Are you a company director? Do you know the exact purpose of a board meeting and how to run them? This article will explain the decision-making powers of the board of directors and when you must take formal steps to vote on certain measures. It will also explain the distinction between board meetings and shareholder resolutions.<\/p>\n
Companies exist as separate legal persons. Since they are not natural persons, they cannot make decisions for themselves.\u00a0<\/p>\n
Broadly, directors are responsible for the company\u2019s daily activities, such as entering into contracts and paying suppliers. Shareholders have the right to vote on certain substantial matters like issuing new shares and appointing new directors to the board.\u00a0<\/p>\n
The full extent of directors and shareholders powers to make decisions on behalf of the company are set out in the company\u2019s articles of association.\u00a0<\/p>\n<\/div>\n
Importantly, not all companies will have the same rules regarding how directors make decisions. This is because a company’s articles of association can be flexible. Indeed, it is possible to tailor your articles of association to best fit your company. Alternatively, you can refer to the model articles of association.\u00a0<\/p>\n
In general, any measure not reserved to the shareholders will need the directors’ approval. Common examples include:<\/p>\n
Directors make decisions collectively at a board meeting or through written resolutions. Likewise, some companies may permit certain directors to make certain decisions unilaterally.\u00a0<\/p>\n
Written resolutions provide a more flexible way for directors to make decisions because fewer formalities are required. In most cases, an email chain with all the directors voicing their opinion on a matter will constitute a valid written resolution.<\/p>\n<\/div>\n
Nonetheless, a company’s articles may require board meetings for certain measures like large property transactions.\u00a0<\/p>\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n