The effectiveness of the work of the board of directors of any joint-stock company depends on its competence and personal composition. It is also associated with the presence of independent directors and committees in it. More than that, the success of the board meeting depends on the preliminary preparation, quality, and timing of the provision of materials to its members.
Stages of Preparation for the Board Meeting
Preparation and organization of a meeting of the board of directors are the key competencies of the corporate secretary of a joint-stock company. There are several stages of preparation for the meeting of the Board of Directors:
- the formation of the agenda of the meeting;
- preparation of agenda materials;
- a preliminary review of meeting materials;
- sending a notice of the board meeting and materials to its participants;
- providing additional information to members of the board of directors upon request.
Let us consider in more detail each of the stages of preparation for holding a meeting of the board of directors of a joint-stock company.
Drawing up the Agenda of the Meeting
The agenda of the meeting is formed based on the work plan of the board of directors. The final agenda of the in-person meeting of the board of directors is approved by the chairman of the board one month before the date of the meeting.
As a rule, the agenda of an in-person meeting of the board of directors consists of 4-6 items. The duration of the meeting is 3-4 hours, without a break. In addition to the issues approved in the work plan of the board of directors, the agenda may include any other issues at the suggestion of the chairman or a member of the board of directors, a member of the audit commission, the company’s auditor, the president, or a member of the company’s board.
Preparation of Agenda Materials
The completeness and quality of the information provided determine what decisions will be made by the board of directors. Therefore, the preparation of materials for meetings of the Board of Directors is of paramount importance.
Lack of information can lead to unreasonable or incorrect decisions. If the amount of information is redundant, a member of the board of directors will not be able to process all the information and form his/her opinion for the meeting.
Preliminary Review of Meeting Materials
Usually, issues included in the agenda of a board meeting are preliminarily considered by the committees of the board of directors. Issues related to the company’s operating activities are subject to preliminary consideration by the company’s board.
The Audit and Risk Committee preliminary considers issues related to the development and maintenance of internal control standards and procedures in the company, approval of the company’s financial statements, risk management in the company, as well as other issues.
Sending a Notice of the Board Meeting and Materials
The notice of the meeting has to contain the following data:
- the date of holding the meeting in the form of joint attendance;
- the address to which members of the board of directors can send their written opinion;
- the agenda of the meeting;
- a list of information provided to members of the board of directors for the meeting;
- time and place of the meeting;
- draft decisions on agenda items.
Providing Extra Data to Board Members
At this stage of preparation for the meeting of the board of directors, the corporate secretary plays an important role as a mediator between a member of the board of directors and company officials. A board member has the right to request documents from the company on the substance of the issue included in the agenda of the meeting of the board of directors. This request is made by sending it to the corporate secretary of the company.