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The Constitution of a company governs the board meetings and documents procedures on holding board meetings. Contrary to other aspects of running a company, board meetings are not governed by the Companies Act (CA), the law governing all companies in Singapore. Regulations on board meetings are therefore not specified in Singapore CA.
As the procedures and other obligations of directors in Board meetings are governed by the company constitution, it adds flexibility in conducting board meetings for Singapore companies.
Model Constitution is one of the most commonly adopted company constitutions registered with ACRA and the board meetings are conducted following the requirements specified in paragraphs 83 to 94 of the Model Constitution. The stepwise procedure is as under.
A Director requests the company secretary to hold a board meeting and unlike meetings with shareholders, a board meeting doesn’t require to be held at a minimum of 14 days advance notice. Though Board meetings can be held anytime, sufficient time needs to be spared for the preparation and review of the meeting agenda and any relevant documents needed for the meeting.
No director can be excluded from board meetings and all the directors must be notified of upcoming board meetings. Not notifying a director for the meeting, either deliberately or by mistake shall make the board meeting invalid as ruled by the Singapore Courts earlier. Board meetings, to be valid, must also satisfy quorum requirements as specified in the company’s constitution. The Chairperson conducts the meeting and in his or her absence, the directors may elect another person to act as a Chairperson solely for the meeting.
Key issues and actions discussed during a meeting are summarized in the minutes. Documentation of comprehensive details of all proceedings of board meetings serves as a written record of all discussions held with reasons for major business decisions. It becomes important for legal and compliance purposes. The written document can also protect the Board of directors from potential lawsuits afterwards, should the shareholders or any other member file a lawsuit challenging the board decisions.
Under Section 188 of Singapore CA, keeping minutes of board meetings is a legal requirement. These minutes are to be properly documented and filed within one month of the board meeting. The company secretary is normally responsible for recording minutes. Minutes are signed off by the chairman of the meeting, and then safely archived in the company’s records.
Not maintaining the minutes for board meetings is a criminal offence in Singapore and both the company and its directors can be fined up to SGD 2,000 each for a breach.
A Board resolution is passed when a decision taken by the board needs to be formalized. It is a proposal that is voted by directors on board for acceptance or rejection. If a majority of directors vote in favour of the resolution, the resolution passes and is made an official document recording the decisions of the board of directors. If the votes are divided in equal numbers, the Chairperson takes the final call by casting his or her vote in favour or against the resolution to break the tie.
As stipulated in Article 157A of the Singapore Companies Act (CA), all company affairs are managed by directors and major company decisions are taken under their guidance and supervision only. The Singapore CA, however, does not specifically mention which management actions require board resolutions and is decided based on the provisions of the Constitution of the company. The constitution is a legal document and specifies the rights and responsibilities of the directors, shareholders and company secretary of the company. Specific requirements for board resolutions and under what conditions a resolution is needed is determined by the Constitution.
All companies may not adopt Model Constitution and may stipulate different voting thresholds to pass a board resolution. For business matters with high importance, a company may require more than 70% of directors to support the resolution to get it passed.
A quorum is the minimum number of company directors who should be present at a board meeting to make the meeting valid. As stipulated in Article 179 (1) (a) of the Singapore CA, a company must have a minimum of 2 members present to constitute a quorum for a company meeting.
The number of board members needed to form the quorum for a board meeting however depends on the Constitution of the company. Once the documented resolution is complete, it must be archived by the company secretary.
Before attending the meeting, the directors must critically review the matters of discussion in the board meeting. Section 156 of the CA warrants the directors to act honestly and declare if they have vested interest in any of the transactions or proposed transactions during the board meeting and abstain from voting on any such resolutions.
It is a crime as per Singapore company law and in case of violation and non-disclosure of vested interest can be imprisoned and fined.
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