P3 - 15. Meetings of the board and its committees Flashcards
Who can elect the chairman of the board?
The directors
Where are the rules and procedures governing the holding of directors’ meetings?
The company’s Articles
What is the main risk associated with having professional advisers present at all directors’ meetings?
Might be deemed to be a shadow director
What do committees of the board, and especially non-executive members contribute to the board?
More in-depth analysis and review of topics. Committee members tend to have greater experience/interest in the committee’s brief than the full board
Different types of meeting?
Board meeting
Directors meeting
Executives management meeting
In companies with a mix or executive and non-executive directors, what are the two different structures for the management of the company?
Formal structured board meetings (set corporate strategy)
Informal, flexible executive management meetings (day-to-day business decisions)
Board meeting characteristics?
Held at longer intervals than management meetings
Formal board minutes retained
No minimum number of board meetings to be held per year
Recommended minimum – at least a meeting to approve financial statements formally (including for dormant companies)
Characteristics of how are board meetings usually held in private companies?
Formal board meetings are rare
Formal resolutions typically approved as written resolutions
Characteristics of how are board meetings usually held in listed companies?
Typically maintain a schedule of dates for board and committee meetings (oversight, strategic planning)
Number of meetings are usually disclosed in the corporate governance section of the annual report.
Is there a minimum notice period for conducting a directors meeting?
No
What is usually included in the notice of a directors meeting?
The place, date and time for the meeting and an agenda of the general topics to be discussed.
While directors are able to delegate authority to committees of the board and to the executive management what can they not delegate their duties under the Act to do?
- act within their powers (CA2006 s. 171);
- promote the success of the company (CA2006 s. 172);
- exercise independent judgement (CA2006 s. 173);
- exercise reasonable care, skill and diligence (CA2006 s. 174);
- avoid conflicts of interest (CA2006 s. 175);
- not accept benefits from third parties (CA2006 s. 176); and
- declare interests in any proposed transaction or arrangement (CA2006 s. 177).
What are the four main benefits of Board committees?
- member knowledge specialisation;
- committee specialism;
- better accountability; and
- more time to look into specific matters in more detail
Transactions exceeding the limit for a substantial property transaction defined in s.191 of the CA 2006 require what?
Approval by ordinary resolution of the members either in general meeting or by written resolution.
Which transactions are exempt from the substantial property transaction requirements?
- a non-cash asset valued at less than £5,000;
- an arrangement between a wholly owned subsidiary and either the holding company or a fellow wholly owned subsidiary;
- an arrangement where the company is being wound up (except a members’ voluntary winding up); or
- in circumstances where the director is acquiring the asset in their capacity as a member of the company and not as a director, i.e. issue of shares pursuant to a rights issue.
