While the Act has been praised as being progressive in that it provides a reasonably clear outline of the rights and obligations of directors, shareholders and creditors, and increases protection for minority shareholders, some company directors are unaware of the smaller but more practical innovations afforded to us by the Act.

One example is the flexibility it offers with respect to the formalities of corporate business and, in particular, the Act’s recognition of the availability of new technologies for conducting the meetings of a board of directors, as set out in section 160 and the Third Schedule of the Act.

The statutory procedure by which a board may conduct its meetings is always subject to the particular constitution of any given company. It is able to contract out of the statutory procedure entirely if desired.

Not less than two working days' notice of a meeting of directors must be given, in writing, to every director, and every such written notice must include the date, time and physical location of the meeting together with an agenda of matters to be discussed.

For overseas directors, in particular, email is likely to be the preferred means of notification of any upcoming meeting.

A meeting of the Board may be held either:-

1. By a number of directors who constitute a quorum being assembled together at a time, place and date appointed for the meeting; or
2. By means of audio, or audio and visual communication by which all directors participating and constituting a quorum can simultaneously hear or hear and see each other throughout the meeting.

In this respect the legislation has anticipated technological advances since the late 1990s, such as audio/visual conferencing. An obvious example of one such technology is Skype.

It would also appear self evident that such technological advances now enable directors to ‘attend’ board meetings, even if they are overseas. All that is required is a webcam and a broadband internet connection – both of which are now standard on most computer laptops.

The development of new technologies such as Skype has also had a practical though somewhat less apparent benefit insofar as the matter of quorums is concerned. Under part 4 of Schedule 3 a quorum for the meeting of a board is a majority of the directors. It states that no business may be transacted if a quorum is not present. Now that all directors could be expected to have the ability to attend a meeting, via their laptop computers, without even having to leave home, it should be less difficult for board meetings to achieve a quorum.

This also gets around the problem of the dissenting minority director or directors who previously may not have turned up to a meeting, and who may have therefore potentially jeopardised the requisite quorum being formed.

Obviously legislation can never solve the problem of a renegade director who is totally uncooperative (and who would probably not attend a meeting, even if it were conducted on Skype). For most directors, however, the ability to attend a meeting via the internet now makes non attendance appear unreasonable and this, of course, may not have been the case prior to the advent of the new technology.

A resolution of the board is passed if it is agreed to by all directors present without dissent or if the majority passed it in favour. It needs to be recorded if a director votes against a resolution, as silence will not suffice in the minutes. Any communication by a director via Skype is therefore required to be recorded in an appropriate manner.

Resolutions may be circulated by email once agreement has been reached. If the agreement reached is in respect of a major transaction, copies of resolutions need to be approved by special resolution of shareholders. Again these may be circulated via email, with a copy going to those who voted against it (as required by section 122(5) of the Act).

The law may be behind the times in some ways, but as you can see there are areas where it has kept pace with modern technology.

We suggest you make sure that your constitution, whether for a company or for a charity, allows for the best and most modern means of communication between board members.

If you require any advice as to any company matters please contact Ben Hickson or Les Allen at our city office.