The following information and tips are designed to assist new and existing directors with common queries in relation to best practice and legal requirements when holding board meetings.
1. Powers of the board
The business of a company is managed by its directors who may delegate their powers to persons or committees and who may regulate their meetings as they see fit. For good corporate governance, it is recommended that directors meet at least once every quarter to discuss the business of the company.
The board may elect one of its members as managing director and confer upon the managing director any of the powers exercisable by the board upon such terms and restrictions as the board thinks fit.
Tip: The delegation and scope of these powers should be clearly documented and approved by the board at a board meeting.
2. The Chairman
The directors may elect a chairman of their meetings and determine the period for which he/ she is to hold office. If no such chairman is elected or if at any meeting the chairman is not present within 15 minutes after the time appointed for holding it, the directors present may choose one of themselves to be chairman of that meeting.
The chairman may have certain responsibilities such as chairing board meetings, signing minutes and casting a deciding vote in the event of a tie.
Tip: Review the constitution of the company to ensure that it does not modify or exclude the standard regulations in relation to the election and responsibilities of the chairman, as these are optional provisions in the Companies Act, 2014 (the “Act”) which may be modified and tailored to a company’s requirements.
The quorum necessary to hold a board meeting may be fixed by the directors in the constitution and, unless fixed, shall be two unless the company has a sole director, in which case the quorum shall be one.
Tip: Review the constitution of the company to ensure that the correct quorum is present before every board meeting.
4. Notice of a board meeting
Any director, or the secretary on the requisition of a director, may summon a board meeting.
The directors are entitled to “reasonable notice” of any meeting of the directors, the length of which will depend on the directors’ usual practice, the urgency of the matters to be discussed, and the whereabouts and ability to attend of the directors. Directors may also unanimously waive their right to notice of a board meeting. Failure to provide notice or reasonable notice may render any resolutions passed at that board meeting void.
There is no company law requirement as to what the notice should contain or what form the notice should take in respect of board meetings.
Good corporate governance requires that each notice should be circulated in writing and should include headings or minor detail of the matters to be discussed. A board pack may also be circulated in advance of any board meeting and should contain copies of the relevant documents to be reviewed, discussed and/or approved at the meeting.
Tip: Where a board pack is necessary, and where there are no time constraints in relation to the matters to be discussed, ensure it is circulated no later than 7 days before the date of the meeting. This will provide the directors with sufficient time to review the content and make informed decisions at the board meeting.
5. Virtual board meetings
Directors may hold board meetings by video, telephone or other electronic means so long as all participants can hear and speak to each other. A director participating in that way is considered to be present in person at the meeting and is entitled to vote and be counted in the quorum.
Tip 1: Review the company’s constitution before arranging a virtual board meeting to ensure that it is permitted.
Tip 2: The Act provides where a virtual meeting has taken place. This is an optional provision and may require modification by companies who want to ensure that the Chairman and the meeting are located in Ireland for tax purposes. Check this with your tax advisor.
6. Preparation of board minutes
A company must maintain a minute book which contains the minutes of the meetings approving the appointment of officers made by the board or of a committee of the board. The minutes must contain the names of those board or committee members present, details of the proceedings of the meeting and of the resolutions passed.
The minutes should be entered in the minute book as soon as possible after the meeting.
Minutes signed by the chairman are evidence of the proceedings of the meeting.
7. Written resolutions
The Act allows directors to pass written resolutions instead of holding a meeting. To be valid, it must be signed by all directors.
Tip 1: Review the company’s constitution to ensure that it is permitted to do so.
Tip 2: Certain companies may be required to hold physical board meetings in Ireland to provide evidence that the central management and control of the company and any major strategic board decisions are made in Ireland for tax purposes. Check this with your tax advisor.
A written resolution will take effect only from the date on which the last director signs and dates the resolution. The directors need not sign the same copy of the resolution provided that the company’s constitution permits this.
Tip: Review the company’s constitution to ensure it permits the signing of the written resolution in counterpart.
Always keep in mind the provisions of the company’s constitution when convening or holding board meetings. If in doubt, take professional advice.