How do you run effective board meetings?

Directors’ decisions

Articles usually state that the business of the company is to be managed by the directors. The directors are entitled to exercise all the powers of the company, as a rule the powers must be exercised by the board collectively at a properly convened board meeting.

However, boards may act informally if they act unanimously. Example: an agreement signed by all directors of the company on different dates, and not as a board, will be a contract binding the company.

Board meetings may also be held casually if all directors agree. In that case the decisions made at the meeting need not be unanimous.

If the directors are likely to agree to a proposed resolution, it may be convenient to pass a written resolution, instead of convening a board meeting.

Obligation to meet

There is no minimum number of board meetings required by law: directors must meet sufficiently often to ensure that they are properly discharging their duties.

Every director of a company has a responsibility, shared with the other directors, for the management of the whole of the company’s affairs.

What is a meeting?

It is generally accepted that directors’ meetings may be conducted by telephone or other electronic means. Each participating director must be able to be aware of the contributions to the meeting made by other directors and to contribute him- or herself to the meeting without impediments.

Calling a board meeting

The articles usually provide that any director may call a meeting of the directors.

Notice of meetings and its contents

As a general rule, notice of a board meeting must be given to every director. The notice must set out where and when the meeting will be held.

The general rule is subject to the respective company’s constitution. In some circumstances notice need not be given.

Directors may not waive their right to notice in advance.

It is not required that the notice states the business proposed to be transacted. However, the notice should contain an agenda of matters to be discussed as a matter of good practice.

A director may bring an action in his or her own name against the other directors if he or she is wrongfully excluded by them from acting as director. 

Voting and conflict of interest

Usually resolutions will be passed by a majority of those present and voting.

Articles will often provide that a director may not vote at a board meeting on a matter in which he or she has a material interest that may conflict with the interests of the company.

However, in many cases private companies’ articles will allow directors to vote and be counted in the quorum in relation to such resolutions.

In any case directors must comply with sections 177 and 182 Companies Act 2006 in relation to declarations of interest in proposed and existing transactions with the company.

Minutes and privilege

Companies are required to take minutes of all proceedings at meetings of their directors. If a company fails to comply, an offence is committed by every officer of the company who is in default.

Comprehensive information must be included in the minutes, for example every unanimous or majority decision taken by the directors.

As a general rule directors are entitled to inspect all books and records of the company, including minutes of board meetings. Auditors and insolvency office-holders are also entitled to inspect board minutes.

Shareholders are not entitled to examine board minutes in the absence of an express provision in the articles or a shareholders' agreement.

Board minutes may have sections protected by legal professional privilege. Privilege entitles a party to withhold evidence from production to a third party or the court.

For example, legal advice privilege will apply to documents or parts of documents that evidence the substance of lawyer-client communications.

When drafting board minutes it should therefore be considered to separate the privileged discussions, for example by putting them in an annex marked privileged and confidential.