London, 7 October 2016 – Simon Osborne, Chief Executive of ICSA: The Governance Institute has written a reply to the Rt Hon Andrew Tyrie responding to his comments on ICSA’s recently published minute taking guidance. In his response to Mr Tyrie’s letter of 6 October, Mr Osborne lays out the following points:
- The responsibility for a company rests with its board and non-executive directors have a particular duty to play an active role in challenging the risks that businesses are running and the way in which these are being managed.
- Clear and accurate board minutes are essential and they 'should record areas of substantive disagreement among directors'. ICSA guidance on minute taking is entirely clear on this point. It says that the minutes of a meeting should include details of decisions made, the reasons for them, actions arising if applicable and the key points of the discussion. This should be sufficient to enable someone not at the meeting to understand not only what decisions the board made but why they made them. Subject only to the need to be balanced, that summary of the discussion should include coverage of material challenge.
- The feedback received from ICSA’s consultation on minute taking shows that the overwhelming majority of board decisions are reached by consensus. There may well be a number of views expressed in discussion which may, or may not, form part of the collective decision. The discussion is an important element of the board decision-making process and will often include constructive challenge. That is different from dissent, which ICSA believes should be, and has been told is, rare in board meetings.
- A director may well express differing views during a discussion that ultimately results in unanimous agreement, but it is important to distinguish between this and a situation where a director feels the need to disagree publicly with the final decision. Given the collective responsibility of a unitary board ICSA believes that there should be a high bar before this happens – it is not something that directors take lightly. ICSA therefore believes it entirely appropriate that directors be asked to confirm their formal disagreement with a decision before that dissent is recorded. The guidance clearly states that a chairman can direct that a director’s dissent be recorded even where an individual does not make a request for their dissenting view to be noted in the minutes. ICSA also offers a suggestion as to how dissent might be recorded.
Speaking about his response, Mr Osborne says: “I disagree with Mr Tyrie’s assertion that our guidance is inadequate, or that it fails to recognise developments in the last 10 years. It has been informed by, and developed in response to, feedback from more than 100 governance practitioners who deal with these issues on a day-to-day basis for boards of all sizes.
“The guidance is the result of a major consultation with our members, ranging from charities, NHS Foundation Trusts, sporting bodies and academy trusts to SMEs and major corporates. Whilst the financial crisis has undoubtedly changed the landscape for large financial institutions, the guidance has to reflect the requirements of the full gamut of ICSA members and we are confident that the guidance accurately does so.
“Mr Tyrie has asked that we review our guidance. We will bear his request in mind. Once we have seen the outcome of the Government’s and the BIS Select Committee’s inquiry into corporate governance we will review all our guidance notes and, if we believe it necessary, address the particular concern that Mr Tyrie is raising. He has also suggested that it is our job to sort out the issue of dissent. I disagree. We are a respected professional body, not a regulator.
“Finally, as the guidance note clearly shows, minute taking is a deceptively difficult task and we would recommend that a properly qualified person should always be asked to take the minutes or be appointed as a company secretary. As the professional body responsible for encouraging good governance, we provide regular training for company secretaries and other governance professionals taking minutes. We also publish a book entitled Effective Minute Taking, which covers strategies for effective note-taking.”
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Notes to Editors:
- ICSA is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With more than 120 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
- ICSA’s guidance on minute taking can be downloaded at www.icsa.org.uk/minutetaking
- Full details of the Effective Minute Taking book can be found on our website - www.icsa.org.uk/shop/books/effective-minute-taking