The convening, running, recording and minuting of board meetings, is often erroneously seen as a minor part of business transactions however, failure to properly hold board meetings can have significant implications for a company and its directors. This article aims to inform directors of how to properly conduct a director’s meeting correctly.

Calling a directors’ meeting

Any director may call a directors’ meeting by giving notice of the meeting to the directors or by authorising the company secretary to give such notice. No specific length of notice is required but reasonable notice should be given. For some companies one week may be reasonable for others it may be shorter.

The notice given to each director does not need to be in writing but must include the following:

• the proposed date and time of the meeting
• where it is to take place and
• if it is anticipated that directors participating in the meeting will not be in the same place, details of a proposed means of communication during the meeting should be provided, ensuring that participants are able to hear each other, contribute to the discussions and make decisions

Chairing of directors’ meetings

The directors may appoint a director to chair their meetings, this individual is known as the chairperson. If the chairperson is not participating in a directors’ meeting within ten minutes of the time at which it was to start, the participating directors must appoint one of themselves to chair it.

Quorum for directors’ meetings

The quorum for a meeting is defined as the minimum number of directors that must be present and entitled to vote in order to constitute a valid meeting.

At a directors’ meeting, unless a quorum is participating, no proposal is to be voted on, except a proposal to call another meeting. Therefore, the first order of business is for the chair to determine if a quorum is present. The quorum is usually defined in the Company’s Articles of Association. If the quorum is not specifically defined, a quorum will default to a majority of directors in office at that time.

In the model articles for both private and public companies, unless it is modified the default quorum established is two directors. If the total number of directors for the time being is less than the quorum required, the directors must not take any decision other than a decision to:

• appoint further directors, or
• call a general meeting to enable the shareholders to appoint further directors

Casting vote

If the numbers of votes for and against a proposal are equal, the chairperson or other director chairing the meeting has a casting vote.

This does not apply if, in accordance with the articles, the chairperson or other director is not to be counted as participating in the decision-making process for quorum or voting purposes due to a potential conflict of interest. The company’s articles of association usually set out the rules regarding director’s conflicts of interest therefore, it is important to ensure voting is conducted in accordance with the Company’s articles of association.

Keeping Records

The minutes of meetings should record the decisions taken and provide sufficient background to those decisions. Therefore, directors may be required to approve previous Board meeting minutes before any official business can be conducted. In doing so they are recording the fact that those previous minutes are a true and accurate record of discussions and decisions.

For further advice regarding Company Secretarial matters please contact Michelle.Lamberth@Herrington-Carmichael.com.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.