4.0 Organizing a Board Meeting

For a high-performing Board and management team, organizing Board meetings would seem to be a routine task. All that is required is to prepare and agenda, assemble minutes and reports from management, identify the decisions the Board must make, assemble all the documents into a 3-ring or online binder and get it to the Directors at least 5 days before the Board meeting.

Yet Board binders are often late and incomplete, resulting in Directors poorly prepared for the meeting. This impairs the effectiveness of the Board and can damage the credibility of Board and management.

The Board Secretary, who is often the CFO, is responsible for organizing the Board meeting. The Secretary cannot be effective, however, without the active support of the CEO and the Board Chairman. Here are suggestions for reducing the stress of the process.

There are tools available to assist the organizing and documenting Board meetings. See www.aprio.net.

1.Establish the schedule of Board and Committee Meetings Months in Advance

This will facilitate meetings with the desired frequency and reduce considerable stress on the Board secretary.

2.Establish a Calendar of Activities for the Board and Committees

At the first meeting of the incoming Board, the Board should review the calendar of activities for the upcoming year. Each Committee should do the same. For samples of Board and Committee calendars, please see related documents Board Terms of Reference, Audit Committee Terms of Reference, Compensation Committee Terms of Reference.

With months of prior notice of events and topics, the Board and management will have a much easier time making preparations.

3.Keep a copy of the Shareholders Agreement handy

Most venture-financed companies and many other private companies will have shareholders agreements that specify certain issues that require approval of the Board or certain shareholders. The CEO, CFO, Board Secretary and Chairman should keep a list of these required approvals handy to ensure that they are placed on the Agenda and approved by the Board promptly.

4.Maintain files of Upcoming Board Event and Issues

Each of the Board Secretary, CFO (if a different person), CEO, and Chairman, should maintain a continuous file into which they put notes of items that likely will require a report or approval by a Committee or the Board. This will include those items defined in the Shareholders Agreement, and may include other items that management believes should be brought to the Board or Committee.

The Board Secretary has the responsibility of monitoring the calendars for the Board and Committees which will also identify issues for upcoming meetings.

5.Management Planning Meeting – Two weeks prior to Board Meeting

The Board Secretary should call a meeting with the CEO and CFO at least two weeks prior to the next Board meeting. Prior to the meeting, the CEO should contact the Chairman and inquire if there are any items that the Chairman would like to put on the Board agenda.

At the management planning meeting, management will refer to their continuous files to identify items that will be on the agenda for the upcoming meeting. The Secretary will then prepare a first draft of the Board Agenda, including the agenda items, decision items, and the person responsible for preparing the report to the Board.

6.Circulate Agenda to Management

The Board Secretary should circulate the draft Agenda as soon as the Agenda is drafted to everyone who will prepare a report. Please see related document Sample Board Agenda. Reports must be in near-final form one week prior to the meeting. The Secretary should monitor the preparation of the reports and the CEO should expedite late reports.

7.Management Review Meeting – One week prior to Board Meeting

The Board Secretary should assemble a 3-ring or electronic binder containing all of the reports to the Board at least one week before the meeting. The Secretary and CEO should review the reports for completeness, accuracy, tone, and to see if all of the decisions the Board must make have been identified. Other management team members may or should attend this meeting, as time and priorities dictate.

8.Prepare binders and circulate to Board – 5 working days before Board Meeting

8.1Legal Requirements – Formal Notice of Meeting. There are legal requirements to be met in the calling of a Board meeting. To call a meeting is to establish a date, time and place at which the meeting is to be held. To be properly convened a meeting of directors must be called by proper notice given by a person duly authorized to do so. The bylaws of the corporation typically provide that meetings of directors may be called by the president, secretary or another member of the board. The calling of meetings is normally one of the secretary’s functions. By-laws also typically provide that a meeting may not be called on less than 24 or 48 hours formal Notice. A valid notice of meeting will contain the date, time and place of the meeting, the purpose of the meeting and notice of any special business to be conducted. The notice must be delivered to all directors in the manner set forth in the by-laws. The Notice is typically the lead item in the Board Agenda which also includes the special business to be conducted. Please see related document Sample Board Agenda.

8.2Legal Requirements – Sufficiency of Information. A director is entitled to receive sufficient information respecting every decision to be made by the board in order to permit the director to make intelligent and informed decisions. The board will typically provide guidance to management of the type of materials required and the manner of preparation. Please see related document Board Terms of Reference.

The formal Notice and the information for directors is usually included in binders to be sent to the Board at least 5 days in advance of the meeting either in a physical 3-ring binder, or in electronic format.

8.3Legal Review. Some Board items should be reviewed by legal counsel. Please see related document Legal Review.

8.4Board Binders.

If the binders are prepared physically, the Agenda should be placed at the front, and each agenda item separated by a numbered tab divider. A popular method to circulate materials is for a materials binder to be prepared properly cross-referenced to agenda items. Decision items should be clearly identified. A directors’ package may include:

  • the notice and/ or agenda for the meeting;

  • draft minutes of previous meetings to be approved;

  • draft resolutions for matters to be discussed at the meeting. Resolutions circulated in advance will clarify the precise subject matter, facilitate discussion and simplify the preparation of minutes;

  • draft financial statements and other financial reports;

  • draft agreements and other documents to be approved;

  • draft press releases; and

  • memoranda describing proposed transactions to be approved.

If the binders are electronic, most Board members will want to print them out in any event. To assist the directors, the files should be given a number and name corresponding to the Agenda item, e.g. "1. Minutes of Previous Meeting", "3. CEO Report", etc. This way, they will be more easily organized after a mass of documents have printed and reconciled to the agenda.

9.Chairman and CEO review meeting – at least one day prior to Board Meeting

The Chairman and CEO should review the agenda and binder of materials briefly at least a day prior to the meeting. This will alert the Chairman to the significant issues and updates to help him manage the meeting.

10.Post Meeting – Minutes within 48 hours

Typically minutes are left to just before the next Board meeting. However, Directors should review the minutes while the meeting is still fresh in their minds. There may be action items for Directors to be acted on quickly. For these reasons, the Board Secretary should prepare the minutes and review with the CEO and Chair within 48 hours, and circulate to Directors within one week of the meeting.

11.Stumbling Blocks – Why Doesn’t the Process Go Smoothly?

As indicated above, even in the best performing companies, the organization and preparation of Board meetings falls far short of an acceptable standard. Too often, there is a tense scramble at the last minute to write the reports, assemble the binders and distribute them on them time. The packages are often late and incomplete, and Directors do not have sufficient time to read, digest, and question the material prior to the Board meeting.

The fault for this failure usually lies with the CEO. As the decision-maker of last resort, the CEO works long, hard days, and the urgent matters often take precedence over the important. Often a heavy travel schedule removes the CEO during the preparation period. The CEO’s report, and the review of the agenda and draft documents is left too late to avoid the scramble to complete.

Regrettably, there is no solution to this problem. Even with weeks of notice, established timelines, and constant follow-up from the Board Secretary, if the CEO will not assign a high priority to the timely preparation and review of the Board materials, then the planning goes for naught. Admonishment from the Chairman and other Directors may help the CEO to pay due attention to the preparation process and timelines.