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Governance & Compliance Update: Top Tips for Directors Holding Board Meetings

07 February 2018

It is essential for directors to understand what is required of them. These tips will assist directors and make it easier for them to comply with obligations.

The management of a company is governed by the Companies Act 2014 (Act) and the company’s constitution. The constitution of a company deals with its rules for internal management such as the holding of board meetings and the procedure at board meetings.

Notice of a board meeting

Reasonable notice of a board meeting must be given to all directors. The length of the notice will depend on usual practice, the urgency of the matter, and the ability of the directors to attend. Directors may unanimously waive their right to notice. Failure to provide notice or reasonable notice may render any resolutions passed at that board meeting void.

Tip: Where a board pack is required and where there are no time constraints, ensure it is circulated no later than seven days before the date of the meeting. This will provide the directors with sufficient time to review and make informed decisions at the meeting.

Delegation of authority

The shareholders of a company delegate the management of the company to the directors. The directors may delegate their powers to committees or other people, such as members of management. A company also needs to check its constitution before delegating its authority to ensure that it is empowered to do so in the manner proposed.

Tip: Where a board delegates its authority it should do so by way of clearly documented committee terms of reference or board resolutions. 

The Chair of the Board

The directors may elect a chairperson and determine the period for which they are to hold office. Usually, if no chairperson is elected or if at any meeting the chairperson is not present within 15 minutes after the time that the meeting is scheduled to start, the directors at the meeting may choose one of themselves to be chairperson of that meeting.

The chairperson may have certain responsibilities in addition to chairing board meetings and signing minutes such as casting a deciding vote in the event of a tie.

Tip: Always review a company’s constitution to check for any particular provisions as to how a chairperson is elected and the powers that they hold. The provisions summarised above are optional provisions in the Act and, therefore, may be modified to a company’s requirements.

Quorum

The chairperson of the board must ensure that a board meeting has a quorum before it proceeds with the business of the meeting. The quorum is the prescribed minimum number of directors required to attend a board meeting. The quorum may be fixed in a company’s constitution and, unless fixed, will be two unless the company has a single director, in which case the quorum will be one.

Tip: A board should be aware of its required quorum as set out in its constitution so that the correct quorum is present before every board meeting.

Virtual board meetings

Directors may hold board meetings by video, telephone or other electronic means provided all participants can hear and speak to each other. A director participating in this way is considered to be present at the meeting and is entitled to vote and be counted in the quorum.

Tip: The Act allows for virtual board meetings to be held unless a company’s constitution specifically prohibits this to occur.  The board of a company should be aware as to whether or not its constitution disallows virtual board meetings.

Board minutes

A company must maintain an accurate minute book which contains the minutes of all directors’ meetings. The minutes must contain the names of those board or committee members present, details of the proceedings of the meeting and of the resolutions passed.

The minutes should be entered in the minute book as soon as possible after the meeting and signed minutes are evidence of the business of the meeting. 

Tip: It is important that the minutes accurately record the business of the meeting before they are signed. Once board minutes have been signed by the chairperson, they can only be amended by a resolution of the board.

Written resolutions

The Act allows directors to pass written resolutions instead of holding a meeting. To be valid, it must be signed by all directors.

A written resolution will take effect from the date on which the last director signs and dates the resolution. The directors need not sign the same copy of the resolution.

Written resolutions should also be entered in the minute book as soon as possible after it has been signed by all directors.

Tip: The importance of a properly maintained minute book cannot be overstated. It provides an accurate record of decisions taken and can assist directors in demonstrating that they properly considered, discussed and approved a particular course of action.

How we can help

For more information on the proper and lawful manner in which to conduct board meetings, contact a member of our Corporate Governance & Compliance team.


The content of this article is provided for information purposes only and does not constitute legal or other advice. 

Discuss your governance and compliance queries now with Claire Lord.

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