P15. Meetings of the board and its committees Flashcards
Act and Articles are concerned with board meetings, day-to-day management meetings, or both?
Just board meetings
What is discussed at board meetings?
Corporate strategy, performance of executives against that strategy
What is discussed at management meetings?
Day-to-day business
How often are management meetings held?
Frequently, usually at pre-determined intervals such as weekly, fortnightly or monthly
What, in practice is the minimum number of board meetings each year?
1, to approve the FS
Does unanimity have to be met in board meetings?
No, but if uncertainties and concerns cannot be resolved after sufficient discussion, the matter will usually be deferred to another meeting. If the decision goes ahead, a directors disagreement should be minuted
Is there a minimum notice period for board meetings?
No
Quorum for board meetings as per model arts
2
Model arts say a sole director can do what
Only formally appoint another director
Role of chair at BMs - acronym
E
S
C
A
P
A
D
S
Role of chair at BMs
Exec decision making is avoided
Sufficient time for debate and challenge
Conflicts of interest raised
Available resources for directors
Performance is reviewed
All points of view discussed
Discussion is focussed
Sufficient communication with shareholders
2018 BEIS response to Insolvency and CG consultation - 4 proposals on insolvency
Take forward measures to ensure greater accountability of directors in group companies when selling distressed subsidiaries
Legislate to enhance existing recovery powers of insolvency practitioners
Legislate to give Insolvency Service necessary powers to investigate directors
Give powers to investigate when it appears as though legal obligations have been breached
2018 BEIS response to Insolvency and CG consultation - 4 proposals on CG
Strengthen transparency requirements around complex group structures
Enhance role of shareholder stewardship
Strengthen UK’s framework in relation to dividend payments
Bring forward proposals to improve boardroom effectiveness
4 main benefits of board committees
Member knowledge specialisation
Committee specialism
Better accountability
More time to look into specific matters in detail
Example of specialist knowledge on board committee
Experienced accountant appointed to head audit committee
What do model articles say on board resolutions?
Provide that a resolution signed by all directors entitled to attend a BM is valid and effectual as if passed at a duly constituted BM
What else do model articles say on board decisions for private co’s?
Decisions can be reached simply by indicating to each other by any means that a common view is shared (such as emails & verbal consent)
How are directors interests most commonly declared?
On appointment and then confirmed on regular basis (annually, quarterly, etc.)
At the start of any relevant meeting
On which 3 matters are conflicts of interest most important?
Property
Information
Opportunity (regardless of whether advantage could be taken by co)
Private co’s - Who can give authorisation in cases on conflicts of interest?
Directors, provided there is nothing in Articles invalidating this
Public co’s - Who can give authorisation in cases on conflicts of interest?
Directors, provided that this is permitted in Articles
What is considered an interest in a contract with another company?
Where the director is also a director of that company
What level of authority is needed for a director (or anyone associated with them) to acquire or transfer a substantial ‘non-cash asset’ (property) from the company?
Ordinary resolution
What is defined as a ‘substantial non-cash asset’?
Value greater than £100,00
or
Value greater than £5,000 and in excess of 10% of company’s net asset value
To whom may a company not make loans, unless with approval of members?
Directors
Connected persons
Directors of holding company
What is a quasi-loan?
Transaction under which one party pays a sum for someone else, on the terms that they payment will be reimbursed
Are quasi-loans prohibited?
Yes
Which disclosures are required for a loan to be approved at a GM?
Purpose of loan or transaction
Amount of loan or value of transaction
Liability to which company may be exposed
Financial exceptions to loans requiring member approval
Up to £50,000 to enable a director to meet expenditure incurred for purpose of company or their duties
Up to £10,000
