Trustee minutes – the devil is in the detail…..
"ICSA" the Governance institute has published a public consultation on the "practice of minuting meetings" which closed Friday 24 June 2016. Following this consultation ICSA are providing an evening briefing on this issue on 19 September 2016, when their new guidance will be formally launched.
The consultation has focused on company board meetings and ICSA have indicated that over time the purpose of board meetings has evolved from recording company decisions for the benefit of the organisation internally, to taking on the purpose of additional functions. ICSA recognise in the consultation that there is little formal guidance regulating to this important aspect of business. One contentious area has been the level of detail around the minuting of board meetings. The consultation indicates minutes should confirm directors were aware of their duties and also document reasons for decisions made at the meeting with sufficient background information so to understand the decision.
One of the questions in the consultation relates to whether directors should give reasons for their decisions and to what extent the minutes should cover this, including the detail of background supporting information.
Although this consultation focuses on the minutes of board minutes for companies, this does have relevance to the governance and administration of UK occupational pension schemes. This is especially true because an increasing number of UK pension schemes have professional corporate trustees appointed by the sponsor. Trustee business is traditionally undertaken by a series of trustee board meetings held each year, and larger schemes operate with sub-committees of the trustee board to discuss specialist areas like investment management. The minutes of trustee meetings record the important matters discussed at trustee meetings. They serve an important internal purpose, which is to record the trustee decisions made at the meetings, in order to facilitate effective scheme administration and governance. These decisions can relate to the operation of the scheme as a whole (for instance whether to wind up the scheme or continue as a frozen scheme after the sponsor has terminated its contributions) or to members benefits (for instance to record the trustee decision on the allocation of death benefits to a member's beneficiary following a member's death in service).
UK pensions law does require pension trustees to keep written records of trustee meetings and does require that these records include basic information like (a) the date, time and place of the meeting (b) the names of the trustees invited to the meeting (c) the names of the trustees who attended the meeting and those that did not attend (d) the name of any professional advisers or any other attendees (e) and all decisions made at the meeting. These requirements reflect the developed practice for company board meetings which is subject to the ICSA review. This is not surprising, as like companies, trustees operate their business through the formal process of trustee meetings, and decision making at these meetings form the bedrock of the administration and governance of the scheme.
The level of detail in trustee minutes is a hot topic. On one level the trustees can be comforted as trustee minutes are not within the class of scheme documents which are disclosable to members at their request under the pensions disclosure regulations. However a number of Pension Ombudsman cases have decided that refusal of a request by a member to disclose trustee minutes amounts to "maladministration". Good practice remains for trustees to draft minutes containing enough detail to record the reasons supporting trustee decisions on matters discussed. They should record the matters taken into account and the advice received as well. The purpose of trustee minutes has evolved too, from a record of decisions made for internal purposes only, to a document which will operate to protect the trustees (and confirm that the trustees acted within their powers and complied with their fiduciary duties) should the minutes be disclosed to a member, either voluntarily or by an order of a Court or the Pensions Ombudsman.
On this note pension trustees will be interested to see the content of the new formal requirements applicable for company board meetings when these are announced on 19 September 2016. These new requirements should be carefully considered by trustees, to see what impact and relevance they have to the preparation of trustee minutes.