TIMESHARE BOARDMANSHIP: Minutes and motions do matter
By Lynne Kweder
Q. As a new member of the board of directors of my timeshare resort’s owners’ association, I have been given many documents to read and study, including the minutes of the board meetings during the last two years.
I find these minutes to be confusing and disturbing. They contain lengthy discussions reflecting who said what, but little clarity about the decisions made.
I am beginning to worry about my liability should this board be sued with the minutes looking like this. I am wondering whether a set of standards exists to produce minutes that I could use to influence how my board’s minutes are produced.
A. Yes, you should be very concerned about the minutes as you describe them. Minutes are a legal record of the work of the board, and minutes which are primarily a record of discussions will not help you if you are taken to court. They can even be damaging to your timeshare resort and your board.
Every board member is responsible for the content of the minutes through the minute-approval process. Board members should be actively involved in eliminating the content of discussions from the minutes, correcting misstatements, and clarifying the central elements of minutes: the motions.
The board’s process to approve the minutes of the previous meeting is often more consequential than anything else that occurs in the moment during a meeting of a board of directors. Nothing else a board does during a meeting carries the long-term weight and legal significance of the approved minutes. Everything else that happens in the current meeting is tentative in the present moment of the board process.
The board’s work in the previous meeting become real and official only after the board has thoroughly reviewed the draft minutes, edited the motions for crystal-clear language, made corrections, eliminated unnecessary detail, and then approved the minutes. The slept-on, deeply considered review process finalizes the work of the previous meeting and makes the decisions concrete and official.
Yet, boards too often treat their minutes as lifeless and not worth much of their time and attention. Many boards routinely approve the secretary’s draft without giving it much thought. This is a serious mistake on the part of board members.
If your board winds up in court with a complainant saying you did not do something, and the motion about that matter in your minutes is unclear, you would not be able to prove you had taken the action.
Moreover, sloppy or unintelligible motions and misstatements left in the minutes could be judged to be a violation of the business-judgement rule and your Duty of Care as a board member.
Protection or legal endangerment?
If carefully crafted and scrupulously reviewed and edited by the board, minutes provide legal protection to the board. The quality of the final, approved written motions can demonstrate your adherence to the business-judgment rule and your Duty of Care. Conversely, if misleading or unclear, they can indicate violations of those legal standards.
Your minutes can demonstrate your adherence to sunshine laws and your bylaws by recording the publication of the meeting notice. They can demonstrate that you have met quorum requirements by recording your attendance. The minutes-approval process can protect the board from enshrining inaccurate, unclear, incomplete, or potentially damaging material in their legal record of what they have done. Minutes are routinely subpoenaed during an investigation by government regulators, or a lawsuit. Your acts are defensible if your minutes demonstrate that you used sound business judgment in making your decisions.
The minutes-approval process is key
The minutes-approval process is the key to fulfilling the purposes of minutes. Editing motions during board meetings is difficult, so revisions must be done during the minutes-approval process. If the board is not actively asking questions and offering clarifications and corrections to the minutes, language that endangers the board and the organization will surely be missed and then live on to create legal hazards. I have seen many a sloppy motion as I have read through old minutes.
All are responsible
Board members should regard the draft minutes as their first priority for in-depth review among the supporting documents they receive before a board meeting. Every board member who voted for a motion has a stake in the accurate representation of the board’s intention and decisions. Board members should be going through the draft minutes with a fine-toothed comb, highlighting any questions they have and developing improved language for motions which clarify the intent and meaning of the motions.
What board members said verbally in the meeting is irrelevant. The edited language of the motions in the minutes is what lives on and matters. The board can even change the meaning and intent of a motion at this point in the process if they agree to do this. As the attorney to my board has repeatedly said to us, “The minutes are whatever the board says they are.” Approved minutes become the reality of the board’s work
Motions: a powerful tool
The word “motion” means action. Motions are the tool boards use to take action and are the most important components of a board’s minutes.
A centrally important function of the motions in your minutes is to provide written directives to management. Because timeshare owners’ association boards are a “group authority structure,” no individual board member can give direction to management. The role of individual board members with management is a consulting and advisory role—not a supervisory role.
Only the board acting through motions in the board meetings can give direction to management. Motions recorded in the minutes are a board’s powerful tool for directing management on an ongoing basis, supplementing your management contract. Clearly stated written motions give clear directives and enable accountability to those directives.
Protective and directive minutes
So how can you produce minutes that serve to protect your board and effectively direct your management? Here are the guidelines:
• Many boards begin the production of minutes by electronically recording their meetings. Boards should have a policy requiring the destruction of electronic recordings following the approval of the final minutes.
• Written transcriptions of the meeting are frequently produced from the recordings. Transcriptions should be regarded as confidential background information, also to be destroyed when the final minutes are approved.
• The minutes should be as short as possible— two to four pages at most. For legal protection, “less is more.”
• Minutes should never include detailed content of discussions, quotes attributed to individuals (unless an individual requests that his/her opinion be shown in the minutes with attribution), and details of the corrections made to minutes.
What to focus on
Minutes should focus primarily on actions taken by the board and should include:
• A structure based upon the meeting agenda.
• The start time of the meeting.
• “Proof of notice”—the posting of the notice of the date, time, and agenda of the board meeting as required by statute.
• A list of all attendees and their titles, including guests whose names have been captured through a sign-up sheet or book.
• Approval of the minutes of the previous meeting, following a thorough review and correction by the board, and a summary statement that the minutes were approved as corrected.
• Crystal-clear wording of motions with names of directors who moved and seconded the motions and voted for and against the motions. (Check your state statutes for guidance about your state’s requirements for displaying names with motions and votes.)
• If a motion covers the adoption of a policy, include clear wording of the policy in its entirety either in or attached to the minutes. (A periodic attorney review of policies is advisable.)
• Note any instance when a board member identified a conflict of interest and refrained from discussion and voting.
• Include a one-sentence acknowledgment of summaries of reports given, or discussions conducted.
• Ending time when adjournment occurs.
Minutes matter! More often than not, minutes contain misstatements and lack clarity. The minutes-approval process should be elevated in the mind of every board member as the most consequential part of the board meeting, when the board members make their decisions of the previous meeting crystal-clear and official.
Motions matter! Often, motions are stated awkwardly during meetings. They must be reviewed and revised for clarity during your minutes-approval process. Other than the management contract, they are the only directives from the board to management for which management is accountable. Clear motions arising from sound business judgment legally protect the board.
Finally, the responsibility for the final minutes cannot be delegated to a secretary. The responsibility lies with the full board and every board member.
Lynne M. Kweder is an organization development consultant, a board certified coach, trainer of boards of directors and management, and administrator. She spent seven years as board president of the Turtle Reef Condominiums I, Inc. (dba Turtle Reef Club), Jensen Beach, FL