Since the arrival of Covid-19, government announced restrictions on gatherings but businesses still have to make their key business decisions that require a formal board or shareholder consent. Most businesses turned to virtual platforms, video or telephone conferences to run their meetings. It seems that working from home might become a new reality for some businesses even post Covid-19.It is a great way to adapt but companies should be mindful of the law that regulates how the meetings should be held. It is recommended that businesses carefully check their articles of association to see what is permitted.
Board meetings
Undoubtedly, for some companies virtual meetings is not a new concept and often a company’s articles of association will already provide for this. Generally, such meetings will be valid even if the company’s articles do not provide for this. However, directors should always:
- Obtain prior consent of each director to hold the meeting in this manner (if the articles of association do not specifically provide for virtual meetings)
- Send the necessary notice to each director
- Make sure the required quorum set out in the articles is present
- Make sure that all participants can be clearly heard and vote in order to establish a consensus
- Prepare minutes of the meeting and circulate them for approval.
In such an unprecedented times, formal written resolutions might not always be appropriate because directors require to make important decisions quickly.
Shareholder meetings
For private limited companies, virtual meetings are effective. Saying this, a caution still needs to be exercised.It is crucial to check that the articles do not contain restrictions on the use of virtual meetings. A notice of the meeting needs to contain all the necessary details to access the meeting including dial in number, internet address, password, access code etc. The practicalities of voting ought to be carefully considered to ensure that all members are able to speak and vote at the meeting.
