Board Meetings - Chapter 5 Flashcards
Give a brief overview of Board meetings
a) Board of directors is form of management committee
b) usually a small group who know eachother well
c) legisltation does not require company to hold board meetings though the articles may.
d) Board meetings deal with many more seperate items than a general meeting
e) At Board meetings director often prevented from voting on any matter in which he has a personal interest.
e) Boards often delegate to committees
What powers do board meetings have?
a) powers are directed under the articles and board meeting is place to excercise those powers
Portuguese consolidated copper mines ltd 1889 - The facts: The power to allot shares was vested in the directors, of whom there were four.
Two directors met, without proper notice of a meeting given to the other two. The two
directors present decided that a quorum should be two and allotted shares in response to
an application. On a later occasion these two directors and one of the others met, approved the
allotment and also the quorum of two. The fourth director sent in a letter, which arrived later
still, giving his agreement.
Decision: As there had been no board meeting, properly convened and held, the allotment
was invalid.
Articles often allow directors to take decisions by written resoloution rather than a meeting.
Do board meetings need to be face to face?
No and the 2006 articles clarify that it doesnt matter if held by conference call as long as they can communicate with eachother
How would you use a signed resoloution as a substitue for a board meeting?
The 2006 Act model articles for public companies provide:
1) written resoloution is adopted when all directors who would have been entitled to vote have signed one or more copies of it, provided that those directors would have formed a quorum.
2) It doesn’t matter whether director signs the resolution before or after the notice proposed it should be adopted
3) once adopted it must be treated as though a decision taken at a directors meeting
4) the company secretary must keep a record in writing or all directors written resolutions for at least ten years.
The 2006 act for private companies provides:
1) may take decisions by a majority of unanimously
2) such decision may take the form of a resolution in writing signed by each director unless they have otherwise indicated in writing
3) directors must have formed a quorum if there had been a meeting
Are there any rules on if and how frequent you should call a board meeting?
No legal requirements.
Articles typically say any director can call a meeting by giving notice to the directors or notifying the company secretary.
Notice must be given to all directors unless articles say otherwise.
If the board has agreed a meeting schedule you don’t need to give notice of each meeting but would send an agenda.
Give an example of a case concerning giving notice of a board meeting?
La compagnie de mayville Whitley 1896
The business set out in the notice did not include the appointment of an additional director, which was in fact made at the meeting.
Decision - the appointment was valid since a board should be left free to discuss whatever matters they choose.
For what practical reasons would you issue an agenda for a board meeting and what notice should be given?
A) to enable the directors to prepare and read papers
B) notice of a directors meeting must be given to each director but doesn’t need to be in writing
C) notice of a directors meeting doesn’t need to be given if they waive entitlement
What Period of notice should be given for a board meeting?
A) no longer than is reasonable to enable directors to attend, even five minutes had been termed reasonable
Homer district consolidated gold mines 1888
There were five directors. Two called a meeting at three hours notice knowing that one of the directors could not attend, one was abroad and they didn’t know about the last director
The meeting was invalid as it was not done as an act of the board
Where does it set out the quorum for a board meeting?
A) you must appoint a chairman properly and a quorum must be present
B) articles usually make specific reference to a quorum, the 2006 act states must never be less than two.
C) you should pass a resolution fixing the quorum if there isn’t one in place
D) can be a quorum with named directors
E)can be alternate directors, however if the director appoints another to vote for him in his absence that director may only be counted once.
What happens of there is a loss of quorum for a board meeting?
1) Articles usually allow some business to still transact like the appointment of further directors or calling of general meetings.
2) any director who is disqualified from voting by having a personal interest may have to be excluded from the quorum for that meeting.
Draft an agenda for a board meeting
Heading
1) apologies present in attendance
2) minutes of last meeting
3) matters arising
4) business of the present meeting
5) consideration of progress reports
6) aob
7) date and time of next meeting
May give chairman a fuller agenda with brief notes
Draft an agenda for a first board meeting
Heading
1) table certificate of incorporation dated xx and printed copy of memorandum and articles of association as registered
2) table copy of application for incorporation as registered and note the appointment of directors and secretary and registered office
3) lay statutory books of company
4) elect a Chairman of the board
5) appoint messrs ball ants, chartered accountants
6) appoint Lloyd as company bankers
7) appoint xx as company solicitors
8) adopt a common seal
9) resolve the accounting reference date of the company
10) allotment of shares
11) declaration of directors interests
12) dates of future meetings
13) aob
How should a board meeting be conducted?
A) in line with the agenda and in sequence
B) chairman should either take a vote or sum up the sense of the meeting
C) usually done by show of hands or nod, if member abstains due to personal interest you should note this
D) each member of the board including chairman has one vote. The articles may provide otherwise say by weighted votes ( salmon v quin) the chairman may be given casting vote
E) although the chairmans notes are not used as evidence it’s good practice for him To keep a note of the outcome.
Outline the isca code of practice of good boardroom practice
Published in 1991. Thirteen principles
1) written procedures, should be authorised by the board on all matters covered in the code
2) guidance to directors, on appointment as to how their duties should be performed. ie induction manual
3) information, each director should be given the same information at the same time
4) matters requiring the boards approval, should be able to identify these
5) material contracts, all material contracts should be agreed by the board, definitions of material and ordinary business
6) agenda, should be decided upon with chairman
7) conduct of the meeting, ensure admin is done correctly. Any director should be able to raise matters of compliance
8) minutes, should be kept
9) board committees,the board should consider the membership and quorum of the committee, their terms of reference and extent of delegated powers. Minutes should be circulated to the board before it’s next meeting and opportunity to raise questions.
What happens in the case of a sole director of a board meeting?
Under the principle of unanimous consent they can make a valid decision whenever they like without holding a board meeting ( Neptune vehicle washing equipment 1995, question was raised in the case of a conflict of interest when the person would have to declare this at a minuted board meeting. This is no longer necessary under the 2006 act which only requires directors to do this if there are other directors.
