The board of directors meeting definition is a formal meeting of an organization's board members. This meeting is usually held at regular intervals to discuss major problems and policy issues within the organization. All individuals that make up an organization's board of directors are usually in attendance.

Meeting Proceedings

The meeting is presided over by the board's chairperson or, in the chairperson's absence, an appointee. The meeting's deliberations are recorded in formal minutes and all resolutions to be passed must meet the quorum requirements. Under the doctrine of collective responsibility, each director — even if absent from the meeting — is bound by the resolutions arrived at during the meeting.

Reasons for Calling a Board Meeting

In most cases, a board of directors meeting is called to discuss the policies of the organization and address major decisions about future actions. The proceedings of the meeting must be in accordance with the organization's articles and any rules stipulated by the board itself.

Constituting a Quorum

All directors should be present at board meetings. However, their presence is not essential since the article usually stipulates the specific number of directors needed to constitute a quorum, or minimum number, of members that must be present at the meeting. If the article does not prescribe a quorum, a simple majority of the directors must be in attendance.

Ordinarily, a board meeting is comprised of the directors of the company whose role is to provide strategic guidance to the company's proceedings.

During discussions, the board of directors:

  • Evaluates the organization's past performance.
  • Engages in strategic discussions and review.
  • Approves plans of action needed to support the organization during its various phases of growth.

Importance of Minutes

For accountability and continuity purposes, the minutes of previous meetings are read during subsequent meetings. Once this is done, the minutes are ratified and pending agendas are attended to. The reading of the previous minutes is critical since it helps the board ascertain the accuracy of the records. The minutes must present a true account of the issues and matters discussed during the meeting.

It also helps to remind the board of directors of pending agendas that were not exhaustively dealt with during the last meeting due to interruptions, more urgent agendas, time constraints, or unavailability of key information/reports. Reading the minutes also helps the board to assess its effectiveness and efficiency and pinpoint areas where improvement is needed.

Review of Reports

During the meeting, the board reviews various reports that detail key developments within the organization in order to establish its effectiveness and health. Key performance indicators that are reviewed include:

  • Marketing and expansion projects.
  • Ongoing research and development.
  • Customer satisfaction.
  • Revenues and expenditures for the year.
  • Market share segmentation.
  • Annual sales.

Due to its oversight functions, the board discusses any negative or positive progress made by the organization and the effects on its current standing. The board also strategizes about the company's future direction and comes up with resolutions for expansion or retraction in certain areas.

Developing Strategic Goals

After reviewing the status and performance of the organization through reports on general management, human resources, and finances, the directors come up with strategies that will help move the organization forward. For instance, the board could consider the ramifications of changing management style and structure to improve employee responsiveness and productivity.

In addition to making long-term plans for the company's future, the board also formulates short-term goals. Based on resolutions made and strategies agreed upon, the board recommends and approves plans of action for management and employees to implement.

The board of directors is charged with making overall governance decisions and could recommend:

  • The expansion of the organization into new territory.
  • Removal, replacement, and promotion of key management officials.
  • Downsizing of the workforce.
  • How profits are distributed to shareholders.

After comprehensive discussions on key issues, members of the board make recommendations, take a vote and approve final decisions on issues. The board of directors becomes ineffective if it does not hold regular meetings. It is through these meetings that the board functions as it should.

Some organizations have monthly board meetings, while others have meetings during or after every quarter. Most public companies follow the latter format since the board of directors needs to review and inspect the quarterly reports before their release to the general public.

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