Introduction to this document

Board resolution to establish committee

Companies set up committees of the board for different reasons, for example to streamline decision making or to oversee a project. Use our model to help ensure that you have covered all the relevant points.

Setting up a committee

As a subsection of the board, a committee obtains its powers from the board and must report back to the board as required. The board must have the authority of the company to establish a committee. This is usually found in the articles, which can be altered by the shareholders to include the power, or impose restrictions on it, if necessary. Therefore, the board must check the articles before establishing a committee to ensure that it works within any relevant limitations.

Composition and remit

The board can choose who sits on a committee, including non-directors, subject to the articles. For example, it may be useful for a non-director to attend committee meetings in an advisory capacity. However, non-directors will not be able to vote.

Unless the articles go into details about the proceedings of the committee, the board should set out the committee’s remit, specifying how far its powers extend and what matters it can deal with, how often it should meet, when it should report back to the board etc. These “terms of reference” should be approved by board resolution.

Using the model

The model takes the form for setting up a standing committee, but can be adapted as necessary. Make sure you consult your company’s articles when drafting the terms of reference to avoid any confusion. The model is intended to be inserted into the minutes of a board meeting, see the Board Meeting Minutes model.