Company Management and Decision Making
The day to day management of companies and the practical steps that directors should take are more important than ever during this period of uncertainty.
Companies should:
- Hold frequent board meetings - as the situation evolves and develops, the company's response may also need to evolve and importantly a regular review of the company's financial position should be undertaken.
- Keep records of all board meetings and decisions made.
- Produce accurate and up to date financial information regularly.
- Monitor the company's cash position.
- Seek professional advice as and when required and in a timely manner if for example wrongful trading is suspected.
The manner in which directors may make decisions is detailed in a company’s constitution. Formal board decisions are usually made by board meeting. All the usual rules as regards quorum and recording board decisions will continue to apply. Most companies should have provisions so that directors are not required to meet physically and that other methods are acceptable, e.g. video/conference calls. Check your company’s articles to see what they say. The model articles for private limited companies state that it is irrelevant where any director is or how they communicate with each other. The model articles also allow for decisions to be taken where all eligible directors indicate to each other “by any means” that they share a common view on a matter. Such decisions do not need to be in writing, but any telephone conversation should, as a matter of good practice, be formally recorded in writing afterwards.
ICSA has produced a useful guide for virtual board and committee meetings. This is available here: https://www.icsa.org.uk/assets/files/pdfs/guidance/good-practice-for-virtual-board-and-committee-meetings-web1-002(1).pdf