Board meetings General

Are matters at a board meeting settled by a majority vote?

Directors may be willing to follow the wishes of a dominant director, but in so doing they are in effect informally voting in a certain way and the majority decides.

When matters are settled formally there is the normal presumption that it is one director one vote, and that victory goes to the side that has the majority. This is certainly the effect of Reg. 88 of Table A and the new model articles say the same in different words. It occasionally happens that company articles specify different arrangements. For example, articles may specify that some things can only happen if the directors are unanimous or there is 75 per cent in favour. Just possibly, articles may provide that the directors are appointed by different groups and that for some items of business a majority is required within each group. Nevertheless, in the great majority of cases it is correct to say that matters are decided by a majority vote.

Who is the chairman of the board of directors?

There is no requirement that a board has a chairman and some do not, but most do. Articles may vary, but Reg. 91 of Table A permits the directors to choose a chairman and at any time to remove him from the position. The office of chairman may be held until the appointment is terminated by resignation or by the directors, or it may be for a certain period or just one meeting. Minutes should make clear the duration of the appointment. Reg. 91 also provides that if the chairman is not willing to act or is not present after five minutes from the appointed time of the meeting, the directors present may appoint one of their number to be chairman of the meeting. The new model articles are essentially the same as Table A in these matters, but they allow ten minutes rather than five minutes.

Does the chairman have a casting vote at a board meeting?

This is not automatically the case and the chairman only has a casting vote if it is provided by the articles. Reg. 88 of Table A does give the chairman a second or casting vote in the event of a tie and this is also the position in the new model articles. The chairman's casting vote is more likely to be used in a board meeting than in a general meeting. This is because there are usually less votes cast and it is usually one person one vote. The chairman does therefore have quite a bit of power.

What are the chairman's powers and duties at a board meeting?

Unless the articles specify differently the chairman has a casting vote in addition to his normal vote. The chairman only has a casting vote if one is provided by the articles, and Table A and the new model articles do so provide. If the articles do not provide a casting vote, a resolution that results in a tied vote will fail. It is the chairman's duty to manage the proceedings of the board. Much of this is common sense and his actions are subject to the consent of the majority of the directors, but it will include:

Take the lead in calling meetings, fixing the agenda and circulating papers ahead of the meeting.

Generally run the meeting.

Keep order and permit all directors to exercise their rights, including the right to speak.

Determine who can speak at any one time.

Call and manage votes and declare the results.

Arrange for minutes to be taken and signed.

The chairman's duty to fairly manage the meeting does not prevent him exercising his own rights. He may speak and vote as he sees fit.

Who or what determines the rules for the conduct of board meetings?

Reg. 88 of Table A provides that:

'Subject to the provisions of the articles, the directors may regulate their proceedings as they see fit.'

Article 16 of the new model articles for private companies limited by shares provides that:

'Subject to the articles the directors may make any rule which they think fit about how they make decisions and about how such rules are to be recorded or communicated to directors.'

This gives a great deal of power to the directors themselves and it is (or should be) the wishes of the majority of the directors that prevail. The articles may give instructions and if they do, they should be followed. The general right of directors to set their own rules is of course subject to the dictates of statutory law - though there are not too many requirements, one of them is the obligation to take and keep minutes. It is not open to the directors to decide to rely on the chairman's memory.

As you would expect there are many common law cases interpreting these requirements. For example in Clark v Workman 1920 it was held that the appointment of a chairman not made according to the provisions of the articles was void, and that accordingly a decision reached due to the chairman's casting vote was inoperative. In Browne v La Trinidad 1887 it was held that notice of a board meeting need not be given in writing unless it was a requirement of the articles.

 
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