Boards that Work – Board Duties & Minutes–J. Ralph Atkin

Provided by: J. Ralph Atkin – Attorney and Board Member

NACD, UTC and MWCN meeting
on January 21, 2010 in Salt Lake City, Utah

BOARD DUTIES & MINUTES – Short Tutorial

BUSINESS JUDGMENT RULE:

The Business Judgment Rule presumes that in making a business decision, disinterested directors acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interest of the corporation. Wrapping yourself in protection from liability.

THE TWO BASIC DUTIES OF MEMBERS OF A BOARD OF DIRECTORS:

  1. Duty of Care: This duty is primarily related to the responsibility to become informed in making decisions and overseeing the management of the entity. This implies that the Director will make the time commitment in preparing, reading and attending meetings. The director does have a legal right to rely in good faith on management and on the board committees to perform their delegated responsibilities.
  2. Duty of Loyalty: This requires a director to act in good faith and in the best interests of the corporation – and not in the director’s own interest or in the interest of another person (e.g., a family member or potential competitor) or organization with which the director is associated.

TAKE A MINUTE FOR THE MINUTES:

Minutes should contain, at a minimum:

  • the date and time of the meeting and a list of attendees;
  • the topics discussed;
  • any matters put to a vote and the outcome of any such vote (or a statement of decisions reached by consensus);
  • whether any directors or other attendees abstained from voting or absented themselves from certain discussions at the meeting;
  • the material terms and rationale of any decision approved by the board or committee;
  • the individual responsible for preparing the minutes; and
  • the time of adjournment.

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