The fundamental process of a company approving a transaction by a directors' resolution will be simplified. Meetings will by default be properly constituted through electronic communications and alternatively resolutions may pass by default as a resolution in writing, without the need to convene a meeting.

Under the Companies Acts 1963-2013, directors must hold a meeting in person to pass directors' resolutions unless the company's articles of association provide for resolutions to be passed in writing without holding a meeting or unless they provide for a meeting to be duly constituted through electronic communications.

The common law supplements this position providing in effect that where all directors' can be shown to be in agreement, a matter can be deemed to be approved by the directors.

The Companies Bill deals with directors’ meetings and provides the default position that directors may pass formal resolutions in writing without a meeting, signed in counterparts by all directors. A company can, if it chooses, derogate from this default position by providing otherwise in its constitution. This provision recognises the modern reality that business is often conducted through electronic means which can significantly improve a company's ability to transact quickly.

The Companies Bill further provides for a situation where one or more (but fewer than half) of the directors are prohibited from voting at a meeting under the company’s constitution or a rule of law, e.g. due to a conflict of interest. The remaining directors may pass the written resolution themselves and the resolution must state the name of each director who did not sign it and the basis upon which he or she did not sign it. All directors no so prohibited from signing, must sign a written resolution for it to be valid.

Electronic communication provisions for attendance at directors’ meetings are also included as default in the Bill.

These changes are much needed and will go a long way to reducing the risk that an action of a company is invalidated due to poorly drafted articles of association.