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Minutes of Meetings – Striking an effective balance for your organisation

The timely preparation of succinct and accurate meeting minutes is one of the main duties of a company secretary. The minutes provide a continuing, permanent official record of the business transacted at every meeting. The Corporations Act (section 251A(1)) legislates that a company must keep minute books in which all proceedings and resolutions of meetings are recorded within one month of holding the meeting.

The Corporations Act (section 251A(2)) also requires that all minutes be signed within a reasonable time after the meeting. As the officer who must sign the minutes, the chair must ensure that they are satisfied that the minutes provide a correct record of proceedings at the meeting.

It is worth noting that there is no requirement for the signed minutes to be the version that is recorded in the minute book within one month. This is important for bodies that do not meet monthly as, in practice, the minutes of the previous meeting will often be approved and signed at the next meeting held.

Although the Corporations Act legislates that timely minutes must be recorded and signed, it does not stipulate the types of minutes that need to be recorded – that is, pure minutes of resolutions or minutes of narration. It is the responsibility of the directors to decide their preferred style of minutes and to work with the company secretary to ensure their requirements are being met. Directors must carefully consider the style of their meeting minutes, as the signed minutes serve as legal evidence acceptable in court proceedings of what occurred at the meeting unless the contrary is proved.

Minutes for the most part, record no more than the occurrence of the meeting, essential details of proceedings and the important decisions made. It is however appropriate corporate practice for minutes of meetings to strike a suitable balance between pure minutes of resolutions and minutes of narration.

Below are key items for consideration when determining the type meeting minutes most suited for your organisation:
- It is important that any declarations of interests made by directors are reflected in the minutes including how these interests were managed;
- That where important business decisions have been made, particularly those that require business judgement, the minutes adequately record the processes followed in coming to the decision;
- That where a resolution is passed, the minutes reflect the exact wording of the resolution including any conditions to the resolution and any director’s dissent or abstention from that resolution;
- That the minutes reflect any advice from management in addition to board papers as well as any advice sought from independent parties. Minutes should also note where additional information or advice has been requested by directors before a final decision can be made;
- That the minutes note when other documents are tabled at the meeting that did not form part of the board papers originally circulated for timely director review; and
- That the minutes include a separate action items list indicating what is to be done, by whom and by when.

Need help?

If you require any assistance in determining the most suitable style of minutes for your organisation or have any questions, please feel free to contact us to discuss further.

31 December 2017 Reporting – Are You Prepared?

It is once again reporting season for those preparing 31 December 2017 half-year or full-year accounts. Fortunately, for most entities there are only minor changes to accounting standards that could potentially impact on their financial statements. Below is a summary of the main areas of note for this reporting season.

Reduction in Tax Rates for Small Businesses

On 9 May 2017, the final approval for the reduction in tax rates for small businesses was given by the House of Representatives for a second time. The amendments were therefore considered substantively enacted on that date and are now law. As such, the corporate tax rate is now reduced to 27.5% for companies carrying on a business with an aggregate turnover not exceeding: - $10m for the income tax year ending 30 June 2017 - $25m for the income tax year ending 30 June 2018 - $50m for the income tax year ending 30 June 2019 AASB 112 Income Taxes requires that the reduction in the corporate tax rate impact the measurement of the current tax in the year in which the new rate becomes effective. For entities with 31 December 2017 annual reporting dates, this means careful consideration of which tax year their accounting period relates to in order to assess their eligibility for the reduced rate based on their aggregate turnover.

More Cash Flow Statement Disclosures

New disclosures about the changes in financial liabilities arising from cash flow and non-cash flow items have been introduced by AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107. The changes are mandatory for annual periods beginning on or after 1 January 2017 and therefore 31 December 2017 financial statements will need to disclose a reconciliation of cash and non-cash movements in liabilities arising from financing activities and movement in financial assets used to hedge liabilities arising from financing activities. AASB 2016-2 does not specify how the additional disclosures must be presented, however includes Example C as an illustration of one possible way of providing the disclosures. Paragraph 44D of AASB2016-2 requires the items disclosed in the reconciliation to be reconciled with movements in the cash flow statement and therefore the Example C reconciliation will need to be adapted by each entity to suit their needs.

ASIC Areas of Focus

The Australian Securities and Investments Commission’s (‘ASIC’) areas of focus for 31 December 2017 are very much similar to 30 June 2017 and broadly focus on the following three areas: - Accounting estimates: including impairment testing and asset values; - Accounting policy choices: including revenue recognition, expense deferral, off-balance sheet arrangements and tax accounting; and - Key disclosures: including estimates and accounting policy judgements and the impact of new revenue, financial instrument, lease and insurance standards.

Significant Global Entities

Significant Global Entities, businesses with annual global income of $1b or more or businesses that are members of international consolidated groups with annual worldwide income of $1b or more, will now be required to lodge audited general purpose financial statements with the Australian Tax Office (‘ATO’). This will only impact on entities that are currently not preparing general purpose financial statements as they may be lodging special purpose financial statements with ASIC or relying on relief available from ASIC. Entities affected will be able to use reduced disclosures when preparing the general purpose financial statements and will need to lodge the financial statements with the annual tax return. Guidance has been issued by the ATO on who will be required to lodged general purpose financial statements.

Need help?

If you require any assistance in the preparation of your 31 December 2017 financial statements or have any questions, please feel free to contact a member of our team.