Kenneth Foo Poh Khean FCIS, LL.B (Hons)
This article discusses the importance of taking a good set of minutes. Kenneth Foo points out that minute taking is beyond merely recording information for repository. It should assist the directors of corporations in communicating their decisions, strategies, policies and plans to the company’s management for implementation. In short, minutes are a guide for management to implement the decisions of the board.

In the Oxford English Dictionary, the word “minutes” mean an official record summarising business at meeting while Black’s Law Dictionary gives its meaning as “a memoranda or notes of a transaction or proceedings”. If we search for it in Wikipedia, minutes are also known as protocols i.e. the instant written record of a meeting or hearing. The consistent thread running through the different dictionaries is the phrase “record” and it is of some transactions or proceedings. There is no consistent meaning to the word “minutes” as it can be long or short report or just a summary.

However, the word “minutes” as it appears in ordinary usage in company law means a record of the decisions and matters made in a meeting. The Companies Act, 1965 (“the Act”) does not define what are minutes.

Although Regulation 78 of Table A requires all proceedings of all meetings to be recorded, it would seem that board minutes serve two primary purposes. Firstly, good minutes assist the Board of Directors in supervising the company by helping it to manage its information and hold management accountable. Secondly, board meetings’ minutes could protect each director from liability for alleged wrongdoing as all decisions and deliberations are recorded unless mala fide or fraud is proven. The minutes will document how the directors fulfil their fiduciary duties to the company.

A good set of minutes should include all references, working papers and information that were used in the deliberation of a decision or resolution. It can thus act as a record and repository for guiding future or new board members to refresh their memories and understand how certain subjects or decisions were discussed and made.

Minutes also assist the directors to communicate their decisions, strategies, policies and plans to the company’s management for their implementation. The minutes will serve as a guide for management to implement the decisions of the board.

Regulation 78 of the Act has made it a duty of the directors to do the following:

The minutes shall be signed by the chairman of the meeting at which the proceedings were held or by the chairman of the next succeeding meeting.

Breaking down Regulation 78 in its various sections, it would be interesting to note the following:

Lastly, if we peruse Regulation 78, the minutes of meeting can be signed by either one of the following persons:

Therefore, it need not necessarily be signed by the chairman of the meeting at which it pertains to but by the chairman of the next succeeding meeting. It would be pertinent to note the words “……the next succeeding meeting” as in practice, if meetings are held infrequently, a chairman of the next succeeding meeting (if he was not in the chair at the previous meeting) would be hesitant to sign and confirm the minutes.

It is interesting to note that Regulation 78 has encapsulated Section 156 of the Act. Section 156 reads:

Section 156 therefore provides a specific time limit of 14 days of the date of the meeting for minutes to be entered into the minute book. The section does not require the minutes to be signed either at the meeting or at the next succeeding meeting, or at any other particular time.

The importance of the signature of the chairman is that if all other requirements of the section are met, then the minutes are prima facie evidence of the proceedings to which they relate - Section 156(2). In the Australian case of R v Anthony (1982) 1 ACLC 20, the Court was concerned with an issue of admitting as evidence the minutes of a meeting. The learned Judge held that minutes which had been signed even though five or six months later after the meeting could be admitted as evidence. However, minutes that had not been signed could not be admitted as such.

In Re L Y Swee & Co Sdn Bhd (1970) 2 MLJ 107, Justice Abdul Hamid held that as the minutes of the directors’ meeting had not been entered into the minute book within 14 days of the meeting, there was a contravention of Section 156. Therefore, the resolution that was passed to appoint a director at the meeting could not be deemed valid as the minutes recording the resolution was not entered into the minute book within 14 days. This rendered the appointment of the director concerned, invalid.

If we look at the case above, it seems advisable that some important and non-contentious decisions of the board should be passed by way of a directors’ written resolution pursuant to Regulation 90 of Table A, rather than at a meeting. This is especially relevant where the chairman may be away for more than 14 days after the meeting or there is no succeeding meeting within 14 days of the preceding meeting.

Finally, we must be aware that the books containing the minutes of proceedings of any general meeting shall be open to inspection by any member without charge - Section 157(1). A member shall be entitled to be furnished within 14 days after he has made a request in writing to the company with a copy of any minutes of general meetings at a charge not exceeding RM1.00 for every 100 words - Section 157(2). Therefore, this right is a right conferred by the Act on every member of a limited company. In fact, if the member’s request is not met, the company and every officer, who is in default, shall be guilty of an offence under the Act for which the penalty is RM500.00 - Section 157(3). Section 359(1) further requires that the minute book must be available for inspection at the place where it is kept during the hours in which the registered office of the company is accessible to the public.

In contrast, directors by virtue of the duty placed on them by Regulation 78 of Table A to keep minutes “of all proceedings at all meetings of the company and of the director” means they shall have access and the right to inspect the minutes thereof whether it pertains to general meetings or meetings of directors. Therefore, secretaries should be careful when drafting a company’s Articles of Association and not delete Regulation 78 by mistake.

The manner in which the minutes are to be kept can be found in Section 156 i.e. “in books kept for that purpose”. In Section 4 of the Act, “books” includes any register or other record of information and any accounts or accounting records, however compiled, recorded or stored, and also includes any document. If we read Section 4 in its widest sense, the minute book could in fact be various documents in a loose-leaf book format. Fortunately, we have Section 358 to assist us.

Section 358(1) of the Act stipulates that the minute book may be kept either by making entries in a bound book or by recording the matters in question in any other permanent form. Section 358(2) goes on to provide that where the minute book is not kept by making entries in a bound book but by some other means, reasonable precautions shall be taken for guarding against falsification and for facilitating the discovery of any falsification. Proper facilities must be provided to enable the minute book to be inspected. The company and any officer in default thereof shall be guilty of an offence for which the penalty is RM2,000.00.

Therefore, the Act does not specify the format or specific type of books other than the requirements of a bound book or some other permanent form. In fact, it could be argued that any book labelled “minute book” on its cover would suffice.

In the current ICT era, some companies do store their records by way of electronic filing in PDF format or scanned electronically and stored in a hard drive or thumb drive. Perhaps, it should be pointed out that Section 358A does not allow the minute book - pursuant to Section 156 - to be kept in any other form than a bound book. Section 358A only empowers a company to keep a register and other records by recording it in a legible form, so long as the recording is capable of being reproduced in a legible form.

Some secretaries record minutes by way of a draft or in a rough scrap book before transcribing it into the formal mode. In such cases, the secretaries would be well advised to keep such draft as initialled or signed by the chairman could be adduced as prima facie evidence of all the conditions precedent to the validity of any resolutions passed at the meeting.

Where should the minute book be kept? Section 157(1) requires “the books containing the minutes of proceedings of any general meetings to be kept by the company at its registered office”. It is interesting therefore to note that the Act only requires the minute book containing minutes of general meetings to be kept at the registered office. Section 157(1) does not mention anything on where the minutes of meetings of directors should be kept. Presumably, if we apply Section 157(1) thereto, the books containing the minutes of proceedings of directors could be kept anywhere and is entirely the board’s prerogative.

Where a holding company is beneficially entitled to the whole of the issue shares of a subsidiary, Section 147(6) of the Act allows the subsidiary’s minutes to be signed by a representative of the holding company. The representative must be authorised by a resolution passed by the directors of the holding company. Any minutes signed by the representative on any matter, act or thing or any ordinary or special resolution shall be deemed to have been made, performed or passed as if it had been made, performed or passed at an ordinary general meeting or extraordinary general meeting of the subsidiary company.

In such cases, the formality of having a quorum and chairman of meeting is dispensed with as this is an “exemption” allowed by the Act.

There are no strict rules in the recording and writing of minutes but perhaps the aspiring company secretary should take note of the following contents and information when drafting the minutes:

The best practice is to draft short minutes of routine or insignificant matters. Where the proceedings covered important matters of such magnitude and detail, it is preferable to draft longer minutes to offer accountability and additional protection from liability. Discussions should be kept succinct and to the point in order to avoid ambiguity.

Aspiring company secretaries should always consult the chairman of the meeting on his preferences and style as he is the person signing and confirming the accuracy of the minutes. In addition, such consultation would refresh the chairman’s memory to avoid different directors insisting on their version of the discussion and proceedings.

Perhaps most important of all when drafting the minutes is the information obtained and presented in the meeting. Copies of any reports or other documents distributed in the meeting should be attached to the minutes or incorporate by reference if the attachments are too bulky. Any disclosure of interest or notice given by any participant at the meeting must be clearly and distinctly recorded together with his name and designation or position.

Minutes should not be altered other than by a resolution which is then minuted. This is particularly pertinent in view of Section 156(2) which deems it as prima facie evidence of the proceedings therein. In the case of In re Cawley & Co (1889) Ch. D 209, the secretary altered the minutes of a meeting of the directors and Lord Esher M.R. said:

It is hoped that with the discussion and suggestions above, the aspiring company secretary would be well reminded as to the legal requirements of minutes and improve his or her drafting of the minutes of meetings.