Making decisions as a board: minimising circular resolutions
No reason why a board can't meet, even urgently, to discuss a vital issue
GIVEN the push to enhance corporate governance standards, non-executive directors are spending more time than ever to better understand the issues that affect the company's business. Indeed, they are generally expected to attend board meetings at least every quarter, sometimes every two months. This is in addition to their commitment to committee meetings. Collectively, this adds up to a significant amount of time and resources, especially if the company is actively engaged in corporate transactions.
In this context, to expect directors to meet on every decision is not reasonable, especially where it is administrative in nature. For instance, where the board may have already discussed and formed a preliminary view on a decision pending confirmation of certain facts by management, a further meeting may be unnecessary if the subsequent information addresses the earlier concerns and does not change the preliminary view.
For this reason, the practice of using written resolutions occurs in almost all publicly listed or private companies.
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