This briefing looks at how the directors of a UK company can take decisions in circumstances where it is not possible for some or all directors to be physically present in the same location.
Where are the requirements that apply to directors' meetings?
As with many aspects of company administration, the requirements are a mixture of statute (the Companies Act 2006 (CA 2006)) and the provisions of the company's articles of association. Articles may vary considerably from company to company and should always be checked. Bear in mind that any shareholders' agreement between the members of the company may also contain provisions on directors' decision-making and again must be checked.
Who may call a directors' meeting?
This will be set out in the company's articles. The Model Articles for private companies provide that any director may call a directors' meeting, by giving notice in accordance with the articles, or authorising the company secretary (if there is one) to give the notice. There are similar provisions in the Model Articles for public companies, although a public company will have a company secretary who must call a directors' meeting if a director so requests.
So if the director who would normally give notice or ask the company secretary to give it is ill or otherwise unable to do so, another director may call the meeting.
However, a member of the company who is not also a director has no power under the Model Articles to call a directors' meeting.
Does the notice have to be given to all directors?
Again, this will be set out in the company's articles. The Model Articles for both private and public companies state that notice must be given to each director. There is no exception for directors who are not in the UK and so, unless there are very specific circumstances set out in the articles, companies should give notice to all directors even if overseas.
This may be relevant where, for example, a director has been prevented from returning to the UK due to travel restrictions or lockdowns imposed because of the coronavirus.
What period of notice is required?
CA 2006 does not require a particular period of notice for directors' meetings and no particular period is specified in the Model Articles (or in the predecessor Table A).
The basic rule is that the notice given needs to be reasonable in the context, taking into account the company, the business to be transacted, and the directors who are receiving the notice. In an emergency, a very short notice period might be considered reasonable even if not all the directors can attend. This may be highly relevant in the context of the coronavirus and its consequences – falling demand, supply chain issues, cash flow difficulties, employee issues, international travel or trade suspensions. All or any of these could necessitate urgent action by companies which will need to be approved at board level without delay.
Is a physical board meeting required?
Fortunately, for companies which have adopted the Model Articles (private and public) it is clear that directors can attend meetings by telephone or video-link without all needing to be in the same place. Both these sets of Model Articles provide that directors 'participate' in a directors' meeting when the meeting has been called and takes place in accordance with the articles of association, and they can each communicate to the others any information or opinions they have on any particular item of business. It is irrelevant where any director is.
These provisions are, however, subject to the company's own articles, so each individual company's constitution must be checked.
If a company does not have Model Articles and its articles do not expressly permit directors to attend meetings remotely, there is some doubt as to whether attendance at a physical directors' meeting is required. If the articles clearly require attendance at a physical board meeting, then this will need to be complied with. If the articles are silent, the directors and their advisers will need to take a view, and this will depend on a number of factors including whether the business of the meeting is likely to be contentious, whether all of the directors can participate on a conference call, and whether the decisions could be easily be ratified at a later, physical board meeting.