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Board decision making and virtual meetings

Company boards have ultimate legal responsibility for their organisations, so their ability to make decisions at the current time is of critical importance. The coronavirus pandemic is having an impact on how boards can discharge these responsibilities.

Clearly remote board meetings are not a new concept but in the near term they will have to become the norm. The Chartered Governance Institute (ICSA) has set out its thoughts on good practice for virtual board meetings, and we list below some important considerations.

 Is a board meeting required?

Can certain decisions be taken by way of written resolution, or perhaps by a smaller board committee? Always consult the company’s articles to determine what is permissible.

Whilst mitigating the need for full board meetings may be sensible, company boards should avoid reaching decisions (whether by email or otherwise) without formally passing a resolution. Ratifying decisions after the event is not good practice, and informal decisions should be followed by a written resolution.

Choose the right communication channel.

An audio only meeting is more stable than a video call, but arguably less engaging. Importantly, the company must have the relevant technology (all directors must be able to use it), and the company’s articles must permit the chosen medium.

Have a clear agenda and structure.

To ensure that a meeting is orderly the directors should know the agenda and understand where decisions are required. Board papers are important tools to focus discussion and should clearly indicate whether a decision is required.

The Chair must lead the meeting through the agenda and after each item should state what the board has decided or noted. Minutes of the meeting should be taken as usual. Recording board meetings is not recommended.

Security of information.

The more information that is disseminated, the greater the security risk. Security considerations are especially relevant to the circulation of board papers, as printing and delivering hard copies may not be an option. Companies may choose to use an electronic portal to distribute documents as a more secure means of correspondence than email, especially if the directors use their personal email addresses.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

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