A board meeting is the coming together of a company’s board of directors. As the director of a private limited company, the idea of arranging and attending board meetings may seem like an unwanted distraction from the actual running of the business. In this post, we look at whether or not board meetings are compulsory in the private limited company structure.
Board meetings are optional
If you find board meetings a nuisance, the good news for you is that in most cases they are non-compulsory (the shareholders’ general meetings and annual general meetings are also optional).
This is unless the company’s articles of association – the document that defines how a company should be run – state that board meetings are required. In some instances, if a shareholders’ agreement is in place, this may also set out the requirement for board meetings.
When the articles of association or shareholders’ agreement stipulate the need for board meetings, the documentation would normally signify how often they should occur.
How are decisions made if board meetings aren’t needed?
The Model articles of association, the version of the articles that most companies are now registered with (and the default that Companies House use), allow for a company to be operated without the need for board meetings, with written resolutions providing a suitable platform for decision making.
Below is the relevant section of the Model articles that references this:
7.(1) The general rule about decision-making by directors is that any decision of the directors must be either a majority decision at a meeting or a decision taken in accordance with article 8.
8.(1) A decision of the directors is taken in accordance with this article when all eligible directors indicate to each other by any means that they share a common view on a matter.
(2) Such a decision may take the form of a resolution in writing, copies of which have been signed by each eligible director or to which each eligible director has otherwise indicated agreement in writing.
Whilst companies formed with 1st Formations are registered using a slightly altered version of the Model articles of association, there is still no statutory obligation for the companies formed with us to hold board meetings.
Written board resolutions
The purpose of board meetings is for the limited company’s directors to come together (physically or remotely, provided the articles of association have provisions for this) in an official capacity to discuss the company and make decisions via board resolutions. Resolutions are then voted on and ‘passed’ if successful.
As demonstrated in the excerpt from the Model articles, board meetings aren’t the only way that board resolutions can be voted on and passed. They can also be facilitated through written board resolutions, which enable directors to cast a written (or electronic) vote, without having to sit in on any kind of meeting format.
Of course, voting isn’t the sole domain of directors. Some key company decisions can only be made by shareholders, such as amending the articles of association and dissolving the company. These decisions can be made in a general meeting or annual general meeting. Still, if a company was determined to not hold meetings, these too can be voted on via written resolutions.
It’s typically not a case of ‘one or the other’. A company may normally hold board meetings, but when not all directors can attend (for example), they may choose to utilise written board resolutions instead. A company wouldn’t generally pick one method and resolutely stick to it.
Meetings can be valuable to your limited company
It’s now clear that as someone running a limited company, you are under no obligation to hold board meetings.
However, if you are operating a limited company that has more than one director, board meetings represent a useful opportunity to get everyone together to discuss what is and isn’t working, and develop new strategies to enhance the growth of the company.
Particularly from a problem-solving perspective, board meetings will often be the most efficient environment in which a situation can be discussed and a resolution reached.
Because of this, we recommend keeping an open mind and embracing the board meeting format when necessary.
Thanks for reading
So there you have it. In most cases, board meetings are not compulsory for private limited companies. Despite this, they can be a valuable tool in helping you discuss company matters with your fellow directors, and so should never be ruled out.
Whilst board meetings aren’t a statutory requirement, there are a number of rules and regulations that limited company directors must adhere to. With our Full Company Secretary Service, available for £149.99 per year, our team of company experts will ensure that your company is always fully compliant with its obligations.
Once our appointed company secretary is in place, we will correctly prepare and file your annual confirmation statement, maintain your five statutory registers, and make any changes to your company (such as appointing new directors, transferring shares, and updating the registered office) as and when you need.
We hope you have found this post helpful. Please leave a comment if you have any questions.