Board Meetings for Startups
Once we’ve developed a diverse board that can help us grow the company, it’s time to convene and run board meetings on a routine basis. The size and structure of the board and the amount invested into the organization will dictate how formal these meetings need to be. For example, a board of three in a pre-revenue organization might be an informal review of what we’ve done and where we’re at (or what’s changed). As we grow, we might have paid attorneys in the meetings to keep us honest.
The board votes to accept office holders and so there are some formalities we need to be aware of, if only so we’re good to open checking accounts and get credit cards. Let’s look at how to structure a board meeting - and we’ll do so in the basic steps the board chair will enable:
Recognize that there is a quorum: A quorum is the number or percentage of people required to make decisions. The number of board members needed to form a quorum are usually outlined in the by-laws and can be anywhere from a simple majority (two out of three or 5 out of 8, etc) of board members or a super-majority. The board chair performs a roll call and identifies if there are enough board members to proceed.
Call the meeting to order: The board chair then calls the meeting to order. This should be a simple statement that there is a quorum and the meeting is beginning.
Approve minutes and the agenda: The minutes (or notes) from a previous board meeting should then be approved and the agenda (or outline of the meeting being started) should be approved. Always remember, old business then new business. Any changes to the minutes and/or agenda should also be approved at this point as well.
Communications and reports: This is the section for any corporate wide communications to be read into the minutes, reports shared, and any teams that need to report to the board (e.g. product, sales, etc) given a chance to share content they may have prepared.
Old business: This is the area for any items brought up previous to be discussed and if needed voted on. Each time can then be approved, denied, postponed to later in the meeting, or tabled to a later meeting.
New business: Once old business is complete, the chair will move to proceed to new business. Here, the chair may ask for any motions to change the order of items from the agenda or may proceed. New items are then approved, denied, postponed to later in the meeting, or tabled to a later meeting and will be picked up as old business in subsequent meetings.
Close the meeting: Once all business has been conducted, the chair can give the floor for informational items (or a point of information) and have it written into formal records that the meeting was run. Again, we would want a second an quick vote to complete the meeting.
The above is fairly rigid, or not according to the scale of the organization. It’s good to get a little more formal than needed early, but not so much so that less is accomplished. For example, each of the items typically requires a vote. The vote needs a motion to vote and then a second and a written tally of which parties voted in favor of a motion passing and which voted in favor of a motion failing. This can be a lot of ceremony for a 3 person board meeting and we may choose to allow a less formal approach until more is needed. However, while we may choose not to require a second to a motion to vote on something, each motion that is voted should still be voted and logged into the minutes. No matter how informal an approach we take, those minutes should still be logged and distributed ahead of the meeting for approval.
As we grow, there will be conflicts here and there. That’s natural and a diversity of ideas is bound to provide a better result in the operations of a company. But those conflicts, no matter how substantive, usually mean it’s time to get a bit more formal with our meetings. A good board chair can do this without making it seem like the company is getting overly formal for the size and current scale of the operations.
Finally we want to make sure not to run afoul of the legal requirements for the type of company we are running. An LLC will be loosely governed; however, a C Corporation will have regulatory and filing requirements. We want to make sure any investors feel heard and that our reporting and regulatory requirements on their behalf are met. This doesn’t mean we need to agree with everything they say - but we do need to occasionally bring in counsel to make sure we’re doing everything by the book.