Essential Board Meeting Tips for Directors

We set out best practice tips for new and existing directors regarding the holding of board meetings.

Convening and regulating directors’ meetings

Any director may, or the secretary on the requisition of a director must, summon a board meeting.

The business of a company is managed by its directors who may delegate their powers to persons or committees, and who can regulate their meetings as they see fit. The Companies Act 2014 (the Act) does not state how often directors should meet and therefore it is a matter for directors to decide themselves. It is good corporate governance practice for directors to meet at least once every quarter to discuss the business of the company, and to retain flexibility to meet urgently if circumstances require.

The Chairperson

The directors may elect a chairperson of their meetings and determine the period for which he or she is to hold office. If no such chairperson is elected or if at any meeting the chairperson is not present within 15 minutes after the time appointed for holding the meeting, the directors present may choose one of themselves to be chairperson of that meeting.

The chairperson’s responsibilities include:

• Chairing board meetings
• Signing minutes of board meetings
• Casting a second or deciding vote where there is an equity of votes

• Tip: Review the constitution of the company to ensure that it does not modify or exclude the standard regulations regarding the election and responsibilities of the chairperson. These are optional provisions in the Act which may be modified and tailored to a company’s requirements.

Quorum

The quorum necessary to hold a board meeting may be fixed by the directors in the constitution. Unless a quorum is fixed in the constitution, this number will default to two directors. If the company has a sole director, the quorum is one. The sole director provision does not apply to designated activity companies (DACs) which are required to have a minimum of two directors.

• Tip: Review the constitution of the company to ensure the correct quorum is present before every board meeting.

Notice of a board meeting

The directors are entitled to “reasonable notice” of any meeting of the directors. The length of notice 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 proper notice to all directors who are entitled to receive it may render the meeting irregular and any resolutions purportedly passed at that board meeting will be deemed invalid.

There is no company law requirement as to what the notice should contain or what form the notice should take for board meetings. Good corporate governance requires that each notice should be circulated in writing and should include headings or minor details 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 relating to the matters to be discussed, ensure it is circulated no later than seven 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.

Electronic board meetings and location of board meetings

Directors may hold board meetings by video, telephone or by other electronic means, so long as all participants can hear and speak to each other. A director participating by electronic means 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 an electronic board meeting to ensure that it is not prohibited.

• Tip 2: The Act specifies where an electronic meeting is deemed to be held. 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. Consult your tax advisor.

Records of directors’ meetings

A company must maintain a minute book which contains:

• Minutes of meetings approving the appointment of officers made by the board or by a committee of the board
• The names of those board or committee members present at each meeting, and
• All resolutions and proceedings at all meetings of the directors and of committees of the directors.

The minutes should be signed by the chairperson of the meeting to which the minutes relate or by the chairperson of the next subsequent meeting. Minutes should be entered in the minute book as soon as possible after the meeting.

The Act provides that minutes signed by the chairperson are evidence of the proceedings of the meeting.

Written resolutions

The Act allows directors to pass resolutions in writing in lieu of holding a meeting. To be valid, the written resolution must be signed by all directors and become effective on the date on which the last director signs and dates the resolution. The directors do not have to sign the same copy of the resolution provided that the company’s constitution permits this. Directors may sign written resolutions electronically.

• Tip 1: Review the company’s constitution to ensure that (i) the directors are not prohibited from passing resolutions in writing and (ii) the written resolution can be signed in counterparts.

• 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. Consult your tax advisor.

Conclusion

Always keep in mind the provisions of the company’s constitution when convening or holding board meetings. If in doubt, take professional advice.

For expert legal guidance on post incorporation obligations, please contact a member of our Corporate Governance & Compliance team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.