9. Board Meetings PDF

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Summary

Board Meetings...

Description

Company Decision Making

Director Authority

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Directors have the power to manage the company on a daily basis and many decisions are taken by board of directors alone (MA 3). The Board generally have to make decisions collectively by either a majority/unanimous decision (except where the company only has 1 director (MA 7(1))

How are decisions made by directors?

There are two ways to make decisions:

What if the private company has only one director?

1. board meeting (a) need quorate meeting and (b) then majority vote

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The procedure for making decisions is determined by the company's articles (S154). For companies with MA, the director may make decisions however he so wishes (MA 7(2))

2. written resolution (except for dismissing directors/auditors)

Procedure

Step 1: Calling a Board Meeting

Who can call a BM, and how?

What must the notice specify? (MA 9(2))

Any of the directors can call a board meeting, or they can authorise the company secretary to do so at any time, by giving reasonable notice to each director of the meeting before it takes place (MA 9(1); TA88; Re Homer)

The notice must specify (a) proposed date; (b) time and place; (c) means of communication (can be text messaging etc MA 10(1)).

Failure to give the correct notice If notice is not given to all directors in accordance with the articles, directors not given the correct notice have the right to demand that another meeting be held within a reasonable time (Browne v La Trinidad 1887)

Step 2: Quorum and Directors' Interests

What is the quorum for private companies?

Do any of the directors have a personal interest?

1. Model Articles: 2 directors (but there is no provision to appoint alternates (MA 11(2)).

***SEE S177 AND S182*** 

2. Table A: 2 directors, but alternates may be appointed (TA89) A meeting at which the quorum is present will be quorate. Where there is no quorum, a valid meeting cannot be held and no decisions can be made.

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The directors may have a duty to declare an interest with an actual or proposed transaction under SS177 and 182 unless there is an exception (see 'Directors Duties'). However, they should still attend and declare their interest as a matter of good practice. May only be unable to vote/count in quorum for one matter of business, but count/vote on others.

Can the directors count in the quorum and vote? Model Articles - directors who have a personal interest in an actual or proposed transaction cannot form part of the quorum and nor can they vote (MA14(1)) except where: (a) SH pass an OR to temporarily disapply the relevant provision in the articles; or (b) SH pass SR to permanently amend the articles under S21 (c) director interest cannot reasonably b regarded as likely to give rise to a conflict of interest; or (d) the conflict of interest arises from a permitted cause: (i) guarantee given by director in respect of an obligation given by the company/its subsidiaries (ii) subscription for shares (iii) ........ (MA14(3); MA14(4)) Table A - as above, but see TA95 subject to the exceptions of TA94

Step 3: Board Resolutions and Voting

Once the quorum established, the directors turn to the agenda for the board meeting and the decisions that need to be taken.  All resolutions are passed by majority vote (MA 7(1) and Table A art 88).  For show of hands, each director has one vote at a board meeting.  Can demand a poll vote, whereby directors have one vote for every share they own (MA 44) If equal number of votes for and against, the negative view will prevail (unless the Chairman has a casting vote).

(a) If there is a dispute about whether a director can form part of the quorum and/or vote, the Chairman's decision is final (MA 14(6), Table A 98) (b) If deadlocked vote, chairman may (if articles grant it) have a casting vote (MA 13(1) and Table A 88).  This extends to a director who chairs the meeting without formally being appointed chairman.  MA 13(2) excludes this casting vote if the Chairman is prevented from voting/counting in the quorum.

The board meeting will then be adjourned for any necessary WRs/GMs and reconvened on reasonable notice

Step 4: Filing and Administration

External Filing For example:  Notice of resignation of a director on Form TM01 within 14 days of resignation  Copy of special resolution (S29 and 30)  Copy of amended articles (S26)

Internal Filing 

Minutes of every BM for 10 years S248 (providing an overview of the decisions made at the meeting)  Must be in hard copy/electronic, but if in electronic format it must be capable of being reproduced in hard copy (S1135(1); MA 15)  Open to inspection by directors but usually not to shareholders (R v Mariquita and New Grenada Mining Company).  If the minutes are signed by the chairman, then they are evidence of proceedings at that meeting. Where they are prepared in accordance with S248 the meeting is deemed duly held, all proceedings taken place and all appointments deemed validly made S249(1)

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Update register of directors/residential addresses

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Cancel old share certificates and issue new share certificates, etc....