Introduction to this document

Notice to directors of ordinary board meeting

If you’re involved in running a company, it’s vital to have regular meetings and also to ensure an accurate record or what was discussed and agreed is kept.

Procedure

There are no statutory requirements laid down about either the need to hold board meetings or how they’re to be conducted. However, the procedure for convening and conducting board meetings is usually laid out in the company’s articles. In order to run a successful company, it’s very important to hold regular board meetings and ensure they’re conducted in an orderly and business-like manner.

Advice

Unlike shareholders’ meetings, there’s no requirement to notify directors in writing when there’s a board meeting scheduled to take place. Nonetheless, particularly where there’s a very important matter to discuss, e.g. a share issue, appointment of key staff etc., it’s good practice for the company secretary to give advanced written notice of the meeting to all the directors. Unless the company’s articles say otherwise “reasonable notice” of any forthcoming board meeting is required to be given.

Tip

It’s also good practice to set out an agenda in the notice to remind all the directors of the salient matters that are to be discussed. This should ensure that everyone attending comes prepared.

Authority

Any director at any time has the authority to call a board meeting. The articles should be checked to see whether there’s a sufficient “quorum” in attendance to enable the meeting to go ahead. The articles should also be checked to see what they said about a “conflict of interest”, should this arise during a meeting.

Chair

Unless the company appointed a chairman when it was founded, its articles usually give the directors a right to nominate a chairman to chair the board meeting. Where the votes are equal, the chairman will usually have a casting vote, however, again the articles should be checked to see if this is the case.

Minutes

It’s a statutory requirement that all companies must keep minutes of all board meetings. This is usually the task of the company secretary or the chairman if there’s no company secretary.

Tip

To ensure the minutes contain an accurate record of what was discussed at the board meeting, make sure they are always signed off by the chairman. Use of forms of Notice, Agenda and Minutes to ensure everything passes off smoothly.

New duties

Under the Companies Act 2006, directors’ duties have been codified and there are seven “general duties” to adhere to. These include, acting in accordance with the company’s constitution, using independent judgement, using reasonable care, skill and diligence, avoiding conflicts of interest and promoting the success of the company for the benefit of its members as a whole. With regard to the latter, there are six factors, when taking any decision, that the board can’t ignore and these include: the long term consequences of any decision; the interests of the employees; the need to foster business relationships with suppliers, customers and others; the impact of the company’s operations on the community and the environment; the desirability of maintaining a reputation for high standards of business conduct and the need to act fairly between members. 

Tip 1

On any key decisions that affect the company, e.g. moving premises etc., don’t forget the need to have regard to the six factors. If need be, make sure the minutes reflect that these factors were considered, so that if questions are asked later, there’s a clear paper trail in existence to provide the necessary evidence. 

Tip 2

Minutes of all board meetings must be kept for ten years from the date of the meeting and a failure to do this is a criminal offence.