Hosting a Board Meeting? Here’s how to do it well.
September 27, 2017 | By Kevin Vela
Board meetings are essential to running a startup. While formal meetings are often neglected during the early stages of a startup, they quickly become a required quarterly event once a startup accepts institutional capital.
Hosting the company’s first board meeting can be intimidating, but a well-executed meeting promotes confidence in your ability to lead and establishes a collaborative atmosphere among the directors. Here are a few tips to running your board meetings.
Manage Time Effectively
Prepare for the meeting by creating an agenda. Carefully consider the biggest issues that the board will need to address. Send the agenda, company financials, and all presentation materials to the directors ahead of time, and ask everyone to review the documents beforehand. The board should arrive at the meeting with a good understanding of the company’s current state, allowing you to move directly into substantive discussion at the beginning of the meeting. A productive and efficient meeting should last between one and three hours (with breaks).
Keep it Small and Confidential
Depending on your company’s size and fundraising strategy, there may be many people who are personally invested by the time you host your first formal board meeting. While it is important to keep investors and employees informed, it is inappropriate to invite anyone other than directors and anyone with an observation right. Moreover, anything discussed at board meetings should be kept confidential.
When the meeting begins, the board should review and formally approve the minutes taken at the previous meeting. Once the minutes have been formally approved, the CEO or chairperson may begin the meeting. Here is a suggested order:
- Business Review: Brief overview of trends, initiatives, and updates on the business’ progress
- Financials Review: Discussion of current financials, future projections, and budget
- Legal Review: Outline of outstanding legal items, if any (for example, issuing options)
- Threats/Concerns: Preview of issues that will require board discussion and input
- Anything Else
Let the Board Govern
By the time a startup hosts its first formal board meeting, it has often already given seats to investors or other outsiders who are experienced at growing businesses. The best thing that you can do as a founder is lean on your board. Come to the meeting ready to discuss a few discrete, robust issues that the company is currently facing, and solicit advise from your board. This should take the form of strategic, in-depth discussion with involvement from the entire team. These conversations can ultimately shape the future of the company, so they should be the focal point of the meeting.
Keeping Minutes—Preliminary Information
Corporate minutes, required by state law in most jurisdictions, create a permanent record of the actions taken at board meetings. By recording the process and outcome of key corporate decisions, minutes can settle legal disputes concerning the validity of actions taken during meetings, as well as provide proof that directors exercised care and satisfied the business judgment rule when making decisions on behalf of the entity. Most states require corporations to record meeting minutes, and several federal laws require entities to take minutes under certain circumstances (see the Exchange Act for requirements of reporting companies).
The minutes should identify whether the board is holding a regular or special meeting, as different notice and quorum rules may apply to each. If a regular meeting, the record proves that the corporation met jurisdictional requirements for holding annual board meetings. The minutes should also describe the notice process to indicate whether notice was given in accordance with state law and the company’s bylaws. Next, identify the directors that were present and absent, and whether a quorum was met for voting purposes. Finally, identify who acted as secretary at the meeting.
Keeping Minutes—Recording the Meeting
The minutes and any resolutions that are adopted during the meeting must refer to any documents presented to the board for approval. If the board approves a material document, it should be attached to the minutes as an exhibit and included in the permanent record. For other documents, it may be appropriate to simply indicate that the board reviewed a document, but not include it as an exhibit. If the board votes on a matter, the record should reflect that a vote was taken and whether or not the outcome was unanimous.
If, during the course of the meeting, the board seeks legal advice from their counsel, document that counsel was sought. However, in order to preserve attorney-client privilege, the minutes should not reflect the specific legal advice given.
When the meeting adjourns, the board should decide whether or not to include the length of the meeting in the record. The meeting’s duration can be used as evidence in determining whether the board’s actions satisfied the business judgment rule, so exercise discretion in making this determination.
An efficient and cohesive board can help a growing startup through its most difficult stages of growth. These tips will help facilitate a productive meeting that inspires board confidence in the company’s future.
Posted in General Business
Kevin Vela is the managing partner at Vela Wood. He focuses his practice in the areas of venture financing, mergers & acquisitions, corporate law, capital raises, and real estate investment activities. You can see Kevin’s attorney profile HERE.