Navigating Closed Board Meetings: Rules, Minutes, and Best Practices

When sensitive topics that require maintaining confidentiality need to be addressed by the board, a general open board of directors meeting doesn’t work. 

For this matter, a dedicated closed board meeting should be held. 

In this article, we discuss the essentials of a closed board meeting, its purpose, benefits, rules, and potential pitfalls. Additionally, we provide a downloadable template of closed board meeting minutes. Keep reading!

What is a closed-session board meeting?

A closed board meeting is a board meeting that a board of directors holds privately, behind the closed door. Such a meeting is not open to the public or other stakeholders and is typically for discussing sensitive or confidential information. 

A closed board meeting is sometimes also called an executive session since often only executives are involved in the meeting.

Sometimes, a closed board meeting can be a part of a general open meeting. In this case, the meeting first starts as open to the public, and when it’s time to discuss private matters, the public is dismissed and the closed session starts.

Topics to discuss during a closed-session board meeting

This is what is typically discussed during a board meeting closed session:

• Personnel matters. This includes discussions about hiring, firing, promoting, and disciplining as well as salary negotiation and performance reviews. 
• Legal issues. This typically implies consultation with legal counsel on pending litigation, legal strategy, potential lawsuits, or legal compliance issues where a board can receive legal advice.
• Contract negotiations. Negotiating terms of contracts, leases, or other contract agreements is also a subject of discussions at executive sessions.
• Financial performance. Any discussions about the company’s budget and possible changes to it are typically held at closed meetings.
• Executive compensation. Executive compensation packages are also a matter of a closed meeting discussion. Topics may include salaries, stock options, bonuses, and other incentives.
• Strategic plans. Anything related to short-term or long-term strategic objectives for the company’s growth is typically discussed behind closed doors.
• Security issues. Considerations involving the security of the organization, including cybersecurity and physical security measures, are never discussed during the open session. 

Benefits of a closed board meeting

Among the advantages of conducting a closed-door meeting are the following: 

• Enhanced confidentiality. Closed board meetings provide a secure environment to discuss sensitive topics without risks of leaks. This is especially important regarding strategic decisions, financial matters, legal issues, and personnel discussions. What’s more, confidentiality is often needed to comply with the requirements of governmental bodies.
• Effective decision-making. At closed sessions, board members might feel freer in discussing sensitive issues, expressing concerns, or proving creative solutions without fear of misinterpretation or the public eye’s judgment. This, in turn, enhances the chances of efficient decision-making. 
• Safeguarded strategic planning. Discussing strategic plans, mergers, acquisitions, and other competitive matters in a closed session ensures that the company’s plans are not prematurely disclosed to competitors. This confidentiality can be critical for maintaining a competitive edge.
• Protection of individuals. Closed meetings are ideal for discussing sensitive personnel issues, such as performance evaluations, disciplinary actions, and executive compensation. What’s more, private meetings are perfect for dealing with internal conflicts or disputes, since they provide a neutral space where issues can be resolved discreetly and effectively.

9 closed board meeting rules and guidelines

Closed-session board meeting rules differ depending on the location, type of organization (for-profit or non-profit), and local or governmental requirements. 

Below, we define some of the most common guidelines for conducting a closed board meeting:

1. Board members should first consider whether local requirements authorize the purpose of their closed meeting. For instance, for a common ownership community meeting to be closed, Maryland County defines only such reasons as consultation with legal counsel on a legal matter, discussion regarding employees and personnel, investigative proceedings concerning possible or actual criminal misconduct, and other sensitive things related to association business.
2. Board members may vote to hold a closed meeting. By results of a vote, a closed meeting can be conducted immediately during an open meeting or at a later date.
3. An organization should have clear definitions of closed meetings and procedures for calling them. Company bylaws should have clear information regarding what constitutes a closed meeting and the conditions under which they can be held. Also, policies should detail how and by whom closed meetings can be called, including the required notice and quorum.
4. Board members should be aware of the upcoming closed meeting if it’s a part of an open meeting. If an open meeting is called only to hold a closed meeting, the notice to every board member should state this.
5. Voting for the closed meeting should be public. For the private meeting to happen, each board member’s vote should be recorded. It means that a unanimous vote can’t be considered, for example.
6. Board members should only discuss topics defined for the closed meeting. Anything not related to those topics, must not be discussed at a separate closed meeting. Additionally, board members should ensure confidentiality of the discussion outside the boardroom.
7. Minutes of the closed board meeting should be taken. They should be detailed enough to reflect the decisions made and the rationale behind them. However, access to these minutes may be restricted to protect confidentiality.
8. Non-Disclosure Agreements may sometimes be signed before the closed meeting. Board members and attendees of closed meetings may be required to sign NDAs to legally bind them to confidentiality.
9. Board members should remember about their fiduciary duty. They must act in the organization’s best interests, which includes maintaining confidentiality about sensitive discussions and decisions made in closed meetings.

Recommendations for conducting a closed board meeting

Now, let’s see what you can do to ensure an efficient closed board meeting. 

Define clear objectives and prepare an agenda

Before the closed meeting, identify the specific goals you want to achieve. This is an important of part of board meeting preparation since it ensures the meeting stays focused and productive. 

These objectives should be clearly reflected in the meeting agenda that is to be distributed among board members before the meeting. A meeting agenda should also include time allocations for each discussion item and the desired outcomes.

Limit the attendees

Invite only those who are essential to the discussion and decision-making process. This keeps the meeting focused and prevents unnecessary distractions. For instance, if there’s a sensitive HR policy change in your company, include only those who are related to this (for example, an HR director and a CEO) and avoid inviting those who are not directly involved in the decision-making.

Summarize and assign action items

At the end of the meeting, summarize the key points discussed, and decisions made, and assign specific action items with deadlines if there’s such a need. This will enhance effectiveness and facilitate decision-making.

Provide follow-up

As a follow-up to a closed meeting, a corporate secretary should send out meeting minutes with action items for each individual board member to ensure accountability and progress. The meeting minutes should contain detailed information about the topics discussed at the meeting and its outcomes.

Leverage technology

For a closed board meeting to be streamlined and effective, opt for a technology solution like board rooms. With their help, you can create and distribute an agenda, create meeting minutes based on offered templates, and ensure collaboration between all the stakeholders. And all in one secure cloud environment that’s accessible at any time and from anywhere. 

Explore the selection of popular board portals on our main page.

Closed-session board meeting minutes essentials

Just like with any other type of corporate board meeting, be it a committee meeting or a general open board meeting, taking corporate minutes of a meeting is essential. 

This is what you should include in the meeting minutes of a closed board meeting:

• Date, time, and location of a meeting. Specify the exact date, start and end times, and location where a closed meeting takes place.
• Attendees. List the names of all the present and absent board members.
• Purpose of a closed meeting. Provide a general statement about the reason for the closed session, such as “to discuss personnel matters,” “to discuss pending litigation,” or “to discuss the 2024 company budget.”
• Approval of previous minutes. Include a record of the approval or amendment of minutes from previous closed sessions.
• Agenda items discussed. Create a list of the main topics or agenda items discussed at the executive session without going into detail about the discussion for confidentiality reasons.
• Decisions made. Add a summary of any decisions made, resolutions passed, or actions taken.
• Motions and votes. Include information on any motions that were proposed, who proposed them, and the outcome of the votes on these motions.
• Follow-ups. Detail action items or follow-up tasks assigned, with responsible parties and deadlines.
• Adjournment. Specify the time of adjournment of the closed executive session.

Common closed board meetings challenges

Let’s briefly review the main challenges that can occur when conducting closed board meetings and suggest their possible solutions. 

Maintaining confidentiality

The main rationale behind a closed board meeting is to ensure the confidentiality of sensitive data. However, sometimes it might be challenging to handle sensitive documents securely and minimize risks of leaks to external parties. Moreover, it’s sometimes difficult to ensure all board members and attendees understand the importance of confidentiality.

Possible solution:

• Require all board members and attendees to sign confidentiality agreements and regularly remind members of their confidentiality obligations
• Use reliable tools for sharing sensitive information, such as board portals
• Implement access controls to ensure only authorized individuals can view sensitive documents
• Conduct regular training sessions on confidentiality and data protection practices

Managing conflicts

Sometimes, personal or professional conflicts may occur between board members which can significantly impact the effectiveness of the board, especially in terms of decision-making. 

Possible solution:

• Develop and enforce a robust conflict of interest policy
• Require members to disclose any potential conflicts of interest at the start of each meeting
• Train board members in conflict resolution techniques to handle disagreements constructively
• Follow a structured agenda to keep discussions focused and prevent conflicts from escalating
• Conduct regular evaluations of board performance and dynamics

Ensuring compliance with regulations

Keeping up-to-date with evolving legal and regulatory requirements might be challenging. This is especially relevant when it comes to ensuring all board decisions and actions comply with relevant laws and regulations.

Possible solution:

• Include legal and compliance experts on the board or have them available as advisors
• Develop and implement a comprehensive compliance program tailored to your company’s needs
• Maintain thorough records of all compliance meetings, decisions, and compliance efforts
• Conduct regular internal and external audits to assess compliance with regulations

Key takeaways 

Let’s briefly summarize the main points from the article: 

• A closed board meeting is a meeting that is conducted privately, behind the closed door.
• Unlike open board meetings where different stakeholders can take part and different topics can be discussed, closed meetings are only for limited attendees and sensitive topics to discuss.
• Among the topics that can be discussed at a closed board meeting are financial matters, security issues, legal issues, personnel matters, contract negotiations, strategic plans, and executive compensation.
• For a streamlined and effective closed meeting, board directors can use dedicated board portals which allow for secure collaboration and document distribution online.

FAQ

What is the meaning of a closed meeting? 

A closed meeting means a board meeting where the public isn’t allowed. Instead, only a few attendees which a board determines are allowed. Such a meeting is for discussing sensitive topics that require confidentiality. 

Is a closed session the same as an executive session?

Sometimes, a closed meeting can be called an executive session since often only executives are allowed to attend it.

Do you take minutes in a closed session?

Yes, it’s required to take meeting minutes of a closed meeting. However, it’s essential to ensure that no third parties will have access to it. That’s also why, closed meeting minutes generally don’t contain any concrete details and provide only a summary of a meeting.