9 reasons why you should hold board meetings in your company

Board meetings are formal gatherings of a company’s board of directors. Although the Companies Act 2006 does not specify that private companies limited by shares must hold board meetings, there are many benefits to having them.

In this article, we look at 9 reasons why you should hold board meetings in your company. Let’s get started.

1. Discuss and vote on proposals

On the most basic level, the board of directors are there to make decisions. To make a decision, the board needs to vote, and, in general terms, if more directors vote in favour of a proposal than against it, the proposal passes, and a decision is made.

Board meetings aren’t the only way the board can make decisions. Written board resolutions allow directors to vote on a matter without being present at any form of meeting. Instead, all directors indicate their approval of a motion in writing. However, written resolutions, by their nature, are not generally conducive to fostering discussion and debate.

When matters are voted upon at a board meeting, the board can discuss them in detail, giving each topic the time it deserves. Simply put, board meetings trump all other options when making informed director decisions.

2. Set your company’s targets and monitor their progress

One of your key duties as a director is promoting the business’ success. To achieve this, you must work with your co-directors to set clear financial goals and objectives for the business. Without these, there is no benchmark for success, and the business will simply flounder from one activity to the next.

Regular board meetings allow directors to gather in the same room (unless the articles of association state otherwise; virtual attendance is generally also permitted), to set targets that will help the company accomplish its overall mission and track their progress.

Without such a meeting, this goal-setting and monitoring task will be confined to informal meetings, ad-hoc chats, and restrictive emails that will probably not provide an adequate platform for such an important job.

3. A place for accountability

Directors must be held accountable for their actions. A board meeting provides a suitable, formal opportunity for directors to explain the reasoning behind their decisions, and receive guidance from their fellow directors on the areas in which they are not excelling.

• General meetings – your questions answered
• A guide to keeping meeting minutes
• What decisions can directors make without shareholder consent?

Whilst no director will enjoy being reprimanded for their actions, it is generally for the company’s betterment. Consider the alternative: a director is left alone to perform their task (or manage a team of people who are performing the task), with no avenue for formalised feedback. It only becomes apparent further down the line, when perhaps significant damage has been done, that directors and shareholders become aware of a problem.

This isn’t about micro-management; you would not hold a board meeting every week. However, by scheduling regular board meetings bi-monthly or quarterly, directors know that they need to report on the work they have done (or supervised).

4. Ensure the board is acting collectively

A general rule is that the board should collaborate as a single unit. This is why decisions usually have to be made by a majority vote.

Practically speaking, it is not possible for every single decision affecting the company to be made collectively at board level. This is where delegation comes into play.

Certain directors may be delegated responsibility for carrying out specific tasks or looking after certain areas of the business. This means that on a day-to-day level, a single director might be making certain decisions based on the authority provided by the board. The board meetings then serve as a means of checking in on the decisions and actions that the director has taken, to ensure they align with the board’s requirements.

5. Tackle problems together

Collaborative tools make working together easier than ever, regardless of where someone is based. Video conferencing, instant messengers, and list-making applications have all broken down geographical barriers for businesses, large and small. Furthermore, companies have been more willing to embrace these technologies since the pandemic.

However, sometimes, nothing beats getting everyone together in the same room to discuss an issue. When a business encounters a problem, a physical board meeting allows the key decision-makers to quickly gather and work towards a solution that complements back-and-forth discussion.

And because board meetings must be minuted (holding board meetings isn’t a legal requirement; taking minutes when you have them is, as is holding on to the minutes for a minimum of 10 years) when decisions have been made, possibly ones that could have ramifications further down the line, the company can legally protect itself through the documented minutes, as those minutes serving as evidence of the matters discussed and the decisions made.

6. Everyone in the know

If your company has several directors, each siloed off performing their duties, it’s too easy for communication cracks to occur. Yes, you may have a functioning intranet, active group chats, and regular emails, but if individuals are busy, reporting everything can become tricky – and sometimes, not everything feels ‘newsworthy’ enough to warrant a dedicated email.

Board meetings, while an opportunity to discuss significant decisions that will affect the business, also represent a chance to address more minor details. Perhaps an employee is going through a bereavement, and the board meeting is a suitable place to notify everyone. Or maybe there’s a minor problem with a supplier that everyone needs to know about.

By hosting board meetings, you can ensure that directors are always kept in the loop, no matter how large or trivial something may seem. This allows them to perform their tasks to the best of their abilities, knowing they have all the information they need.

7. Review and then strategise

It’s easy for a company’s review process to be reduced to a handful of distributed reports (on finances, analysis, research, and more) and then quickly forgotten. Feedback is not encouraged, and so is not provided. The directors, while made privy to the necessary information, aren’t invited to provide their input. Amongst other things, this approach essentially wastes the talents and expertise of the board of directors.

The people within a company will likely possess many skills that can benefit the business. Board meetings can elevate reports to full-on discussions and collaborations in an inclusive, transparent environment, that correctly utilises the board.

Once a piece of work has been reported, all directors can have their say and then work together to develop strategies to advance the work, plan the next steps, and give the project a clear direction. With regular board meetings, tasks become a joint effort rather than something done in isolation.

8. Present new ideas

Innovation is fundamental to business growth. The problem is that in a busy organisation where directors focus on the day-to-day running of the business, they often lose sight of this, or do not have time to give it much thought.

Board meetings provide the perfect platform for fostering a company culture where innovative thinking is embraced. Directors can present their ideas to the entire board and listen to the ideas of others in a – hopefully – receptive atmosphere.

On a purely logistical level, having the chance to discuss an idea with everyone at once, rather than one director at a time, makes developing an idea that much simpler. Moreover, it opens up a dialogue and provides an avenue for feedback, which can ultimately improve a proposal.

9. Encourage team cohesion

Holding a board meeting enables the board of directors to view the business operation as a whole, rather than as a collection of individual departments operating under one company. This may not be a problem in a smaller business run by two or three directors. However, when multiple people are involved, it’s easy to forget the company’s values and overarching mission.

A regular catchup with fellow directors is a suitable reminder of why you are there in the first place, the role you have to fulfil, and how your work is helping.

The term ‘board of directors’ may not conjure up images of cosy team togetherness. Nonetheless, the board is a team, and board meetings provide an opportunity for it to get together and work as one.

So there you have it

That was 9 reasons why you should hold board meetings in your limited company. We hope you have found this post helpful. Please leave a comment if you have any questions, and we’ll get back to you as soon as possible. Thanks for reading.