The significant increase in machine learning and AI powered minute taking software has questioned whether Company Secretaries are still required for minute taking in board meetings. Michael Clarke, manager at MSP Company Secretarial investigates the significant pitfalls faced by an over-reliance on AI platforms.
AI and boardroom minute taking: Do you need a company secretary?
The rise of AI has been all too prominent over the last 18 months, with features that promote efficiency both in time and money. Many meetings, especially in a virtual setting, now feature an AI note taker or software which records meetings ad verbatim. For short meetings, this can be a risk-free time saver. The use of AI in the boardroom is not without concern including risk management, privacy, sensitive conversations and the use of confidential data. These need to be freely discussed without privacy concerns.
So, with AI-enabled systems so prominent, do you still need a Company Secretary? The short answer: Absolutely.
AI in the boardroom: is it time to implement?
According to a survey conducted this summer by GC100, the association of general counsel, and Company Secretaries from FTSE 100 companies, only a third of Company Secretaries and general counsels from 70 leading UK companies think that AI technologies have a place in the boardroom, with two thirds either against or undecided.
The survey highlighted a number of concerns regarding the application of AI in the boardroom or for formal meetings, particularly about its systems, privacy concerns and how they operate. Security, confidentiality and loss of legal privilege are also real risks of poor minute management. 92% of survey respondents had said they hadn’t adopted AI for minute taking.
Compare this to contracting a professional Company Secretary to minute take. They will be qualified and experienced in minuting corporate C suite level meetings, protecting confidential conversations and topics and preventing sensitive information being shared across public domains. With such considerations, the apparent time or resources saved by using AI is outweighed by the serious ramifications a drop in professional minute taking standards generates.
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AI, nuance and maintaining minute taking standards
Looking past the privacy concerns posed by AI minute taking software, there is also a discussion around the quality of notes provided by automated recording systems. It’s important to realise that note taking is not the same as minute taking. A skilled company secretary will form minutes that convey the motivations behind board decisions formed in a meeting. AI software has not yet mastered this reliably. We have seen with the recent Post Office scandal the critical role nuance has played when revisiting prior executive level meeting minutes, AI has not yet developed to a point where it can detect the meaning behind statements.
Consider the following:
“No more meaning is needed” compared to “No, more meaning is needed”
A simple grammatical difference produces a strikingly different decision within the meeting itself. In this instance, an incorrect minute will misconstrue the entire board discussion. Discussions between the board of directors are not scripted, they are a lively adaptive forum for the exchange of views, where context, interpretations and consequences are all important, and the human and technological tools deployed in board meetings need to cope with the demands of the boardroom.
Implementing minute taking standards that work
Good minute taking should deliver a document beyond just historical reference that can be used and referred to by all members of the meeting, plus effectively inform absent members. It should provide valuable insights and reflect the actions and strategies agreed by those present.
An experienced company secretary will ensure your minutes fit the following factors:
- The minutes will suit the needs of your company, they will be as brief or comprehensive as required to capture the focus and decisions of the meeting.
- The minutes will be comprehensible, ensuring that whoever reads them will understand the items discussed, the essence of the debates held and the context of discussions, decision-making processes and their conclusions.
AI minute takers record all conversations within a meeting, without nuance, editing or restriction. This means that every meeting will contain vast amounts of back and forth, toneless, and without context. The resulting document will require extensive review to reform into minutes the executive suite can use. The resource and risk management invested offsets any saving in time during the meeting itself and still requires expertise to adapt after the meeting has finished.
AI doesn’t write the whole story
Professional Company Secretaries not only prepare competent minutes efficiently, but they are also a source of valuable real-time advice. Corporate boardrooms that rely on AI minute taking risk overlooking matters of compliance and governance. Will share issues be properly minuted to ensure statutory filings can be made, for example? For listed companies, when a PDMR transaction is approved, will it be properly registered (internally and with the regulator), and a stock exchange announcement prepared? Does the annual reporting schedule allow sufficient time for the increasingly comprehensive non-financial reporting to be compiled? Who will remember that the annual report of a quoted company is filed with the regulator in ESEF/iXBRL format? And does the transaction being discussed qualify as a connected person or a related party transaction?
There are more things to be considered to properly manage and govern board meetings than the use of AI for minute taking. Company Secretaries also have the skills to provide timely advice on regulatory requirements, compliance processes and governance related matters at the moment of decision making.
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The legal requirements for board meeting minutes
The Companies Act 2006 legislates that all organisations must record minutes of company directors’ meetings and retain them for a minimum of ten years. There are legal penalties for not making and keeping board meeting minutes, with fines for each director found to be in default of their legal duties.
Minutes don’t have to conform to a specific format; however, they should accurately and impartially reflect the proceedings, decisions and discussion of the meeting.
Ultimately, minutes provide a transparency and accountability for organisations and are often crucial in determining outcomes of tribunals or other legal ramifications. For listed companies, minutes are especially important: they are a fundamental record of decision making for all stakeholders. They are used by regulators as a record of what is known, when; they contribute to an Auditor’s view of risk during annual audits; they detail agreements and disagreements; they record directors’ actions and hence their compliance with their statutory duties. Board minutes featured prominently in Parliament’s investigation into the collapse of Carillion plc.
Privacy and AI note taking software
Utilising AI minute takers in business-critical meetings can introduce further risk, from individual privacy consent through to cyber security. Recording an entire meeting unedited opens the potential for greater disclosure required during litigation while distributing minutes indiscriminately can open up risk to areas of confidentiality or legal privilege. Knowing that a meeting is being recorded may even constrain contributions from meeting participants.
Information gathered by AI note takers are often stored on the software supplier’s central data storage or servers. Once this data has been gathered it may also be used for AI training purposes. This third-party storage increases the potential for accidental leaks or cyber-theft, which your organisation has no control over. Engaging a company secretary mitigates these risks while adding other benefits including governance advice during meetings.
How MSP Company Secretarial can help
MSP Company Secretarial provides the full range of Board support services that enhance the operation of Boards and promote compliance with statutory and regulatory obligations. In addition to statutory and filing compliance, we offer the following Company Secretarial services:
- Preparing, attending and minuting Board and Committee meetings: ensuring proper records are made, helping to maintain the Board’s focus and activity programmes.
- Assessing the appropriate Corporate Governance approach for a company: advising business leaders on the implementation of best practice corporate governance applicable to the organization and in compliance with a company’s adopted governance codes and reporting practices.
- Advising public and listed companies on regulatory disclosures, including MAR compliance: ensuring disclosures and records comply with Listing, Disclosure and MAR rules.
- Assisting with Insider List preparation and maintenance.
- Drafting a company’s annual report – working with auditors and finance departments and where appropriate, liaise with printers to make sure a company’s annual report is released on schedule (and in iXBRL/ESEF format if required).
- Support Annual and General Meetings: assisting the Board in composing resolutions to be proposed to members, and preparing the notice of meeting and forms of proxy and direction; and officiate at Meetings.
- Reviewing and assessing Board effectiveness: reviewing performance and effectiveness of the Board.
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MSP offers full board support and corporate governance services. To see how these services can benefit your organisation, contact us.
Frequently Asked Questions
What is a Company Secretary?
Lee Roach defines the Company Secretary as an “officer and agent of the company who is usually responsible for ensuring that the company complies with its legal and financial obligations.”*
Formally recognised as an officer of the company with the Companies Act 1948, the role of Company Secretary has expanded to encompass the interests of the Company, the Board, and the Shareholders, and since the early 1990s the company secretary has a central role in the governance practices of companies, and often overseeing non-financial reporting of a company.
[* Lee Roach “Company Law Concentrate” (2020) Oxford University Press, p. A13.]
What are the core duties of a Company Secretary?
In outline, a Company Secretary administers the Board’s and Board Committees’ activities; advises on and makes statutory filings; manages the share register (with outside registrars, as appropriate); manages and maintains the statutory registers of a company; holds the company’s records – records Board decisions; manages shareholder enquiries and shareholder agreements; manages a company’s listing services.
Is it a legal requirement to have a Company Secretary?
A properly qualified Company Secretary is a legal requirement of a PLC (CA 2006, ss. 271 and 273) who must be registered with Companies House (s. 277).
Are there examples of instances where minutes can be relied upon?
Beyond the requirement that companies must hold records of resolutions and Board and shareholder meetings for at least 10 years (CA 2006 s. 355), minutes of meetings form important records of decisions made at Board and shareholder meetings.
Minutes signed by a director, meeting chair, or Company Secretary are evidence that the proceedings of the shareholder meetings were conducted and recorded properly (s. 356). Properly prepared minutes are important records for shareholders who can request to see minutes of shareholder meetings (s. 358); and minutes from director meetings are often required by banks, for example, to confirm company commitments and authorities required to support loan and facility applications.
What needs to be recorded in minutes?
What is minuted varies by company, however, minutes should contain a record of the topics discussed by directors at Board and Committee meetings and capture decisions made. General meetings of shareholders typically record the significant events of such meetings, and record the resolutions presented and the voting outcome of those meetings.
An equally important consideration is capturing statutory and regulatory implications of discussions – for example:
- Is a statutory filing required?
- Following a Board decision for a listed company is a market announcement required? Is the company entering a Closed Period?
- Do Class Tests apply to a proposed transaction?
Company Secretaries can be invaluable as they can provide advice to Boards and shareholders that ensure minutes and actions from meetings satisfy the company’s administrative, statutory, and regulatory requirements in real time.
Related Topics
- Virtual Board Meetings – 10 Tips to Make Them a Success
- AI Transcripts V Minutes – What’s The Best Way to Record Your Meeting?
- The Art of Minute Writing
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