PROCEEDINGS OF COMPANY DIRECTORS Iyke Ozemena
Attrorney, Corporate Consultant: Author The directors shall meet at
regular intervals to discharge one of its duties to the company, namely
making decisions on the management and policies for the company. Among
other things, directors duties are fiduciary one. Most of directors
powers and duties are provided by the memorandum and articles and
therein it shall be stated at what intervgals the directors shall meet.
It should be noted that whatever is provided by the articles and
memorandum is subject to the provisions of the Act, with the exception
of matters which come under internal managemtn rules. For a new company
the first directors meeting must take place within 6 months after its
incorporation. But for already existing companies the directors shall
determine when and how to hold their meetings and also be able to
regulate it, in accordance with s.263(1) CAMA 1990. Ability to regulate
the meetings includes the discretion under s.263(3) which urges the
Secretary to summon a meeting whenever a requisition is tendered by a
member. Also if directors have already agreed to hold meetings at
certain intervals, there would be no need for notices. Notices are sent
to all the directors before each directors' meeting takes place. A
director is a member and entitled to attend if his tenure is not yet
expired. Another factor that operates as a disqualification to attend
meetings is notice or actural removal of a director. However, a
director who is subject to removal resolution is still entitled to
receive notice of meetings until he is finally removed vide s.266(1).
Similarly, a director who is outside the country cannot be sent notices
unless he had a local address as provided by s.266(4). The company Act
provides that 14 days' notice in writing shall be given to all directors
entitled to attend, unless the articles states otherwise. The effect
of not giving proper notice of a meeting is to render it void. S.266(3)
clearly states that failure to comply with notice requirement is
sufficient to invalidate the meeting. When a meeting is so invalidated
it is of no effect and no meeting was held. Although all members
entitled to attend the meeting received notices a quorum must be present
before the commencement of the meeting. Various meetings stipulate
what number of members entitled to attend constitutes a quorum. The
company's Act provides that where there are not more than 6 directors, 2
directors present at the commencement of a meeting of directors shall
constitute a quorum for a valid meeting to be held. But this does not
prevent organisations from stating the number of members that
constitutes a quorum in their articles of association. Furthermore
s.264(1) states that where the number of directors entitled to attend
are more than 6 directors, the quorum should be one third of the number
of directors. But if the number is not a multiple of three, the quorum
shall then be a third of the directors to the nearest number.
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DECLARTION OF INTERESTS Directors are required to declare their various interests on assuming the office of directorship. One of such interes is shareholding. In order to keep track of directors shareholding in companies, a register is kept for such purpose as prescribed by s.275. Another form of interest to be disclosed by directors is contracts. S.276 makes it a mandatory duty on directors to give sufficient notice of these interests. These interests do affect the directors votes. If a matter before the board is one in which some directors are interested, they may abstain from voting. This incident affects the quorum of the meeting. The directors at the meeting may have formed a quorum but a sudden reduction in the circumstance under discussion would not allow the meeting to pass certain resolutions. In the circumstances described above it is the board that would determine how to proceed. Normally it would seem appropriate to treat it as a matter under internal management rule. However, in GLOBE FISHING INDUSTRIES LTD+ 4 ORS V. COKER (1990) 7 NWLR Pt. 162 where a director was not invited to a directors' meeting in which election of 3 directors contested by 4 members leaving the 5th one out was declared null and void. Section 265 does provide that where a quorum is unobtainable at a director's meeting for whatever rerason and therefore becomes unable to act, the general meeting may act in place of the board. Similarly where a committee could not form a quorum to transact its business the board of directors may act in the place of the committee. Members shall decide matters before them by voting; and decisions are carried by a simple majority. Members shall have one vote each unless the articles and memorandum say otherwise. The chairman shall equally have one vote as a member however, when there is equality of vote he shall then possess a second vote called 'casting vote'. The casting vote is not used until there is a tie. Some chairmen conscious of their position of neutrality rarely use their casting vote. A chairman may be elected once amongst the directors to chair all their meetings, and the directors may then decide for how long he holds the office. If after 5 minutes of the appointed time for the meeting to commence the chairman is not present, members may elect one of them present to be the chairman. The directors constitute the board described by Denning LJ as the brain and hand with which the company acts. Decisions as to the running of the company are made by the board. One of them, the managing director is the chief executive of the company, who is empowered through the articles to carry out the functions of a chief executive which is largely implenting the policies of the Board. The managing Director is not necessarily an agent but performs the functions of an agent. In some cases a board may decide to appoint a committee instead of a Chief Executive. Where this happens the committee is given a term of reference being a guidline and an instrument of control by the board, who delegated the power. The managing director may give further directions as to the object or mission of the committee. There is no hard and fast rule regarding membership of committee. What is important is that members should be versed and knowledgeable about the object of the committee. In the present case the committee shall be composed of directors, managing director inclusive and any other administrative staff. One of them is elected a chairman of the committee; so that he/she presides over all meetings of the committee. Where none is elected or the chairman not present 5 minutes after the supposed commencement time, those members present are obliged by s.263(6) to chose one of them to be the chairman. The procedure adopted at committee meetings shall be that obtained at ordinary well-regulated meetings. It shall give notice of meetings to all members entitled to attend. It shall adjourn and decisions are taken by majority votes of members in attendance. But where there is equality of votes it shall be resolved by the chairman using the casting vote. Like all important decisions taken in a meeting, resolutions of the directors proceedings shall be recorded. However, if the directors wishes to pass resolutions otherwise other than in a regular meeting, such resolution shall be valid and effectual if it was signed by all the present directors entitled to attend the directors meetings. Thus in RE: EXPRESS ENGINEERING WORKS LTD 1920 1 CH 466 CA it was held that a company is bound in a matter intra vires by the unanimous but informal agreement of its members. The only exception can be where the Act so pecifically requires a meeting for a decision, or where there is an objection by one of the directors, the informal meeting would not be valid. -- H.L. BOLTON ENGINEERING CO. LTD V. T.J. GRAHAM & SONS LTD (1957) 1 QB 159 CA <P>
<P>
Iyke Ozemena Attorney, Corporate Consultant, Author: <P>
DIRECTORS: Duties & Enforcement | http://www.amazon.com/dp/B005783S6S <P>
GUIDE TO FINAN$IAL $ECURITY | http://www.amazon.com/dp/B005EFTHNC <P>
<P>
DECLARTION OF INTERESTS Directors are required to declare their various interests on assuming the office of directorship. One of such interes is shareholding. In order to keep track of directors shareholding in companies, a register is kept for such purpose as prescribed by s.275. Another form of interest to be disclosed by directors is contracts. S.276 makes it a mandatory duty on directors to give sufficient notice of these interests. These interests do affect the directors votes. If a matter before the board is one in which some directors are interested, they may abstain from voting. This incident affects the quorum of the meeting. The directors at the meeting may have formed a quorum but a sudden reduction in the circumstance under discussion would not allow the meeting to pass certain resolutions. In the circumstances described above it is the board that would determine how to proceed. Normally it would seem appropriate to treat it as a matter under internal management rule. However, in GLOBE FISHING INDUSTRIES LTD+ 4 ORS V. COKER (1990) 7 NWLR Pt. 162 where a director was not invited to a directors' meeting in which election of 3 directors contested by 4 members leaving the 5th one out was declared null and void. Section 265 does provide that where a quorum is unobtainable at a director's meeting for whatever rerason and therefore becomes unable to act, the general meeting may act in place of the board. Similarly where a committee could not form a quorum to transact its business the board of directors may act in the place of the committee. Members shall decide matters before them by voting; and decisions are carried by a simple majority. Members shall have one vote each unless the articles and memorandum say otherwise. The chairman shall equally have one vote as a member however, when there is equality of vote he shall then possess a second vote called 'casting vote'. The casting vote is not used until there is a tie. Some chairmen conscious of their position of neutrality rarely use their casting vote. A chairman may be elected once amongst the directors to chair all their meetings, and the directors may then decide for how long he holds the office. If after 5 minutes of the appointed time for the meeting to commence the chairman is not present, members may elect one of them present to be the chairman. The directors constitute the board described by Denning LJ as the brain and hand with which the company acts. Decisions as to the running of the company are made by the board. One of them, the managing director is the chief executive of the company, who is empowered through the articles to carry out the functions of a chief executive which is largely implenting the policies of the Board. The managing Director is not necessarily an agent but performs the functions of an agent. In some cases a board may decide to appoint a committee instead of a Chief Executive. Where this happens the committee is given a term of reference being a guidline and an instrument of control by the board, who delegated the power. The managing director may give further directions as to the object or mission of the committee. There is no hard and fast rule regarding membership of committee. What is important is that members should be versed and knowledgeable about the object of the committee. In the present case the committee shall be composed of directors, managing director inclusive and any other administrative staff. One of them is elected a chairman of the committee; so that he/she presides over all meetings of the committee. Where none is elected or the chairman not present 5 minutes after the supposed commencement time, those members present are obliged by s.263(6) to chose one of them to be the chairman. The procedure adopted at committee meetings shall be that obtained at ordinary well-regulated meetings. It shall give notice of meetings to all members entitled to attend. It shall adjourn and decisions are taken by majority votes of members in attendance. But where there is equality of votes it shall be resolved by the chairman using the casting vote. Like all important decisions taken in a meeting, resolutions of the directors proceedings shall be recorded. However, if the directors wishes to pass resolutions otherwise other than in a regular meeting, such resolution shall be valid and effectual if it was signed by all the present directors entitled to attend the directors meetings. Thus in RE: EXPRESS ENGINEERING WORKS LTD 1920 1 CH 466 CA it was held that a company is bound in a matter intra vires by the unanimous but informal agreement of its members. The only exception can be where the Act so pecifically requires a meeting for a decision, or where there is an objection by one of the directors, the informal meeting would not be valid. -- H.L. BOLTON ENGINEERING CO. LTD V. T.J. GRAHAM & SONS LTD (1957) 1 QB 159 CA <P>
<P>
Iyke Ozemena Attorney, Corporate Consultant, Author: <P>
DIRECTORS: Duties & Enforcement | http://www.amazon.com/dp/B005783S6S <P>
GUIDE TO FINAN$IAL $ECURITY | http://www.amazon.com/dp/B005EFTHNC <P>
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Comment
Thanks for sharing useful information about Appointment and Resignation of Director. As per section 168(3) of Companies Act 2013, where all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.
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Resignation of Director in India