Isolation and social distancing measures in response to the Coronavirus outbreak have meant that most businesses are now working from home in their entirety. Meetings are now being held over the phone or on video conferencing sites such as Zoom or Skype, but what are the implications for board meetings also being conducted remotely?
Article 9(2)(c) of the Model Articles for Private Companies Limited by Shares states that if the directors cannot be in the same place to conduct the meeting, notice of the meeting must set out how the directors are to communicate with each other remotely. Article 8(4)(c) of the Model Articles for Public Companies sets out the same. It is more and more common that a company’s articles of association will include provisions for directors’ meetings to be held electronically but companies with older articles should check to see if virtual meetings are expressly or implicitly prohibited.
If a board meeting is to be held electronically:
- The directors should all be able to hear each other. Open communication is the focus of earlier case law on the matter but, with modern technology more readily available, being able to hear and even see everyone at the same time should not be an issue.
- The directors should give their express consent to the proposed audio or video format when they are notified of the meeting.
- Minutes should be circulated after the meeting to each director to ensure a correct record has been obtained.
- There must be clear instructions for each participant as to how to join the meeting but, once it has been agreed and everyone is set up properly, usual rules will apply as to quorum and voting.
There have been many instances where the Courts have accepted that directors may be present via telephone at board meetings and so, in a period where staying at home is mandatory, it is difficult to see why the Courts would object to electronic participation if it is agreed and carried out in an open and organised manner.
Giao Pacey, Partner, Simkins LLP