P15. Meetings of the board and its committees

Question 1

Act and Articles are concerned with board meetings, day-to-day management meetings, or both?

Answer 1

Just board meetings

Question 2

What is discussed at board meetings?

Answer 2

Corporate strategy, performance of executives against that strategy

Question 3

What is discussed at management meetings?

Answer 3

Day-to-day business

Question 4

How often are management meetings held?

Answer 4

Frequently, usually at pre-determined intervals such as weekly, fortnightly or monthly

Question 5

What, in practice is the minimum number of board meetings each year?

Answer 5

1, to approve the FS

Question 6

Does unanimity have to be met in board meetings?

Answer 6

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

Question 7

Is there a minimum notice period for board meetings?

Answer 7

No

Question 8

Quorum for board meetings as per model arts

Answer 8

2

Question 9

Model arts say a sole director can do what

Answer 9

Only formally appoint another director

Question 10

Role of chair at BMs - acronym

Answer 10

E
S
C
A
P
A
D
S

Question 11

Role of chair at BMs

Answer 11

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

Question 12

2018 BEIS response to Insolvency and CG consultation - 4 proposals on insolvency

Answer 12

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

Question 13

2018 BEIS response to Insolvency and CG consultation - 4 proposals on CG

Answer 13

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

Question 14

4 main benefits of board committees

Answer 14

Member knowledge specialisation
Committee specialism
Better accountability
More time to look into specific matters in detail

Question 15

Example of specialist knowledge on board committee

Answer 15

Experienced accountant appointed to head audit committee

Question 16

What do model articles say on board resolutions?

Answer 16

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

Question 17

What else do model articles say on board decisions for private co’s?

Answer 17

Decisions can be reached simply by indicating to each other by any means that a common view is shared (such as emails & verbal consent)

Question 18

How are directors interests most commonly declared?

Answer 18

On appointment and then confirmed on regular basis (annually, quarterly, etc.)
At the start of any relevant meeting

Question 19

On which 3 matters are conflicts of interest most important?

Answer 19

Property
Information
Opportunity (regardless of whether advantage could be taken by co)

Question 20

Private co’s - Who can give authorisation in cases on conflicts of interest?

Answer 20

Directors, provided there is nothing in Articles invalidating this

Question 21

Public co’s - Who can give authorisation in cases on conflicts of interest?

Answer 21

Directors, provided that this is permitted in Articles

Question 22

What is considered an interest in a contract with another company?

Answer 22

Where the director is also a director of that company

Question 23

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?

Answer 23

Ordinary resolution

Question 24

What is defined as a ‘substantial non-cash asset’?

Answer 24

Value greater than £100,00
or
Value greater than £5,000 and in excess of 10% of company’s net asset value

Question 25

To whom may a company not make loans, unless with approval of members?

Answer 25

Directors
Connected persons
Directors of holding company

Question 26

What is a quasi-loan?

Answer 26

Transaction under which one party pays a sum for someone else, on the terms that they payment will be reimbursed

Question 27

Are quasi-loans prohibited?

Answer 27

Yes

Question 28

Which disclosures are required for a loan to be approved at a GM?

Answer 28

Purpose of loan or transaction
Amount of loan or value of transaction
Liability to which company may be exposed

Question 29

Financial exceptions to loans requiring member approval

Answer 29

Up to £50,000 to enable a director to meet expenditure incurred for purpose of company or their duties
Up to £10,000