The legalities around online board meetings
Working from home would appear to be the new norm going forward in the corporate space with companies having to ramp up their remote work capabilities and update their Memoranda of Incorporation (MOI) to ensure compliance and accommodate this new way of working.
So, let us talk (remotely) about the legalities of online board meetings around motions passed and decisions taken, particularly for shareholders and directors as set out by the Companies Act, 2008 (the “Act”). The Act is actually ahead of the game, having already made provisions with regard to the specified methods of convening directors’ and shareholders’ meetings via electronic communication, provided the participants are able to effectively contribute and simultaneously communicate with one another, without an intermediary.
Directors of a company are required to exercise their powers to ensure effective management of the company by passing resolutions at meetings of the Board and these meetings must be properly convened and must comply with the provisions of the company’s MOI:
- Board meetings can be convened at any time;
- A notice of the meeting must be given to each of the directors;
- A board meeting must be called if required by at least 25% of the directors (where the Board has 12 or more members), or at least 2 directors (where the Board has fewer than 12 members) being present before any meeting may commence or any matter may begin to be considered. Shareholder meetings can be conducted with one or more shareholders, or proxies for shareholders,
If a meeting is not called in the correct manner, the resolutions determined at such a meeting may be declared invalid.
The Act also stipulates that any decisions that could be voted on at a formal meeting of the Board, may instead be implemented via written consent of a majority of the directors, in person or by electronic means. However, decisions can be passed in this way only if every director has received notice of the matter to be decided. Resolutions passed in this manner have the same effect as if they had been approved by voting at a formal meeting of the Board.
Finally, a company must keep minutes of its board meetings in order to confirm the business that was discussed and decided upon at the meeting. The minutes must include every resolution adopted by the Board and any declarations given by notice or made by a director regarding the director’s financial interests in any matter.
Online board meetings get my vote!
Author: PJ Veldhuizen