13 July 2023 - The purpose of a board meeting is clear. Within the setting of a formal gathering, a company’s directors will set a strategy and monitor its ongoing implementation, review and analyse the organization’s performance – and present, discuss and agree significant decisions with respect to future actions.
A Cayman regulated entity’s board should meet at a minimum once a year in order to comply with the Cayman Islands’ recently issued Rule on Corporate Governance for Regulated Entities and the Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds, taking effect on 14 October 2023.
However, where circumstances of size, complexity, structure, nature of business and risk profile of operations so require, boards should consider holding meetings more frequently to help facilitate directors in fulfilling their statutory responsibilities effectively.
Previously set out as recommendations or best practice within the corporate governance framework, these new requirements will now place binding obligations on regulated entities. It is an imperative to organize well-structured meetings that are appropriately documented – as non-compliance could lead to enforcement action against an entity and its board of directors.
So how do you achieve an effective board meeting?
The board of directors is required to ensure that a complete, accurate and clear written record is maintained in respect of all board meetings, including the decisions made within them. The meeting minutes should include:
The agenda items and circulated documents;
- A list of attendees present at the meeting and the means by which each individual attended the meeting;
- A declaration related to conflicts of interest;
- The matters reviewed and decisions taken; and
The information requested from, and provided by, service providers and advisors.
A proficient corporate secretary will prepare a comprehensive agenda for each board meeting covering regular reporting from various service providers – as well as any regulatory matters – that should be brought to the board’s attention for consideration, such as a periodic self-assessment exercise to review business performance and governance practices. This will enable a company’s directors to arrive at fully informed decisions respecting all perspectives presented during a meeting.
With continued enhancements to technology, sophisticated board portal platforms offered by established service providers can now support with the preparation and distribution of board packs in advance of these meetings. A clear and timely distributed agenda that organizes the planned content of the meeting is critical to the success of any meeting.
A typical meeting would consist of key elements, such as a call to order, a roll call, the recording of formalities such as appointing the chairperson of the meeting, confirming quorum and recording any conflicts of interest that the directors might have. Next, the board should review and approve the minutes of the previous meeting and monitor the progress on all action points from the previous meetings.
An experienced corporate secretary will agree on the most convenient and logical running order of the meeting, taking into account that the representatives of various service providers may be attending via teleconference from different jurisdictions across varied time zones. Running an effective board meeting requires every agenda item to flow smoothly.
Supporting information and documents are key to every agenda and allow directors to form their opinions, ask questions, and assist them with making a formal decision.
The minutes of the meeting should summarize the discussions held, all decisions made by the directors, and any follow-up tasks or action items. It is important to note that a board meeting should not be a one-sided presentation but rather a collaborative discussion between the board members on the various topics in question.
Every meeting should be closed off with an agreed date set for the next meeting.
The Corporate team at Citco Trustees (Cayman) Limited is composed of qualified professionals with well-rounded experience in providing company secretarial and board support services and ensuring that the functions are carried out with the highest degree of efficiency. Our teams are skilled at building effective relationships with board and committee members in order to develop tailored solutions to meet the needs of our clients.
By Katerina Mickova, Senior Manager – Corporate & Liquidations, Citco Trustees (Cayman) Limited