COVID-19: Passing board resolutions during a pandemic (Ireland)

Published 31 March 2020

Introduction

A major impact of the measures introduced by the Irish government to control the spread of COVID-19 has been the essential prevention of the physical meeting and interaction of people in both a business and social context. For directors of companies that normally conduct their board meetings in the same location, these measures mean that this method of holding board meetings must be avoided so long as the current circumstances in Ireland prevail.

In this article, we discuss two alternative methods of dealing with necessary board matters without requiring the directors to be physically in attendance in the same location.

Unanimous written resolutions of directors

The passing of a unanimous written resolution signed by all the directors of a company is an alternative option to the directors of a company holding a board meeting. A resolution in writing signed by all of the directors of a company is as valid as if it had been passed at a meeting of the directors. The resolution may consist of several documents in like form each signed by one or more directors and for all purposes take effect from the time it is signed by the last director.

However in circumstances where such unanimous written consent isn’t possible, a board meeting of the directors may be required.

Board meetings held by electronic means

Quorum

For the vast majority of companies, the quorum necessary for the transaction of business of the board is usually two directors (unless otherwise fixed by the directors or the company’s constitution). If a company has a sole director, the quorum applicable is one director.

Instead of requiring the directors of a company to be present in the same location, it is possible to arrange a meeting of directors consisting of a conference between some or all of the directors who are not all in one place, but each of whom is able (directly or by means of telephonic, video or other electronic communication) to speak to each of the others. A company’s constitution may, however, provide otherwise so it is important to check the constitution to determine whether the holding of a board meeting by electronic means is permitted and whether any specific conditions apply to the holding of a board meeting in this manner.

Where electronic meetings are permitted, a director taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote and be counted in the quorum. Such a meeting shall be deemed to take place:

• where the largest group of those participating in the meeting is assembled; or
• if there is no such group – as is likely to be the case over the coming weeks, where the chairperson of the meeting then is; or
• if neither of the above situations apply, in such location as the meeting itself decides.

In normal circumstances, the board would try to have the necessary quorum present in the same location physically as the chairperson to avoid a scenario where an adjournment of the meeting would be required if a fault occurs with the electronic media being used to facilitate the meeting. However in light of the current circumstances in Ireland, it is extremely unlikely that boards will be able to do so.

Where a meeting is being held by electronic means without the quorum present in the same location, it is of paramount importance to ensure that all directors can hear and communicate throughout the duration of such a meeting. The ability of each director to hear and communicate should be confirmed by the chairperson as each resolution is read out, considered and passed to guarantee that the resolutions are considered and validly passed by the board of directors. Such confirmations of the ability of each director to hear and communicate should be recorded in the minutes of the meeting.

Conclusion

Unanimous written resolutions of the directors and the holding of board meetings by electronic means allow directors of a company to attend to necessary board matters without the need for directors to meet physically in the same location.

For more information please contact Sarah Meehan, Associate or another member of our Dublin Corporate and Commercial team.