During a board meeting, it is necessary for a limited firm to keep board minutes. Board minutes make sure the company maintains a written record of the undertakings of each meeting, which includes board resolutions and motions. The written resolutions of board directors and board minutes need to be kept for a minimum of ten years, however, it is wise to retain the given documents while the company remains operational.
With regard to board resolutions, they may be considered formal decisions or agreements made by the board of directors of a limited firm. Board resolutions can be passed during board meetings; however, it is more likely for directors to pass resolutions written on paper. Written resolutions may be seen as a flexible option that allow decision making remotely, without calling or attending general meetings.
The decision-making procedures of company directors are typically regulated by the constitution of a firm, prescribed under the 2006 Companies Act. The guidelines can also be considered in directors’ service agreements or shareholders’ contracts.
These are decisions or legal contracts made by limited firm directors authorising certain modifications. This form of directors’ resolution may be recorded within board minutes. In theory, a ‘board resolution’ can be defined as a decision made during a board meeting. Practically, nonetheless, the term also often encompasses the printed resolutions of directors.
A board resolution may be ‘passed’ under the model articles of association in the event it achieves the necessary proportion of directors’ votes. Usually,, this a basic majority. A few companies prefer to modify their articles to reflect that unanimous agreement or greater majority is required to pass a resolution.
During a board meeting, all the directors who are eligible are required to cast their votes. The vote must be cast by poll or show of hands. If the necessary number of votes isn’t achieved on the side of the proposed bill, it’s likely to fail. If a deadlock occurs, the board chairperson may be asked to exercise a casting vote.
Directors’ written resolutions
These are decisions that are made by the board of directors on paper, instead of at board meetings.
As long as the articles of association of a firm don’t preclude written resolution usage, directors will be able to utilise this procedure whenever possible. On the contrary, public limited firms, are not allowed to pass resolutions on paper.
The written resolutions of directors are especially beneficial when:
- Directors need to vote on general matters that do not need thorough consideration.
- Decisions need to be made within a given time.
- It is anticipated that the company board will abide by the motion.
- Geographical restrictions or other scenarios make it difficult for directors to gather at one location.
- A business consists of a single director.
The written resolutions need to be forwarded to each director who has the right to vote. A single hard copy may be circulated to each director whenever possible, or separate copies may be sent to every director simultaneously. Otherwise, the written agreement can be transferred electronically or offered through a website.
The agreement must include clear instructions on how agreement will be signified, and provide the deadline by which votes must be cast. Based the type of written resolution, company directors may forward their agreement by attesting and returning the printed document copy to the motion, offering an e-response, or voting through an online site.
Although board resolutions may also be passed through a simple majority, the written resolutions of directors must be passed after a unanimous agreement is made by all directors with a right to vote, except any contrary provision has been stated in the articles.
What decisions can be made by a directors’ resolution?
Written resolutions of directors along with board resolutions should be used at any time when directors are required to make major decisions for the firm, contrary to regular decisions that are made while running daily business operations.
As per the default model articles that are utilised by a number of private limited firms in the United Kingdom, directors are authorised to “exercise all company powers.” This means that they are able to pass bills on virtually all matters, except decisions expressly precluded by the 2006 Companies Act, passed special member bills, or modified articles.
Some of the decisions requiring directors’ resolution include:
- Approving various documents
- Registering for a business banking account
- Hiring a company secretary
- Signing company documents
- Modifying company ARD
- Terminating contracts or agreeing to new ones
- Authorising corporate loans
- Renting premises
- Issuing dividends to stockholders
- Trading company assets
- Hiring an auditor or accountant
- Transferring statutory records
- Modifying the registered company address
- Creating a SAIL address
- Appointing a board chairperson
- Approving statutory accounts
A members’ resolution is obligatory while passing certain company decisions. Some decisions that may be beyond the powers of company directors include:
- Modifying the business name
- Modifying the articles of association
- Dissolving a company
- Allowing major property transactions in case conflicting interests arise
- Allowing certain directors’ loans
- Approving certain directors’ contracts
- Authorising shares
- Firing directors
An overview of board minutes
As per the 2006 Companies Act, section 248, board minutes are required to be taken during every meeting of the board of directors. Thus, limited companies must keep a precise written record of each board meeting.
In order to take effective board minutes, it is important to record the information below, whenever applicable:
- Business name and physical address, as registered at Companies House
- Time, location, and date of board meeting
- Commencement time of the meeting
- Details of members who attended these meetings
- Members who were absent
- Chairperson name
- Authorised proxies
- Topics of discussion
- Proposed resolutions
- Result of proposed resolutions
- Name of directors who were with the motion and those against it
- Subsequent steps necessary to fulfil resolutions that were passed
- Questions, answers or concerns that were raised
- Corrections or amendments to earlier board minutes
- Present additions to the board meeting theme
- Topics postponed until a future date or an upcoming meeting
- Filing notes made at HMRC or Companies House, in addition to the person(s)name(s) accountable for these assignments
- Other topics of discussion
- Date of an upcoming board meeting
- Adjournment time
In addition to being a legal obligation, board minutes can be incredibly beneficial for tracking the company’s progress, and details of future plans. Likewise, they can offer a reference point for critical matters making sure that each director is fulfilling their fiduciary duties to the company as well as its partners.