Proceedings of Directors

Part 4 – Corporate Governance

All the rules in the sections that follow – Sections 157 to 167 – come from the old Model Regulations, which were found in the First Schedule to the 1963 Act.

The 2014 Act states that these rules apply unless the company’s constitution says otherwise.

The well-known old Model Regulation 80 – which placed the day-to-day management of the business in the hands of the directors – is re-enacted here, in Section 158.

Briefly, the salient points are as follows:

1. The directors may exercise all the powers of the company – with this qualification: they may not exercise powers which are required to be exercised by the company in general meeting, or powers which they are not allowed to exercise on their own by virtue of the 2014 Act or the company’s constitution.

2. The directors’ powers, therefore, are not “unfettered”. They are subject to (1) any regulations in the company’s constitution; (2), the provisions of the Act; and (3) any directions given by the members in general meeting, via a special resolution, which are not inconsistent with the regulations in the company’s constitution.

3. If a direction is given by the members in a general meeting, that direction doesn’t render invalid an act that the directors have already done.

4. If directors choose, they may delegate their powers to committees or other persons.

The power to appoint a Managing Director remains as it was. The only new element is the addition of the words “by whatever name called”. This recognises that what is important when considering whether a person was the MD of a company, is the substance of the position and not the title. Some companies, for example, refer to the CEO. (Section 159)

The Board may confer – or give away – all its powers on the MD, or it may decide that the MD’s powers will be concurrent with its own.

The MD’s salary is determined by the Board.

You will recognise the contents of Sections 160 and 161 since they are taken from a number of Model Regulations in the 1963 Act.

There are two new additions: a “reasonable notice” requirement for any directors’ meeting has been added. This simply puts a requirement, which was established in case law in 1990, into statute.

Also new is subsection 5, which spells out the fact that no persons other than directors may object to the notice given for any directors’ meeting.

Where the company has a sole director, the quorum is one. Where a company has more than one director, the quorum can be fixed at whatever number they please, but the minimum is two.

The time period allowing a chairperson to arrive at a meeting is new. It has been extended from 5 to 15 minutes.

If the directors wish to forego a meeting, they can pass resolutions by written resolutions (Section 161(1)).

Where a minority of directors is unable to vote on a directors’ resolution at a meeting duly held and convened – because of the company’s constitution, for example – that resolution can still be valid, if it is signed by the directors who would have been permitted to vote on it, had the meeting been called. This is new (Section 161(2)). The resolution must state the name of each director who didn’t sign and the reason why he or she didn’t sign.

Also new is the fact that directors may sign a written resolution on separate pieces of paper (Section 161(5)).

There is a new provision enabling directors’ meetings to be held with some or all directors participating by means of “telephonic, video or other electronic communication”. The key thing is that each director must be able to hear and able to speak, i.e., participate fully.

Every company must keep minutes of all appointments of officers, names of directors present and all resolutions and proceedings of all meetings (Section 166).

The general rule is that a director may hold any other office or “place of profit” under the company at the same time as her directorship.

The director in question, however, cannot vote on his or her own appointment to that other “office or place of profit”, though that director can be counted in the quorum in the meeting where the question is decided (Section 163).

A director may be the company secretary.

No director may be the company’s auditor.

Boards of large companies must establish an audit committee. By “large”, the Act means a company whose balance sheet total exceeds €25m or whose turnover exceeds €50m. Those figures are taken from the most recent, and the penultimate, financial year. It may also be that the company, taken together with its subsidiaries, crosses this threshold.

For the responsibilities of the audit committee, and the rules in general, click here (Section 167).