Directors and Secretaries Beware: Maintaining High Standards for Board Processes and Minutes

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Directors and Secretaries Beware: Maintaining High Standards for Board Processes and Minutes


A recent case between ASIC and Australian Property Custodian Holdings Limited (“APC”) has highlighted the importance of maintaining high standards for board processes and minutes.  In the final decision, the directors of APC were fined and disqualified after the Board attempted to introduce new fees to be charged by APC, as the responsible entity of Prime Trust, without seeking the approval of the members of the Trust. 


It also involved a conflict of interest with one of the directors who would benefit from the fees.  That conflict was not disclosed and the relevant director claimed he had satisfied his fiduciary obligations by abstaining from voting.



This case highlights the statutory duties of directors. It examines boardroom procedure and how decision-making should be undertaken and recorded, particularly in circumstances where there are:

  • issues of disclosures,
  • conflict of interest, and
  • abstentions arise.


The duty of preparing and keeping board minutes is often left in the hands of company secretaries. This case emphasises the significance of the secretary’s role in relation to board processes and that secretaries should be prepared to uphold the responsibilities that go with the role.



The general principles that follow from the APC decision are:

  • those who prepare and approve board minutes are obliged to exercise a high standard of care;
  • board minutes should record discussions of important matters;
  • each director is required to support, oppose or abstain from the resolution, and to ensure their choice is expressed and recorded in one of those ways; and
  • the resolution of the directors should be recorded by having it approved and signed by all directors at the next board meeting.


This case is also an important reminder that it is an offence under section 1308(2) of the Corporation Act 2001 (the Act) to make a statement in a document required by, or for the purpose of, the Act which is false or misleading. Equally, it should be noted that an omission which renders a board minute false and misleading would amount to a contravention under this section of the Act, and possible penalties include jail.


If you require any assistance with understanding or ensuring compliance with your statutory obligations, please contact please contact your relevant ESV Engagement Partner on (02) 9283 1666.


Article by Lisa Brink