A Board meeting is a formal meeting of the Board of directors of a company, convened at specific times during the corporate year, or on an ad hoc basis, when deemed necessary.

The holding of Board Meetings is important for a number of reasons:

  • they can assist in the creation of superior Board etiquette;
  • they can be used to ensure the creation of efficient communications between the Board & Shareholders, and;
  • they can demonstrate where management and control of the Company is located.

Creating Superior Board Etiquette

In the everyday course of business, boards are required to reach collective agreements. Considering the different personalities, opinions, behaviours and the executive and non-executive functions of the individuals on a board, reaching collective agreements can sometimes be challenging.

Whilst Board protocol can vary significantly from one organisation to another, the holding of Board meetings can create decorum which not only makes directors more efficient but can also ensure that legal and ethical principles are observed at all times.

Examples of superior board etiquette may include:

  • Reviewing board papers and requesting any further information considered necessary in advance of the meeting and noting any suggestions or questions they wish to raise.
  • During the meeting, board members should act in a cohesive, co-operative manner. They should follow the agenda, focus on the items at hand and direct any comments and discussions through the Chairman.

After the meeting, board members should respect the collective decisions made inside the boardroom and proceed accordingly. Therefore all board members have a collective responsibility to act on the decisions made as a group and not attempt to come to a consensus outside the boardroom.

Creating Efficient Communications Between The Board & Shareholders

A Board of Directors run the company on behalf of the company's shareholders and should ensure that the Shareholders understand how the company is being run, and why. In ensuring the success of the company, the directors must also earn the trust of the shareholders and ensure that a satisfactory dialogue with shareholders takes place. This may be achieved by building an open and transparent relationship with them, by ensuring effective communication not only prior to the Annual General Meeting (AGM) but throughout the course of the year.

A break down in communication could result in the Shareholders losing faith in the Directors and removing them from the Board. The holding of Board meetings, therefore, provides the required background for formal meaningful discussions on various matters which may be contentious at a particular time for shareholders. This may also facilitate decisions on the best methods to ensure the flow of communications between the Board of Directors and the company's shareholders.

Demonstrating Where Management And Control Of The Company Is Located

Where a board meeting is held may demonstrate where the management and control of the company is located. There have been a number of significant tax case decisions in the European and United Kingdom courts concerning the tax residence of companies. These cases focus on the particular conditions required to demonstrate the tax residence of a company, emphasising central management and control of the company. Some of the factors that can generally be expected to be of relevance in determining the central management and control include, for example:

  • where are the important questions of company policy and critical decisions determined?;
  • where do the majority of directors reside?;
  • where are the board meetings held? and;
  • where is the negotiation of major contracts undertaken?

There needs to be substantive evidence that the Board exercises central management and control over the company's affairs. In this regard, Board meetings should be held on a regular basis throughout the corporate year with detailed minutes being prepared to include a full record of matters discussed and decided upon as described in section 166 of the Companies Act 2014. These should be inserted into the Minute Book of the Company, maintained by the Company Secretary, and signed by the chairman as evidence of the proceedings.

To conclude, a good Board of directors should always aim to be proactive, ethical, fair and diligent in matters surrounding the holding of Board meetings. Given the importance attached to the actual holding of Board meetings, it is fundamental for directors to recognise that the holding of Board meetings is an integral part of their leadership position rather than a matter which only receives consideration when deemed absolutely necessary.

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