6 - The Role of the Board

• The power to manager the company is initially vested to the members of the Company
• Article 3 of the model articles which states that ‘[s]ubject to the articles, the directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company’.
• Article provisions that delegate managerial power to the director are often expressed as being 'subject to the Articles' - provisions can be inserted into the articles that affect the division of power between the directors and members.
• The board does not have the power to delegate its managerial powers to others by default – such delegation is only permissible if the articles allow for it. Given how useful delegation is, most companies will include a provision in their articles that allows the directors to delegate powers to others. Article 5(1) of the model articles provides the directors with wide powers of delegation.
• The principle method by which directors exercise their managerial powers is by making decisions at board meetings.
• The Companies Act 2006 has almost nothing to say about board meetings, with all the key rules being found in the Company's Articles
• If the articles are silent on quorum, then the Model Articles apply (the quorum is determined by the directors but it must not be less than 2)
• Quorum requirements are a matter for the the Company's articles
• Article 7(1) of the model articles for private companies provides that any decision of the directors must either be (i) a majority decision at a meeting; or (ii) a decision taken in accordance with article 8.

   

  Articles 8(1) and (3) provide that a decision of the directors can be taken without a board meeting if all the directors eligible to vote on the matter indicate to each other, by any means, that they share a common view on the matter.
• Article 13 of the model articles for public companies provides that, subject to the articles:

  • a decision is taken at a board meeting by a majority of the votes of participating directors; and

  • each director participating in a board meeting has one vote.
• The Act provides that every company must record all minutes of proceedings at directors’ meetings (s. 248(1)) and must keep these records for at least 10 years from the date of the meeting (s. 248(2)). Failure to keep such minutes is a criminal offence (s. 248(3)), although decisions taken at the relevant meeting will be unaffected
• If a Company Secretary is not appointed on a private company, then:

  1.       Anything authorised or required to be sent to the CoSec is sent to the Company itself

  2.       Anything else required or authorised to be done by the CoSec may be done by a director or persons authorised by the directors