The process for making decisions can vary from company to company and must reflect your Articles of Association. However, there are common elements that need to be complied with to ensure due procedure and prevent a decision being challenged due to lack of authority.

The basic principles of how to convene a Board Meeting are:

• Notice – you need to issue notice of the meeting to all of the directors. Check your Articles to see any requirements in relation to:
  1. how the notice must be given (e.g. can it be sent via email, even WhatsApp, or does it have to be by post)
  2. how far in advance it must be given
  3. What needs to be in the notice – it may be obvious but the date, time and location should be specified
  4. How the directors can attend – can they attend via skype or video conference

• Convene the meeting – it may sound obvious but you need to ensure that you convene a meeting which complies with your Articles. You need to check:
  1. Chairman – who will run the meeting
  2. Quorum – do you have enough eligible directors present to convene the meeting?
  3. Conflict – are all of the directors entitled to vote or are they conflicted in the decision being made?

• Pass Resolutions – Ultimately the point of your meeting is to pass resolutions and make decisions. These need to be in the Company’s best commercial interest and should consider the S172 Factors. For more information on the s172 Factors – please see our Q&A Guide on what to consider in Board Meetings. Remember you may need Shareholder Authority to pass certain resolutions and the meeting may need to be adjourned to enable you to obtain the requisite consent.

• Minute the meeting – you must minute the decisions made in the meeting. The minutes should be signed off by your chairman.

• Filing – Don’t forget that you need to undertake filing following your meeting. This may include filing certain returns at Companies House but at the very least a copy of your minutes must be stored with your Statutory Books for at least 10 years

For more information and guidance on convening Board Meetings, please don’t hesitate to get in touch with Franklins’ Business Services team who would be happy to assist on 01604 828282 / 01908 660966 or at BusinessSevices@franklins-sols.co.uk.

Question 1: I am a director of a Company, what do I need to think about when making decisions?

Answer: When making decisions there are certain factors prescribed by s172 of the Companies Act 2006 that should be considered. These include:

• The consequences of the decision in the long term;
• The interests of your employees;
• Your business relationships with others;
• The impact that the decision will have on the environment and the community;
• Maintaining high standards of business; and
• Acting fairly between the members of the Company.

Ultimately, all decisions must be made in the best commercial interests of the Company considering not only its members but its creditors as a whole. Every decision you make as a director will naturally have an impact on the company, its operations and people that it deals with. What is in one person’s interests may not align with another’s and you need to be able to justify a particular decision as in the Company’s best interests.

Question 2: What do I do if there is a conflict between my interests and the Company’s?

Answer: This will depend on what is in your Company’s Articles of Association. It may be possible to continue to participate in the meeting if you have the necessary authority from either your Articles or the Shareholders. If you don’t, the rule of thumb is that you cannot count for quorum or voting purposes.

For more information and to find out how we can help, contact the Franklins’ Business Services team who would be happy to assist on 01604 828282 / 01908 660966 or at BusinessSevices@franklins-sols.co.uk.

As any director should be aware, under s248 of the Companies Act 2006 the board of a company are required to keep minutes of proceedings of directors. They must be retained for at least 10 years and a failure to comply is an offence by any officer in default. It is easy to picture a large corporate boardroom full of directors who account to the shareholders for their actions and to understand the requirement for Board Minutes in these circumstances. However, when it comes to SMEs, owner-managed and family run businesses the requirement for board minutes often seems draconian and an unnecessary burden on the individuals involved. Nevertheless, they remain equally as important to evidence due procedure and ultimately the reason behind your decision-making.

It’s an Offence!

Firstly, failure to maintain board minutes is an offence under the Companies Act 2006. However, this is not the only potential consequence of failure to maintain appropriate minutes.

They are a Defence against Proceedings

I would hope that it never comes to this, however litigious proceedings can be an unfortunate part of business. You can be forced to defend a claim even if it is unfounded and certain claims, such as fraud or misrepresentation, could all hinge on whether or not there was the requisite authority to enter into a contract. See our Case Study on how Board Minutes can impact proceedings.

Similarly, you may find yourself relying upon them in winding up proceedings to justify your actions and decision making. Whilst Board Minutes are not a defence to any decisions made, they can certainly evidence why you made a decision and what you consider to be in the best commercial interests at the time and reduce your risk of exposure.

Ultimately, maintaining board minutes might be a chore, but they go a long way to protecting you as an individual as they evidence due process and compliance if the decision in question is ever challenged in any capacity. If you would like to know more about the process for convening a board meeting, please see our How To guide.

If you would like to know more about directors duties, decision making and maintaining appropriate minutes contact Holly Threlfall at holly.threlfall@franklins-sols.co.uk or on 01604 828282 / 01908 660966.