Board meeting one
Who can call a board meeting
Notice
Quorum
Directors interests
Board resolutions
Administration
All meetings be quorate?
General meeting
Calling
Notice
Quorum
Resolutions
Voting
Administrations
Alternatives
Written resolution
Board meeting 2
Overall administration
Diego director authority
Can you explain how a company can enter into a contract
Did he have express authority for licensing and purchase agreement
Does he have implied authority
does he have apparent authority
is the company bound by the contracts
Diego – breach of s174
What are the director’s duties imposed on Diego
Explain s174
Breach s174?
Remedies s174
Diego - breach of s172
Explain s172
Breach s172
Diego – breach of s176
Did Diego breach s176
Diego – breach of s171
Did Diego breach s171
Diego
Remedies to the company
Avoiding liability
Loan to Samir
Should Samir be awarded the loan?
General Questions
PART B
,BOARD MEETING 1 – QUESTIONS
for the appointment of Zara – MA 17
- Can be made by the directors alone in the Board meeting via ordinary resolution.
- OR can be made by the shareholders in the GM via ordinary resolution
For the dismissal of Diego – S197(1) CA
- This is a decision by the shareholders only.
- Has to be made in the GM
- Via ordinary resolution
- Special notice must be given after the BM.
For the loan to Samir S168(1)
- Directors decision with shareholder approval
- Has to be done in the GM
- Via ordinary resolution.
Calling – who can call a board meeting?
Any director can call the board meeting; it is usually the Chairperson—in this case, it
will likely be Matilda.
Notice – What is the requirement of serving a valid notice for a board meeting?
The requirement of serving a valid notice for a board meeting is found in MA 9:
The notice must be addressed to all directors, does not need to be formal or in
writing.
Within reasonable time and this is interpreted on the facts (Re Homer District) .
MA 9(2)(a) – must indicate its proposed date and time
MA 9(2)(b) – where it is to take place.
The facts suggest that notice will be sent by email – provide that the above is
satisfied there is no issue here to call a board meeting.
Quorum - Will the board meeting be quorate?
The Quorum is two directors (MA 11) – there is nothing in the facts that suggests
that no directors will not attend. It seems that Matilda, Diego, Samir, and Alia will
attend, so the meeting will be quorate.
Importantly, Christina is not a director. She may attend the board meeting, but she is
not entitled to vote, so if she does attend, the minutes of the meeting will state that
the directors were ‘present’ and Christina was ‘in attendance’.
However, where a director has an interest (or involvement) in the
transaction/arrangement, this will have an effect on the quorum and on how the
directors can vote. Samir clearly has an interest in the loan as it is for an extension to
his house.
, Under Model Article 14, this prevents him from counting in the quorum and from
voting on any resolution in relation to this transaction (only). As Matilda, Diego, and
Alia are likely to attend, the meeting will still be quorate in relation to all matters.
(His interest does not affect any other of the resolutions.)
Directors interests - Is there any director’s interest that needs to be declared?
S 177 CA 2006 - Where a director has a personal interest in a proposed transaction
or arrangement with the company, they must declare the nature and extent of this
interest to the board.
However, there are exceptions to the declaration requirement under s177 (6), this
being (a) if the interest is unlikely to give rise to conflict, (b) if the other directors are
already aware of the interest, or (c) if it relates to service contract terms considered
by the board.
Here, Samir would have to disclose his personal interest in the matter—he wants the
loan for an extension to his house.
It is likely that under s 177(6)(b), the other directors are already aware of this, as the
facts suggest that he has already approached the board of directors about this loan.
However, it is always best practice to disclose interest as it helps improve
transparency if actions are later scrutinised. It would be recommended that Samir
declare his interest.
The effect of this is that he will be excluded from voting.
Under MA 14, a director cannot count in the quorum if a proposed decision of the
board is concerned with an actual or proposed transaction or arrangement with the
company in which the director is interested.
Director's with a personal interest in a matter could easily make decision which
benefit them rather than the company.
During that meeting, the director who is preventing from counting can count in the
quorum for the part of the meting where other resolutions are being passed.
For the resolution of the loan to Samir – as per MA 14 Samir may not count in the
vote as he has a personal interest in the matter. However, he will be allowed to vote
on the appointment of Zara and dismissing Deigo.
If Samir wanted to be included in the voting this is possible as MA 14 can be
disapplied through: Change company’s articles via special resolution (s 21 CA 2006)
or temporarily suspend MA 14 via ordinary resolution (MA 14(3)).
Important to note that s177 cannot be disapplied by articles.
Board resolutions – how many resolutions will there be in the first BM and will they be
passed?
, It is possible to have two resolutions at the board meeting. This being the
appointment of Zara as new director under MA 17. And to approve the circulation of
the General Meeting.
For the appointment of Zara, under MA 17 this can be done in the board meeting
with director approval OR by ordinary resolution by the shareholders in the GM.
However, upon the facts it suggests that the company want to implement the
general meeting procedure for any shareholder resolutions, therefore it is likely that
the company will want to appoint Zara within the general meeting.
Therefore, this BM will have one resolution which is to approve the circulation of the
GM – this is a procedural point to cover the following resolutions that will be
brought up in the GM:
o Appointment of Zara Monroe as new director (MA 17).
o Awarding the loan of £50,000 to Samir (s197(1) CA 2006) – must be done by
shareholder approval via ordinary resolution (must be done in the GM)
o Dismissing Diego Gonzalez as a director (s168(1) CA 2006) – This cannot be
done as a written resolution; it has to be done in the GM only.
Will the resolutions be passed?
Under MA 7 board resolutions will be passed if a simple majority on a show of hands
are in favour. Should there be a tie in passing the resolution, the chairperson,
Matilda may have an extra vote to break the tie (MA 13).
For the approval of the GM – it seems that Matilda, Samir, and Alia will vote in
favour. Diego will be against the approval of the GM as he wont want a GM to be
called as he will not want to be removed as a director and he doesn’t approve the
loan or the appointment of Zara.
Consequently, there is 3 in favour and 1 against there is no need for a casting vote
from the chairperson (Matilda) as there is a simple majority here, the resolution will
be passed.
Administration – explain the internal and external administration points after the BM
INTERNAL
o Minutes of the BMs (s248 CA/ MA 15) – keep at the registered office or single
alternative inspection location, for 10 years, failure to do so is an offence
( s248(3) CA)
FOR SAMIRS LOAN - Under s 197(3) of the CA, a memorandum setting out
the terms of Samir’s loan and the company’s liability must be made available
for inspection at the company’s registered office for 15 days prior to the GM.
If the board wishes to propose an ordinary resolution by written resolution, a
copy of the memorandum must be sent out with the written resolution and
does not need to be available for inspection at the company’s registered
office – unlikely to be written resolution as the company wishes to hold a GM
for ordinary resolutions.
EXTERNAL
Who can call a board meeting
Notice
Quorum
Directors interests
Board resolutions
Administration
All meetings be quorate?
General meeting
Calling
Notice
Quorum
Resolutions
Voting
Administrations
Alternatives
Written resolution
Board meeting 2
Overall administration
Diego director authority
Can you explain how a company can enter into a contract
Did he have express authority for licensing and purchase agreement
Does he have implied authority
does he have apparent authority
is the company bound by the contracts
Diego – breach of s174
What are the director’s duties imposed on Diego
Explain s174
Breach s174?
Remedies s174
Diego - breach of s172
Explain s172
Breach s172
Diego – breach of s176
Did Diego breach s176
Diego – breach of s171
Did Diego breach s171
Diego
Remedies to the company
Avoiding liability
Loan to Samir
Should Samir be awarded the loan?
General Questions
PART B
,BOARD MEETING 1 – QUESTIONS
for the appointment of Zara – MA 17
- Can be made by the directors alone in the Board meeting via ordinary resolution.
- OR can be made by the shareholders in the GM via ordinary resolution
For the dismissal of Diego – S197(1) CA
- This is a decision by the shareholders only.
- Has to be made in the GM
- Via ordinary resolution
- Special notice must be given after the BM.
For the loan to Samir S168(1)
- Directors decision with shareholder approval
- Has to be done in the GM
- Via ordinary resolution.
Calling – who can call a board meeting?
Any director can call the board meeting; it is usually the Chairperson—in this case, it
will likely be Matilda.
Notice – What is the requirement of serving a valid notice for a board meeting?
The requirement of serving a valid notice for a board meeting is found in MA 9:
The notice must be addressed to all directors, does not need to be formal or in
writing.
Within reasonable time and this is interpreted on the facts (Re Homer District) .
MA 9(2)(a) – must indicate its proposed date and time
MA 9(2)(b) – where it is to take place.
The facts suggest that notice will be sent by email – provide that the above is
satisfied there is no issue here to call a board meeting.
Quorum - Will the board meeting be quorate?
The Quorum is two directors (MA 11) – there is nothing in the facts that suggests
that no directors will not attend. It seems that Matilda, Diego, Samir, and Alia will
attend, so the meeting will be quorate.
Importantly, Christina is not a director. She may attend the board meeting, but she is
not entitled to vote, so if she does attend, the minutes of the meeting will state that
the directors were ‘present’ and Christina was ‘in attendance’.
However, where a director has an interest (or involvement) in the
transaction/arrangement, this will have an effect on the quorum and on how the
directors can vote. Samir clearly has an interest in the loan as it is for an extension to
his house.
, Under Model Article 14, this prevents him from counting in the quorum and from
voting on any resolution in relation to this transaction (only). As Matilda, Diego, and
Alia are likely to attend, the meeting will still be quorate in relation to all matters.
(His interest does not affect any other of the resolutions.)
Directors interests - Is there any director’s interest that needs to be declared?
S 177 CA 2006 - Where a director has a personal interest in a proposed transaction
or arrangement with the company, they must declare the nature and extent of this
interest to the board.
However, there are exceptions to the declaration requirement under s177 (6), this
being (a) if the interest is unlikely to give rise to conflict, (b) if the other directors are
already aware of the interest, or (c) if it relates to service contract terms considered
by the board.
Here, Samir would have to disclose his personal interest in the matter—he wants the
loan for an extension to his house.
It is likely that under s 177(6)(b), the other directors are already aware of this, as the
facts suggest that he has already approached the board of directors about this loan.
However, it is always best practice to disclose interest as it helps improve
transparency if actions are later scrutinised. It would be recommended that Samir
declare his interest.
The effect of this is that he will be excluded from voting.
Under MA 14, a director cannot count in the quorum if a proposed decision of the
board is concerned with an actual or proposed transaction or arrangement with the
company in which the director is interested.
Director's with a personal interest in a matter could easily make decision which
benefit them rather than the company.
During that meeting, the director who is preventing from counting can count in the
quorum for the part of the meting where other resolutions are being passed.
For the resolution of the loan to Samir – as per MA 14 Samir may not count in the
vote as he has a personal interest in the matter. However, he will be allowed to vote
on the appointment of Zara and dismissing Deigo.
If Samir wanted to be included in the voting this is possible as MA 14 can be
disapplied through: Change company’s articles via special resolution (s 21 CA 2006)
or temporarily suspend MA 14 via ordinary resolution (MA 14(3)).
Important to note that s177 cannot be disapplied by articles.
Board resolutions – how many resolutions will there be in the first BM and will they be
passed?
, It is possible to have two resolutions at the board meeting. This being the
appointment of Zara as new director under MA 17. And to approve the circulation of
the General Meeting.
For the appointment of Zara, under MA 17 this can be done in the board meeting
with director approval OR by ordinary resolution by the shareholders in the GM.
However, upon the facts it suggests that the company want to implement the
general meeting procedure for any shareholder resolutions, therefore it is likely that
the company will want to appoint Zara within the general meeting.
Therefore, this BM will have one resolution which is to approve the circulation of the
GM – this is a procedural point to cover the following resolutions that will be
brought up in the GM:
o Appointment of Zara Monroe as new director (MA 17).
o Awarding the loan of £50,000 to Samir (s197(1) CA 2006) – must be done by
shareholder approval via ordinary resolution (must be done in the GM)
o Dismissing Diego Gonzalez as a director (s168(1) CA 2006) – This cannot be
done as a written resolution; it has to be done in the GM only.
Will the resolutions be passed?
Under MA 7 board resolutions will be passed if a simple majority on a show of hands
are in favour. Should there be a tie in passing the resolution, the chairperson,
Matilda may have an extra vote to break the tie (MA 13).
For the approval of the GM – it seems that Matilda, Samir, and Alia will vote in
favour. Diego will be against the approval of the GM as he wont want a GM to be
called as he will not want to be removed as a director and he doesn’t approve the
loan or the appointment of Zara.
Consequently, there is 3 in favour and 1 against there is no need for a casting vote
from the chairperson (Matilda) as there is a simple majority here, the resolution will
be passed.
Administration – explain the internal and external administration points after the BM
INTERNAL
o Minutes of the BMs (s248 CA/ MA 15) – keep at the registered office or single
alternative inspection location, for 10 years, failure to do so is an offence
( s248(3) CA)
FOR SAMIRS LOAN - Under s 197(3) of the CA, a memorandum setting out
the terms of Samir’s loan and the company’s liability must be made available
for inspection at the company’s registered office for 15 days prior to the GM.
If the board wishes to propose an ordinary resolution by written resolution, a
copy of the memorandum must be sent out with the written resolution and
does not need to be available for inspection at the company’s registered
office – unlikely to be written resolution as the company wishes to hold a GM
for ordinary resolutions.
EXTERNAL
