Directors' decisions Flashcards
(11 cards)
explain the notice requirements for a BM, inc:
- D’s powers
- form and content of the notice
- length of notice to be given
- D (or CS under Ds instruction) have the power to call a BM by giving notice to all Ds
- Notice can be verbal or in writing but must inc. date, time & location of meeting. Under MAs no requirement to inc. the business of the meeting but helpful
- MAs do not specify length of notice to be given. Where AAs are silent ‘reasonable’ notice of the meeting must be given. Reasonable is fact-sensitive i.e. issue urgent? All Ds already in office?
what happens if notice and quorum requirements aren’t met and how can this be remedied?
decision at meeting is invalid
This could be corrected by a subsequent resolution at a duly constituted BM
NB: company would still be bound by any contracts entered into with a third party in good faith
explain D’s entitlement to attend a BM and the form of the meeting
- All Ds are entitled to attend BMs. D can only be excluded from the meeting (or part of) if they have a COI and this is being discussed.
- Meeting can take place in person, remotely etc
explain the chair’s position, inc:
- their role + power
- how they are appointed/terminated
- Chair is responsible for agenda, notice, quorum & voting procedures
- Ds can appoint + terminate a chair at any time.
- If the chair has not joined within 10 mins of starting, participating Ds must appoint one of themselves to act as the chair
- Under the MAs, the chair has the casting vote (i.e. tie-break vote used if voting in favour of decision) (this is in addition to the vote they would have as a D)
what is the meaning of quorum? Why is it important?
the min. number of participants present to make a valid decision
No proposal can be passed at an inquorate meeting (apart from calling another BM)
the meeting will be invalid if meeting is inquorate
explain quorum for BMs under the MAs and the position where there is a sole director
Ds can fix quorum from time to time by BR, but it must always be at least 2
NB: case law has confirmed this MA is effectively disapplied where there is a sole D in a LTD, thereby allowing sole Ds to pass BRs. Advisable for MAs to be altered to allow sole Ds to hold a quorate meeting.
what happens if D declares a s.177 interest at a BM? who plays a deciding role in this regard and what do they decide?
they will not count in quorum or voting purposes unless:
o SHs have passed an OR disapplying this restriction; or
o The interest cannot reasonably be regarded as a COI
The chair decides whether the D will count in quorum / voting.
NB: a sole D doesn’t need to declare an interest (see: s177 exceptions)
give 2 examples where D might have an interest
o D’s service contract - NB: if there were only 2 Ds in the company they couldn’t decide on the terms of the service contract because 1 wouldn’t couldn’t for quorum under MAs. Would need SHs to disapply the MA.
o Transaction with D or a company D is a SH of
what happens at the BM inc:
- general approach
- legal requirement
- voting
- Typically a board pack inc. all the key information is circulated in advance
- Ds discuss and debate the business of the meeting
- Legal requirement for BMs to be minuted
- Each D has one vote. Majority decision required to pass the BR.
what are the post-meeting administration tasks? (4)
- BM minutes + decisions must be kept for 10 years
- Company registers may need to be updated
- Documents may need to be filed with CH
- Might need to call a GM (i.e. for certain reserved transactions)
explain how a decision is taken using a written procedure, inc.:
- form
- voting
- quorum
- notice
- administration
- can take any form so long as other Ds can give their view
- Unanimity required by all Ds entitled to vote (not simple majority as for BMs)
- Rules on quorum apply (i.e. must be at least 2 Ds that are eligible to vote, otherwise quorum rule would need to be disapplied)
- No notice requirements.
- Decisions need to be kept in writing for 10 years.
