Research Essay Board Paper

Board members gain a great deal of information about the decisions they need to make

through the papers they receive prior to a board meeting. Papers cover a variety of functions,

from providing general information to a call for action.

Board papers are often prepared by non-board members

who may not be familiar with the board’s requirements,

which means a thorough control process can improve the

quality of reports. Such a process also allows the senior

executives to consider and coordinate information so that

they are better prepared to answer questions that arise

from the board discussions.

The information contained in board papers should

be consistent, coherent and complete. Board papers

are part of the official records of the company and

a complete set should be maintained for future reference.

As set out in s 180 of the Corporations Act 2001, directors

have a statutory duty of care to have read the board papers

to be able to contribute effectively to board meetings. The

Centro case highlights the need for boards to carefully

manage the board paper process and focus on the manner

in which information is provided to the board. Boards need

to ensure that they receive meaningful information and not

merely data. In the Centro case (ASIC v Healey (2011) FCA

717 at 226), Justice Middleton noted:

"A board can control the information it receives.

If there was an information overload, it could have been

prevented. If there was a huge amount of information,

then more time may need to be taken to read and

understand it".

The board is partly to blame if it is not receiving the

board papers in a format that makes them comprehensible

for directors, as the board is responsible for:

• Setting expectations and providing directions

to management on:

- the content of reports;

- the format of reports;

- the timing and timeliness of board papers;

- the amount of information provided;

• Ensuring it has sufficient information with which

to make decisions;

• Ensuring management has in place the processes

and controls to ensure the integrity of the

information provided; and

• Setting KPIs for management to report against.

Board papers Meeting effectiveness

DIRECTOR TOOLS

DIRECTOR TOOLS: MEETING EFFECTIVENESS – BOARD PAPERS 2

Points to consider

• Standardisation aids clarity and speed of reading and

allows board members to focus on the key points.

Uniformity and consistency can be achieved by using

a board paper template, as shown in the sample

that follows. A template such as this provides the

headings within which the writers of board papers

should work. This type of template will, of course,

need some modification for papers that are for noting

or discussion rather for decision-making purposes.

However, the paper can still include a draft resolution

and recommendation, such as: ‘It is recommended that

the information is noted’.

• Consider providing specifications for length, content

and order of papers. For example: ‘The executive

summary shall be no longer than half a sheet of A4 with

text of normal size and spacing’, or ‘No board paper shall

exceed 10 pages and all papers should contain a glossary

of any technical terms’.

• Consider circulating a sign-off sheet so that board

members can see that the paper has been reviewed by

various staff members. This helps improve coordination

in large organisations and alerts staff to the issues.

• The CEO is responsible for any paper prepared by the

executive team, regardless of whether he or she signs the

signing sheet.

• Will the paper be supported by a verbal presentation and

will supporting information be supplied at the meeting?

• Clarify the storage of papers after the meeting, including

whether board members are allowed to retain the papers

or if they need to be returned to the company secretary

for secure disposal.

• Consider the delivery method of the paper, which

could include the hardcopy or an electronic delivery

mechanism. Technology offers a greater range of

presentation style but creates other issues such as the

security of the servers used to transmit the data, which

must be managed.

“ Technology offers a greater range of

presentation style but creates other

issues such as the security of the

servers used to transmit the data,

which must be managed.”

DIRECTOR TOOLS: MEETING EFFECTIVENESS – BOARD PAPERS 3

BOARD PAPER

Agenda Item: #

Agenda Item: [Insert Title]

Paper Type: [For Decision], [For Discussion] OR [For Noting]

Sponsor: [Insert Name and Title]

Draft Resolution: [Insert exact wording of proposed resolution that the board is asked to pass.

The draft resolution must be clear and concise.]

Executive Summary:

In this section, explain in no more than four lines what the paper is about and what it is endeavouring to achieve. The paragraph should

be clear and concise and should state whether the paper is being submitted for the board’s information or is seeking the board’s approval

for a contract, action, etc.

Background:

Outline in no more than 12 lines the background to what is being proposed to the board providing the information necessary to

understand the proposal for a non-executive director who does not have the background knowledge of an executive who has been

managing the day-to-day affairs of a particular matter.

Summarise any previous board consideration of the specific proposal. If it is not possible to explain the background to a proposal in the

space of two paragraphs, include an attachment and provide further details.

Identify any external advice/consultants/information who has been involved in the preparation of the proposal.

Recommendation:

Outline the recommendation in no more than twelve lines. Do not repeat the statements made in the sections above. Mention the

options that were considered by management and explain why the preferred option was chosen. Also detail the outcomes that

management is seeking to achieve from the proposal. If the implications of the proposal are complex, include an attachment and provide

further details.

Issues:

Strategy Implications

Explain in no more than ten lines how this proposal is aligned to the agreed strategic and business plans.

Financial Implications

Explain in no more than twelve lines the expenditure implications of the proposal. Once again this should take the form of an executive

summary approach. If the expenditure implications are complex include an attachment and provide further details.

This section should include comments on whether the expenditure is budgeted or unbudgeted, the proposed timing of the expenditure

and cash flow implications. If a detailed business case has been prepared for a proposal the major points of the case should be

summarised here.

Risk Analysis

Analyse in no more than twelve lines the major risks associated with the proposal and explain how these risks will be managed. This

information may be presented using the following table format.

Identified Risk Likelihood (H,M,L) Impact of Risk (H,M,L) Strategy to Manage Risk

Annotated sample board paper1

DIRECTOR TOOLS: MEETING EFFECTIVENESS – BOARD PAPERS 4

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Disclaimer This document is part of a Director Tools series prepared by the Australian Institute of Company Directors. This series has been designed to provide general background information and as a starting point for undertaking a board-related activity. It is not designed to replace legal advice or a detailed review of the subject matter. The material in this document does not constitute legal, accounting or other professional advice. While reasonable care has been taken in its preparation, the Australian Institute of Company Directors does not make any express or implied representations or warranties as to the completeness, currency, reliability or accuracy of the material in this document. This document should not be used or relied upon as a substitute for professional advice or as a basis for formulating business decisions. To the extent permitted by law, the Australian Institute of Company Directors excludes all liability for any loss or damage arising out of the use of the material in this document. Any links to third-party websites are provided for convenience only and do not represent endorsement, sponsorship or approval of those third parties, or any products and/or services offered by third parties, or any comment on the accuracy or currency of the information included in third party websites. The opinions of those quoted do not necessarily represent the view of the Australian Institute of Company Directors.

© 2016 Australian Institute of Company Directors

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1 Adapted from Kiel G, Nicholson G, Tunny J A, Beck S, Directors at Work, Thomson Reuters Australia Ltd, 2012.

Corporate Governance and Compliance

Outline in no more than twelve lines the corporate governance implications of the proposal remembering that it is of considerable

importance to the board that contemporary corporate governance standards are achieved. Therefore, the adoption of appropriate

internal risk management and compliance processes will be a condition precedent to the board considering and approving a proposal.

Outline what KPIs and/or reporting back to the board will occur during and after implementation.

Management Responsibility

Identify the manager who will have responsibility for the proposal as well as the executive who will deal with the matter on a day-to-day

basis.

Signing of Board Paper

Chief Executive Officer Sponsor

The following people have been involved in the preparation of this board paper:

[Name and Title]