nominated Director (using a standard set of criteria) provides a critique of the meeting at the end of each meeting. This role is rotated among the Directors for each Board meeting.
The Chair confirms the next meeting date and ensures that everyone is able to attend. The Director who will critique the next meeting may also be confirmed at this time.
The Chair should finish by thanking meeting participants, particularly where they are volunteers, for their time and effort.
minutes of the meeting
Recording the outcomes of the Board's deliberations accurately is a critical part of good governance in a public entity.
The Board Secretary,Executive Officer, the paid 'scribe' or, on small voluntary public entities, one of the Directors, will take the minutes. A draft should be sent to the Chair within 24 hours and then sent to Directors when approved.
In some organisations, minutes are circulated shortly after the meeting date. This is especially useful for Directors and staff when items have been referred to particular Directors or executives for action between Board meetings.
It is the responsibility of all Directors to ensure that the minutes are accurate. The minutes typically record:
- Who attended the meeting, for what period and whether anyone left the meeting for conflict of interest reasons, noting if they are Directors, ex-officio Directors, presenters, management or contractors.
- Which Directors gave their apologies and were unable to attend.
- Each agenda item, even if only noted or nothing was presented.
- The outcome of each discussion of an agenda item or paper with a record of any dissenting viewpoints and the key reasons for the decision.
- Any new procedures or policies decided.
- Actions to be taken, including outstanding issues to be progressed and reconsidered at the next meeting.
- A signature block for the Chair to be signed at the following meeting once all amendments have been taken into account.
reporting to the board and related decision-making
At the Board meeting, the Board should receive reports:
- On the background to the organisation's activities from the CEO. If the issues involve any decisions from the meeting then they should be given their own place in the agenda and voted on separately.
- On the financial situation as it stands by the CEO or, on the decision of the Chair, from the Chief Finance and Accounting Officer (CFAO). Any discussion of fundraising or economies should come elsewhere in the meeting under its own agenda item.
- On organisational performance against targets set against key performance measures.
- Of any committees or sub-committees. These reports should be presented by the Chair of the relevant committee for acceptance and relevant action.
- Where relevant, the CEO should submit a report setting out all uses of the entity’s Seal. This report will be circulated with the Board papers. The report on the Seal Register will normally be 'For resolution'. However, any Director may ask for any use of the Seal to be discussed.
In reaching a decision, the Board must consider the following questions. These should have been thought through by management in preparing briefing papers. Techniques such as checklists and decision mapping are sometimes used by management and the Board to ensure all relevant matters have been appropriately addressed in framing the preferred recommendation to the Board.
- What do the establishing legislation and the PAA say on the matter?
- What are the constraints/conditions imposed by the establishing legislation or the PAA? For example, the legislation might require Ministerial approval before the Board makes the decision if it is about entering 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 PAA require certain procedures to be followed in connection with making the decision? 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, the Board, the Chair or the CEO?
- Is there a Ministerial direction issued by the Treasurer or the Minister for Finance or the portfolio Minister to the Board of the public entity that affects whether the Board can make the decision, or how it is to go about making the decision?
The CEO is responsible for keeping Directors informed about existing and amended Ministerial directions, amendments to legislation, and other such critical information relating to Board functions and powers.
A decision might appear legally valid but may have an ethical issue. An example is where a Director who voted for a decision was operating with a conflict of interest. The Board may have been too lax in allowing the conflicted Director to remain in the meeting and vote for the decision, irrespective of the voting outcome. (See linked module on Managing conflicts of interest and duty and Directors' Code of Conduct and Guidance notes).
Where the Board may make more than one possible decision on a matter after going through the above process, the decision should be the fairest it can make in all of the circumstances.
practical tips for board decision-making:
If a Director is not comfortable making a decision because they do not have sufficient understanding of the issues, they should continue to ask questions of the CEO and other Directors until they are satisfied they are able to make an informed decision.
good practice tips for improving board meetings
self-assessment questions about board meetings
It is suggested that the Board collectively consider how well its meetings are conducted. One way of doing this is to nominate a Director at the start of each meeting to assess a range of factors during the course of the meeting and then provide brief structured feedback to the Board at the conclusion of the meeting.
Another way to do this is to ensure that the periodic assessment of the Board’s effectiveness includes assessment questions that address this topic. Examples of the types of questions that can be asked are:
- Does the Chair set the agenda with the CEO taking into account other Directors' suggestions and issues arising from the last meeting?
- Is the agenda and supporting documentation supplied at least five working days before the meeting?
- Have all Directors read the papers and thought through the issues?
- Does your Board culture encourage:
- Frank and open discussion?
- Seeking independent advice and expert opinion when there are gaps in Directors' expertise/understanding?
- External professional assessment of the Board's performance at least once every two years?
- Does the Chair effectively balance time constraints with the need to ensure proper discussion on matters of interest?
- Does the Chair ensure differing viewpoints are accurately recorded in the minutes?
- Does the Chair clear the minutes within one week of the meeting to ensure accuracy?
good practice tips for meetings
- Keep the agenda as short and 'tight' as possible so that the meeting can be finished within two hours – if practicable in the circumstances that apply to the particular entity. Some people can become less productive after that length of time.
- If meetings are taking too long, try allocating times to each item and work out matters that can be deferred at the start of the meeting.
- Consider alternating largely procedural meetings with planning meetings to allow time for brainstorming and analysing strategic directions.
- The Board meeting agenda should allocate time during the meeting to have 'in-camera' discussions that exclude staff. This reinforces the separation of the roles between the Directors and staff. It also means that staff will be less likely to be alarmed or intrigued when the Board does wish to discuss particular matters without staff present. Where the CEO is also a Director, the CEO should not have to leave the room during such discussions unless the discussion is about the CEO personally.
practical tips to help deliver good practice chairing:
- Be democratic but stay in control. If someone else wants to dominate or divert the agenda and is derailing a meeting, it is up to the Chair to bring them to order. Keep the meeting focused on the task at hand.
- If an item proves beyond resolution at a meeting, choose one of the following:
- Extend the time for this item.
- Refer the item to a working group for a report at the next meeting.
- Set up an extraordinary meeting of the entire Board to deal with the item.
practical tips to help deliver good practice minutes:
- The minutes show what action the Board has committed itself to. They may be referred to as the official record months and even years after a decision has been made. Directors should review the minutes carefully before approving them.
- Ensure minute takers clarify with the Chair if they are unsure what has been decided and why.
- Ensure the Chair clears and signs the minutes as soon as possible after the meeting, preferably within 24 hours.
- Drafts of minutes should be sent to Directors as soon as possible after the meeting for agreement.