AI Notetaking for Corporate Governance: Best Practices and Legal Considerations

For a few years now, Artificial Intelligence (AI) has become one of those recurring topics that kept finding its way into the board meeting – it may even be a standing agenda item for some organizations. More recently, however, AI is now part of the conversation, quietly shaping discussions, as businesses increasingly adopt the use of AI-powered note-taking technology.

These AI-powered tools promise to improve meeting efficiency, streamline access to information both during and after-meetings, and help keep accurate records. They leverage machine learning to produce meeting transcripts, generate summaries of key decisions, and track action items for post-meeting distribution. All of which can be beneficial depending on whether the goal is to produce meeting notes or meeting minutes.

Distinguishing Meeting Notes from Meeting Minutes

Whether operating a not-for-profit or a for-profit corporation, nearly all statutes across Canada require that board meeting minutes be maintained as part of a corporation’s minute book records. However, meeting notes are not meeting minutes. AI notetaking is, subject to the considerations discussed below, a helpful way to supplement meeting notes and akin to recording a meeting but caution must be exercised when using this technology for meeting minutes, particularly for board meetings. In any context, whether for a routine meeting between staff or a board of directors meeting, producing well-drafted minutes is time consuming and far from straightforward.

Legal Considerations and Risks

Ensuring responsible, effective, and efficient use of these tools starts with understanding and carefully considering the legal challenges and potential risks.

Litigation and directors’ liability

Under both the Canada Business Corporations Act and the Business Corporations Act (Ontario), businesses are required to keep board meeting minutes as part of their minute book records. Except in rare circumstances, neither meeting notes nor meeting minutes will be privileged and may be produced in the context of litigation. When a court is reviewing the decisions of a board of directors, board minutes often act as the primary source to either prove or disprove that a director has met their duty of care or fiduciary obligation. The board minutes, if correctly drafted, will not only show the outcome and decision taken by the board but also that the board considered the relevant issues prior to making said decision, known as the ‘Business Judgment Rule[1]. Making that final decision of what’s “in” and what’s “out” requires a good understanding of the business, as well as the different parties involved in the discussion to ensure that the minutes are an accurate summary of what occurred, capture the right amount of detail, and that the right words and tone are chosen.

Unfortunately, most AI-notetakers will fall short of having the required knowledge to make such a decision so crucial to protecting directors from liability. Effectively denying a director’s ability to defend their decision. Additionally, the existence of any AI-generated transcripts, notes, and summaries will also undermine the integrity of any meeting minutes as the “official record”.

Confidential information

Confidential information is often disclosed during board meetings and discussed among directors. Even in regular meetings staff might be discussing confidential information with other staff or even clients. Understanding to what extent and which information discussed is intended to be shared or reproduced is inherently a judgment decision which can only be made by those individuals having knowledge of the business. Additionally, there are ever-growing security risks surrounding how third parties, such as these AI softwares, store information and the potential for data breaches.

Privileged information

Common practice is that privileged discussions between legal counsel and board members is not documented where legal advice is being sought or given (solicitor-client privilege), or where matters relating to an existing or anticipated litigation are being discussed (litigation privilege). Instead, minutes will commonly reflect that a privileged conversation with counsel transpired with reference to general information on the topic. Concern arises with the use of AI notetaking particularly where the tool cannot be temporarily disabled for a portion of the meeting, meeting summaries, notes, and transcripts cannot be limited to certain meeting attendees, and the information cannot be vetted before being distributed.

Director’s dissent

Under both the Canada Business Corporations Act and the Business Corporations Act (Ontario), every director, whether present or absent from a meeting, has a right to formally document their dissent of any passed resolution in the minutes. Nonetheless, perceived disagreement, conflicts, or arguments between directors will not always reach the point where a director wishes to formally document their dissent. This is particularly the case if the directors wish to strategically “present a united front” because a recorded dissent can be perceived as undermining the decision. The concern and risk with AI-notetaking is that healthy debate and discussions amongst directors can be registered as “dissents” and be reflected in the recorded meeting notes or minutes of the meeting. This can in turn create an inconsistency with the actual consensus of the board.

Free-flowing discussions

Board meetings are crucial for strategic discissions. An important part of decision-making at that level of an organization is ensuring there is space for meaningful debate and discussion. Board members need to feel comfortable having such discussions, and AI-notetaking may compromise their comfort level. Being recorded and knowing every word said will be captured is less than incentivising for free-flowing discussion. An AI-notetaking software does not understand the nuance of discussion, does not factor in body-language, tone, or delivery, and is not at the stage where it can suitably decide what is recorded.

Best Practices

Understanding the legal risks makes leveraging AI-notetaking technologies efficiently and safely that much more important.

Choose the right tool

Choose the right AI-notetaker that best aligns with specific business needs. Not every AI-notetaking software offers the same functionality and features. Consider only using AI-softwares that allow the business to control the features depending on the use-case. Additionally, proper due diligence should be done to ensure that the AI-software complies with data protection laws, regulatory requirements, and the business’ industry specific requirements and standards.

Always disclose and get permission

Disclose the use of AI-notetaking softwares before using it – particularly with parties outside the business who may not be familiar with the software. Staff and other individuals should be able to raise concerns, staff should be trained to answer questions about any software, and each person should be able to refuse the use of the software.

Human-in-the-loop.

AI can, does, and will continue to make mistakes. Understanding that human oversight will always be needed is the most crucial step to effectively using these tools. Equally as important, is making sure that the right people with specific knowledge of the matter are reviewing the content. This should be addressed in a policy.

Establish and review policies

Implementing a proper framework with various policies in place will prevent misuse and limit some of the legal risks described above. Businesses should have policies that are reviewed regularly and that address:

• Human element. A human should always have the final discretion over anything produced by an AI software.
• Retention. Consider requiring all AI notes, transcripts, and summaries be destroyed once the official meeting minutes are approved.
• Privileged discussions. Consider prohibiting use during privileged discussions, or discussions with any professionals (e.g., lawyers, accountants, and consultants) providing an opinion, guidance, or advice.
• Access. Consider restricting access to certain individuals in the business, at least until there is a general understanding and literacy for the technology.

Summary

Generative AI is disruptive in nature and constantly evolving. AI-notetaking is still, like many other AI technologies, in its infancy. In its current form, AI lacks the necessary knowledge and skill required for taking minutes effectively. Businesses should ensure that their constant pursuit of efficient corporate governance does not expose their board members to liability.

[1] The Business Judgment Rule focuses on the procedural integrity of the decision and can be explained as “whether an appropriate degree of prudence and diligence was brought to bear in reaching what is claimed to be a reasonable business decision at the time it was made.” See MacIntosh, Jeffrey. « The Business Judgment Rule, the Public Interest Powers, and the “Fair and Reasonable” Test: Fellow Travellers or Ships in the Night?. » Osgoode Hall Law Journal 60.1 (2023) : 73-125; and Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68 at para 67.