This month’s Practical Tips addresses practical matters involved in following good procedures for Board meetings. Following good procedures helps to ensure that a board meeting is a success.

The articles of association of a company deal with matters of internal management such as the holding of Board meetings and the procedure at Board meetings and are the starting point where good Boardroom procedures are concerned. Articles of association vary greatly between companies, although many incorporate some of the model regulations provided for in Table A of Schedule 1 of the Companies Act 1963 (“Table A”). In addition, special regulatory requirements apply to some companies such as those listed on a Stock Exchange or companies that are in a regulated sector (e.g. credit institutions or insurance undertakings).Therefore, while there is no one-size fits all approach to good procedures for board meetings, there are elements that apply to all companies.

Notice
Reasonable notice of the Board meeting must be given to all Directors save that, where a Company applies Table A,  if the Directors so resolve, notice does not have to be given to a director who resides in Ireland but is temporarily outside the country. Merely giving notice to a majority does not validate the proceedings. Whether or not notice is reasonable depends on the circumstances, although the articles of association of some companies may prescribe minimum notice periods. Failure to provide reasonable notice of a directors’ meeting renders any resolutions passed at it void. It is also good practice (although not essential) to provide the Directors with an agenda in advance of the meeting and any documents or materials which they will be required to consider at the meeting.

Participation at meeting
Frequently, the articles of association of a company permit Directors to participate in a meeting of the Directors or any committee of the Directors by means of conference telephone, video-conferencing or other telecommunications equipment provided that all persons participating in the meeting can hear each other speak. If directors cannot attend the meeting in person, care should be take to check whether the articles of association contain these provisions and that the articles provide that such participation in a meeting shall constitute presence in person at the meeting (for the purposes of quorum requirements). Similarly, where a Director cannot attend or participate at a Board meeting, the Director may wish to appoint an alternate Director to attend or participate at the Board meeting in his or her place. Where this arises, the articles of association should be reviewed to determine whether the appointment of alternate directors is permitted and the procedure for the appointment of an alternate Director.

Quorum requirements
The Chairman checks that a quorum is present. The relevant quorum requirements are prescribed by the company’s articles. If the company is a party to a shareholders’ agreement, that too may contain requirements for quorums at Board meetings. The names of the Directors who are present and absent should be noted.

Chairman calls meeting to order
The Chairman calls the meeting to order and declares the meeting open for business (having confirmed that a quorum is present). If nobody holds the office of Chairman, then the Directors can usually elect one of their own to preside at the meeting. The articles of association often provide that if the elected Chairman is not present within 5 minutes of the appointed meeting time, those directors present can choose another director to act as Chairman.

The Chairman’s primary job is to preside. The Chairman should determine who will keep note of the meeting’s proceedings (the Company Secretary will typically perform this function). Where a vote is held at a meeting and an equality of votes amongst Directors arises, the articles of association often (but not always) give the Chairman a casting (or second vote).

Declarations of Interest
An earlier edition of Practical Tips dealt with declarations of interests  and any director who is interested in a contract or proposed contract with the company must declare the nature of his interest at a meeting of the Board in accordance with Section 194 of the Companies Act 1963 and such interest must be noted in a book maintained by the company for that purpose. A Director cannot assume that all other Directors know of his or her interest in a particular matter. In addition, regulation 84 of Table A (Part I) (frequently, though not always, disapplied under the articles of association of companies), provides that a Director must generally not vote in respect of any contract or arrangement in which he is interested, and if he shall so vote, his vote shall not be counted, nor shall he be counted for the purposes of determining whether there is a quorum for the Board meeting. Where a director declares that he has an interest in a contract, the articles of association should be checked carefully to determine whether regulation 84 or similar restrictions apply.

Use of Company Seal
Typically, the articles of association will provide that the company seal can only be used with the authority of the directors or a committee of the directors. Accordingly, to the extent that it is proposed that the company seal is to be used, it is important that its use has been approved by the Board (or a committee, as the case may be) and that such approval is recorded in the minutes of the relevant Board meeting. It is considered good practice, although not a statutory requirement, for a company to also maintain a “Register of Sealing” in which the company registers each time the company’s seal is used with particulars of the use of the seal including (i) the persons who attested to the use of the seal; (ii) a description of the document sealed; (iii) the date on which the seal was used; and (iv) and the date upon which authority for the use of the seal was conferred.

Minutes
Accurate minutes must be kept of all directors’ meetings and entered in the minute book. The minutes should set out the subject matters considered at the meeting and any resolutions passed. They must be signed by the person who chaired the meeting or who chairs the meeting at which the minutes were approved.

Conclusion
As much as every company’s articles of association may differ and good procedure for Board meetings differ as between companies, the above are some of the elements that are common to all good Board procedures. Practical matters such as ensuring that a suitable meeting room is available for the meeting and is equipped with writing pads, pens, water and any other appropriate items should also be considered. The importance of the company’s articles of association should never be overlooked and before any Board meeting a careful review of the articles of association should be undertaken to identify provisions relevant to Board procedures and the discretions afforded to the Chairman. Preparing in this way can help to avoid the emergence of subsequent disputes around the validity of decisions made at a Board meeting or other procedural matters.

Contributed by Ruairi Bourke.