As a director do not assume to rely on the ’posture of automatons’. A wonderful phrase but what does it mean and what has it got to do with being a director?
In a recent Cayman Islands case, Weavering Macro Fixed Income Fund Limited (in liquidation) v Stefan Peterson and Hans Ekstrom The Hon Mr Justice Andrew J Jones QC noted that the format of the directors board minutes had differed very little over the previous six years and there was no evidence that any discussion or debate ever took place at the meetings and the purpose of the minutes was merely a ‘rubber stamping’ exercise. He therefore stated that the directors had not fulfilled their duties by merely signing whatever documentation was put in front of them without making enquiries or applying their minds even if their advisors had fulfilled their roles in producing the documentation for signature.
This judgement is therefore a useful reminder of the importance of directors’ board minutes in complying with corporate governance. In other words directors should bear in mind that pro forma minutes should only be used to record certain matters where the minutes are more a formality and there is unlikely to be any discussion, such as the change of registered office or possibly the change of a company’s accounting reference date. Where matters of a corporate or commercial nature are to be considered an agenda should be prepared and circulated in advance to all directors and advisers who are likely to have an input to the meeting. The minutes should then be drafted following the meeting recording the discussions and the decisions made at the meeting.
Do not rely on the posture of automatons.
