The directors take decisions at meetings of the board of directors by means of resolutions. The articles of association and shareholders agreements usually provide the formalities of convening and conducting the meetings (e.g. physically, virtually or hybrid).
Unless the articles of association provide for a greater majority, decisions are taken by a majority of the members present.
It should be noted that the president of the meeting has a casting vote.
If the company has a constitution, the constitution will ordinarily regulate the manner in which directors can make decisions. In proprietary companies, the constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, meeting via technology or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must ordinarily be given to all). Unless the constitution stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the constitution may specify otherwise.
Directors may exercise weighted voting rights at board meetings for incorporated joint ventures, depending on the terms of the constitution and other contractual terms (such as a shareholders' agreement or joint venture agreement).
The manner in which directors can make decisions is set out in the company's constitution. Either the articles of association provide how decisions are taken, otherwise, without a specific provision in the articles of association, the directors have to act unanimously.
Decisions are made by written resolution with a majority vote required to pass, unless otherwise provided for in the bylaws of the company.
In a private limited liability company, the directors usually have individual management power, which means they can each make decisions on their own. To comply with good corporate governance practices, however, the directors will often take joint decisions. Alternatively, the articles of association may provide otherwise and install, for instance, a collegiate management body.
In a public limited liability company, the board of directors (in a one-tier structure) or supervisory board and management board (in a two-tier structure) will act as a collegiate body (meaning that they do not have individual management powers and will make decisions jointly, through a majority vote, unless the articles of association provide for stricter majority requirements). In the case of a sole director, the sole director will evidently have sole management power.
A meeting of directors can be held either physically or through teleconference (unless the articles of association prevent this). Unanimous written resolutions are also possible, unless the articles of association provide otherwise.
The manner in which directors can make decisions is set out in the company's constitution or where the company does not adopt a constitution, the First Schedule of the Companies Act. A key feature in the Act is that the company shall not enter into a major transaction or make a substantial decision unless the transaction is approved by special resolution or contingent on approval of the shareholders. However, other decisions that concern the day to day administration of the company can be made by way of an ordinary resolution.
Directors’ functions are collectively exercised in duly constituted meetings, complying with attendance and voting quorums.
Therefore, individual acts of directors do not constitute an act of the board, nor of the company and are not binding on the company unless the board, acting as such, delegates some specific functions to such director.
Generally, the law does not specify a decision-making process in an s.r.o. and as such this is therefore determined by the articles of association. However, the law requires that every director must fulfil their duties with managerial care, i.e. with the necessary loyalty as well as with the necessary knowledge and care.
In general, private limited liability companies are free to regulate when board meetings are to be held. However, any member of the board of directors or executive board or the company’s auditor may request that a board meeting be held. Nevertheless, a company should have at least one annual board meeting in order to prepare the annual report to be presented at the annual general meeting for the approval of the company's shareholder(s).
The function and duties, including the decision-making of the board of directors may be governed by a set of rules of procedure of the board of directors if such procedure has been adopted by the board of directors. Adopting rules of procedure is mandatory for limited liability companies if the board of directors consists of more than one member.
The board of directors forms a quorum when more than half of the members are present, unless the articles of association require any larger quorum. However, it is required that all members have been allowed to participate in the board meeting in question.
Meetings of the board of directors are held in person, unless the board decides that members may participate by electronic means or by written resolution and such participation is compatible with the members carrying out their duties. However, any member of the board of directors or executive board may request that a meeting be held in person.
Matters to be determined at board meetings may be passed by simple majority of votes, unless otherwise stipulated in the articles of association or the Danish Companies Act.
In private companies, law provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally more than half of all members of the board (although notice must be given to all). Unless the articles of association stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required.
In an SAS, the modalities for directors (whether President, General Manager, Delegated General Manager or any other manager) to take decisions are freely set out in the bylaws.
Usually, either the articles of association or rules of procedure for the managing board determine the (usually quite flexible) decision making process, in particular determining the frequency of formal meetings as well as listing such measures which are subject to a resolution of all managing directors.
The constitution of a company may prescribe how decisions are made by the directors. The directors of a company are required to meet at least once every six months in each year.
Unless otherwise provided by the company’s constitution, the statutory default position is as follows:
- Directors may meet anywhere and regulate their meetings as they think fit.
- The quorum necessary for the transaction of business of the directors and of a committee of directors may be fixed by the directors, and unless so fixed shall be two or in the case of a one-person committee, one.
- Questions arising at a meeting of the directors or a committee of directors are decided by a majority of votes and in the case of an equality of votes the chair has a casting vote.
Decisions may be also made by written resolution signed by all directors.
The manner in which directors can make decisions is set out in the company's articles of association and the Companies Ordinance (Cap. 622) (CO).
In private companies, the articles of association typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all). Unless the articles of association stipulate otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the articles of association may specify otherwise (in the case of a single director company, the CO provides for an alternative whereby a written record is provided to the company within seven days after the decision is made).
- In the case of Boards (both in kfts and zrts) the decisions of the Board take the form of board resolutions. Such corporate resolutions are usually passed by voting at Board meetings. The majority requirement for passing a resolution (simple or qualified majority) must be set out in the Board’s rules of procedure. Alternatively, board resolutions may also be passed by circulation (i.e. without holding a meeting). In such cases Board members indicate their support for/objection to the proposed action by a written statement (vote).
- In the case of limited liability companies with one or more directors and in the case of private companies limited by shares with a single director: given that these officers are individual officers and not a collegiate body (board), there is no need to pass a resolution. Instead, they simply perform the acts in accordance with their decisions (e.g. they sign a contract).
- In the case of kfts having more than one director with independent signatory rights, the directors are entitled to act independently, however they are each entitled to raise objection against the actions of the other director(s). In that case the objection shall be decided by the general meeting and the planned action cannot be carried out pending such decision.
- In the case of zrts weighted voting may also be applied in decision-making, in which case, for example, the vote of the chairman of the Board may be decisive in case of a tie in votes. Further, it is also possible to grant multiple voting rights to certain members of the Board.
The BOD may adopt decisions in a meeting of the BOD or by adopting a unanimous circular resolution. The articles of association of a PT may govern the specific procedures for a meeting of the BOD.
The manner in which directors can make decisions is set out in the company's constitution. In private companies, the constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all). Unless the constitution stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the constitution may specify otherwise.
In both SARL and SA companies, the decisions are made within the limits set forth in the articles of association, subject to any additional requirements under the law.
When the management body consists of a board of directors, decisions are taken collegially with specific procedural rules to be met. The chair of the board of directors is entitled to call the board of directors' meeting, unless the company's by-laws state otherwise. In order for the meeting to be correctly held, the majority of the members of the board of directors or management body must attend the meeting. Board resolutions require the approval of the majority of the directors attending the meeting. The company’s by-laws can set out different quorum requirements, the possibility to attend board meetings in plenary form and/or by teleconference or other rules and notice requirements for the calling of a board meeting.
In limited liabilities companies (Srl), when a board of directors is appointed, it is not mandatory that decisions are taken collegially: if the company’s by-laws allow it, decisions can be taken upon written consultation or on the basis of written acceptance. If more directors are appointed without forming a board of directors and they do not act jointly according to the by-laws, each director can take decisions individually with the exception of decisions regarding the draft financial statements, the drafting of mergers or divisions plans, and the approval of a capital increase.
If the company has a board of directors, the board of directors has the authority and duty to make decisions on the operation of important business affairs. The resolution of a board of directors meeting may be passed by the majority of the directors present at the meeting where the majority of the directors entitled to vote are present (this voting requirement can be higher under the articles of incorporation). A director with a special interest in the resolution may not participate in the vote. A written resolution of the board of directors is permitted if provided under the articles of incorporation. However, when decisions are made in writing, the unanimous agreement of all directors who can vote for the resolution is required. A board meeting must be held at least once every three months, at which each representative director must report on the performance of their duties.
If the company does not have a board of directors and it has two or more directors, the business affairs of the company is determined by a majority of the directors, unless otherwise stipulated by the articles of incorporation.
Directors make decision by way of board resolutions, which may be written (circular resolutions) or passed during board meetings. The articles of association and shareholders agreements (together the Governance Documents) normally provide the formalities of conducting the meetings (e.g. physical, virtual or hybrid).
Unless the Governance Documents stipulate otherwise, voting at board meetings is by simple majority. On occasion there are provisions for certain decisions to be made by super majorities of either two-thirds, three quarters or unanimously or other agreed permutations.
Although not a legal requirement, most Governance Documents provide that written resolutions should be unanimous.
The manner in which managers can make decisions is provided by the LSC and is generally set out in the company’s Articles.
It is worth noting that in accordance with the LSC, any manager may participate in any meeting of the Board by telephone or video conference, or by any other means of communication which allows all those taking part in the meeting to identify, hear and speak to each other.
The managers may also adopt resolutions in writing if so provided by the Articles.
Other than in case of sole manager and unless the Articles provide for higher (but not lower) quorum or majority requirements, the minimum quorum for a board meeting is the majority of the board members present or represented and decisions are adopted on a simple majority basis. When decisions are made in writing, however, the unanimous consent of all managers is required.
Directors make decision by way of board resolutions, which may be written or passed during board meetings.
Notwithstanding the constitution of a company, voting at board meetings is by simple majority, except where the shareholders exercise a power to:
- adopt a constitution or, if it has one, to alter or revoke the company's constitution
- reduce the stated capital of the company
- approve a major transaction
- approve an amalgamation of the company, and
- put the company into liquidation,
in which case, the power shall be exercised by special resolution.
Usually, decisions are made either by a meeting or through written resolutions. The ability to pass unanimous consent resolutions by the board of directors must be included in the bylaws of the company. Such resolutions must be signed by every director personally.
Unless the corporate bylaws provide for higher affirmative voting percentages, decisions taken by the board of directors or board of managers are valid and enforceable if taken by a majority of its members.
A recent amendment to the GLBO allows decisions to be adopted by the directors remotely (without the need for the meeting to be held at the corporate address of the entity) through the use of electronic, optical, or any other means of technology, provided that this is allowed by the company’s bylaws.
The director provides the board with a managing report in order for the board to deliberate based on the said report. The general assembly of shareholders then proceeds to vote on the decisions and if the quorum and majority conditions are met then the decisions are executed.
In case of a Lda company with only one or two directors, decisions are made individually by any one of them. When there are two directors, each one of them has, individually, the power to bind the company.
If the Lda company institutes a Board of Directors, decisions are taken by simple majority of votes, save if the articles of association provide otherwise.
In the case of SA companies, the Board cannot meet if the majority of its members are not present, and decisions are taken by simple majority of votes of the directors’ present/represented. It is not possible to establish a different quorum and each director has only one vote.
In the case of SAS companies, as this type of company is governed by the will of the shareholders, decisions are taken in the way prescribed in their articles of association.
Directors’ resolutions must be recorded in a specific and mandatory minutes book (which can be a physical book, electronic book, or loose sheets that are compiled and legalized by the Legal Entities Registrar Office).
Director decisions are usually taken by ordinary majority of the board. Unanimous resolutions / consent are also recognised under the common law and the Companies Act.
The law assumes that in general the management of the board is the result of a collective deliberation and decision-making process.
The law and the articles of association set requirements for the adoption of board decisions. For some matters the involvement of the general meeting, the works council or the supervisory board or another corporate body of holders of a certain class of shares is prescribed. A resolution must be reasonable and fair and must be passed as a "result of mutual consultation". This means that no directors may be excluded from the meeting. At the board meeting, unless the articles of association provide otherwise, each director has one vote. If these rules are not complied with, the resolution is void (nietig) or voidable (vernietigbaar) at a later date. (The difference between a void decision and a voidable decision is that a void decision is deemed never to have existed, whereas a voidable decision is valid until it has been nullified by the court.)
If a certain decision has important (material) consequences for the company, it is advisable to make a formal resolution recorded in writing.
Under the Dutch Civil Code (DCC), a resolution of the board is void if it is in breach of the law or the articles of association . However, sometimes a resolution of the board is only void if it:
- Is contrary to provisions laid down by law or in the articles of association governing the adoption of decisions.
- Contravenes reasonableness and fairness (redelijkheid en billijkheid).
- Contravenes internal regulations.
The manner in which directors make decisions is set out in the company's constitution. The constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all). Unless the constitution stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the constitution may specify otherwise.
If a company does not have a constitution, the Act sets out the way in which directors make decisions, which is similar to the manner set out above.
Directors are free to regulate their proceedings, and the manner in which directors can make decisions may be set out in the company's articles of association – whether by physical meeting, teleconference or a written resolution. Other than single director companies and unless the company's articles stipulate otherwise, the minimum quorum for board meetings is two directors where there are not more than six directors. If there are more than six directors, then quorum is a third of the number of directors.
Unless the articles stipulate otherwise, decisions at board meetings are made by a simple majority vote, and the chair will have a casting vote in the case of equality of votes. When decisions are made in writing, however, the unanimous agreement of all directors is required.
In making decisions, directors must act in the best interests of the company and must have regard to the impact of the company’s operations on the environment, the interests of the company’s employees in general, as well as the interests of its shareholders.
The board of directors must deal with matters in meetings unless the chairperson of the board finds that the matter can be submitted in writing or dealt with in some other adequate manner. Minutes must be kept of all board meetings.
The board of directors forms a quorum when at least half of the directors are present. A resolution of the board of directors requires the supporting vote of a majority of the directors who participate in the consideration of a matter. In addition, the board may only adopt resolutions if all members of the board of directors have, wherever possible, been invited to participate in the proceedings. In the event of a tie, the chairperson of the board has the casting vote. Those who vote in favour of a proposal which entails a change must however always make up more than one third of all the members of the board of directors.
In companies where the employees are represented on the board of directors, the board of directors must issue instructions detailing the board of directors’ activities and procedure. The instructions must, inter alia, include rules as to which matters that are to be dealt with by the board of directors and the functions and duties of the general manager towards the board. The instructions must also include rules for notices of meetings and proceedings at meetings.
The company’s bylaws specify the manner in which the president of the board or any director (in specific cases) may summon the board of directors of the company.
The quorum for the board of directors is half plus one of the total members. Each director has the right to one vote and resolutions are adopted by the absolute majority of votes of the directors who attend the meeting. The bylaws may establish higher quorums (but may not require the attendance of all members) and majorities.
The board of directors’ resolutions must be recorded in a minute book.
The manner in which management board members may make decisions is set out in the Polish Company Law and, optionally, in company's articles of association. The management board may adopt resolutions at the meeting, in writing or using means of direct remote communication.
There is no statutory minimum quorum for management board meetings (although notice must be given to all members). Unless the articles of association stipulate otherwise, voting at management board meetings is on an absolute majority of votes basis.
Each member of the management board may, without a prior resolution of the entire management board, carry out the company's affairs within the ordinary course of the company's business. However, if even one of the other members of the management board opposes the carrying out of any such affair or if the affair exceeds the scope of ordinary activities of the company, a prior resolution of the entire management board is required.
The manner in which directors can make decisions is set out in the company's bylaws. In private liability companies by shares, the bylaws typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telematic means (provided that the company ensures the authenticity of declarations and the security of communications, registering the content of all interventions) or through a unanimous written resolution.
Directors must meet at least once a month, unless otherwise provided in company’s bylaws.
In relation to the minimum quorum, the board of directors must not approve resolutions without the majority of its members being present or represented.
Unless the bylaws stipulate otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is required.
The manner in which directors can make decisions is set out in the LLC’s memorandum of association (subject to adherence to Qatar’s Companies Law). In LLCs, the memorandum of association can provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone or a written resolution. Other than single director LLCs, the minimum quorum for board meetings is set out in the memorandum of association. Unless the memorandum of association stipulates otherwise, voting at board meetings may be on a simple majority basis. When decisions are made in writing, the unanimous agreement of all directors is usually required, although the memorandum of association may specify otherwise.
In the case of LLCs: the Company Law does not specify how decisions may be adopted by the board of directors (e.g. how meetings are convened, quorum and voting requirements). These may be provided for in the AoA.
In the case of JSCs:
- Quorum requirements for the meeting of the board of directors/executive board/supervisory board: at least half of the total number of members, unless the AoA provides for a higher number.
- Voting requirements for the meeting of the board of directors/executive board/supervisory board: vote of the majority of the present members. Decisions regarding the appointment / revocation of the chairperson of such corporate bodies are taken with the vote of the majority of the members.
The rules for adopting decisions by managers of JSCs with a one-tier system are established by the AoA or by a decision of the board of directors.
The manner in which directors can make decisions is set out in the LLC's articles of association (subject to adherence to the KSA Companies Law). In LLCs, the articles of association can provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than an LLC managed by a sole director/general manager, the minimum quorum for board meetings is set out in the articles of association. Unless the articles of association stipulate otherwise, voting at board meetings may be on a simple majority basis. When decisions are made in writing, the unanimous agreement of all directors is usually required, although the articles of association may specify otherwise.
When there is a sole director, that person takes all the decisions except those which are within the competence of the shareholders.
When there is more than one manager, each manager can take decisions separately, except for those which are within the competence of the shareholders.
Directors make decisions collectively in the manner as set out in the company's constitution.
In private companies, the constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all). Unless the constitution or the Act stipulates otherwise (for instance where the constitution provides for certain shareholders’ and board reserved matters requiring a higher voting threshold), voting at board meetings is on a simple majority basis. In the case of equality of votes, the chair (who is elected by the directors and among the directors from time to time) will usually have a second or casting vote under the constitution of the company.
When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the constitution may specify otherwise (for instance, a majority of the Directors for the time being and being not less than are sufficient to form a quorum).
Generally, the Slovak commercial law does not specify a decision-making process of directors of a Slovak limited liability company.
The law requires that every director fulfils their duties with professional care and in line with the interests of the company and all its shareholders.
The manner in which directors can make decisions is set out in the company's memorandum of incorporation. In private companies, the constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all). Unless the memorandum of incorporation stipulates otherwise, voting at board meetings is on a simple majority basis.
The company’s memorandum of incorporation may provide for a resolution in respect of certain matters to be adopted by a supermajority of votes.
The company’s bylaws contain the manner in which a decision/resolution is made by the directors (in any case subject to the requirements of the Spanish Companies Act), likewise the quorum (if applicable), the deliberation process and the majority required for the adoption of these decisions/resolutions. All the decisions and resolutions of the management body are transcribed in a minutes book (libro de actas).
Unless the company's articles of association stipulate otherwise, the directors usually have the flexibility to determine between themselves how decisions are made - whether by physical meeting, telephone meeting or a written resolution.
Other than single director companies, a board of directors is quorate if more than half of the total number of directors or a higher number as provided by the company's articles of association is present at the board meeting (however, the notice of the board meeting must be given to all). Unless the company's articles of association stipulate a specific voting majority, resolutions of the board of directors are passed by a simple majority of those present. In the event of a tied vote, the chair has the casting vote. However, if not all directors are present at the board meeting, those voting in favour of a resolution must constitute more than one-third of the total number of directors, unless otherwise provided by the articles of association. When resolutions are made in writing, the unanimous agreement of all directors is usually required, although the articles of association may specify otherwise.
The manner in which directors can make decisions is set out in the company's articles of association and any board charters a company may have. In private companies, the articles of association and board charters typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution.
The minimum quorum for board meetings depends on the articles of association of the company and can be two directors (although notice must be given to all).
Unless the articles of association stipulate otherwise, voting at board meetings is on a simple majority basis. When decisions are made by circular resolutions (round robin), however, the unanimous agreement of all directors is usually required, although the articles of association may specify otherwise.
In a limited liability company, the powers of the manager(s) may be freely determined by the bylaws. The manager may, unless otherwise stipulated in the bylaws, perform all acts that fall within the scope of the company's purpose and in its interest.
Nevertheless, certain acts of a manager are prohibited by law. A manager may not enter into agreements with the company, be granted credit by the company or obtain a guarantee or endorsement from the company of their commitments towards third parties.
Decisions by directors are typically made through a board resolution passed by majority vote unless otherwise stipulated in the company's articles. In most cases, the board has discretion to regulate the nature and conduct of its meetings.
Onshore UAE
The manner in which directors can make decisions is set out in the LLC's memorandum of association (subject to adherence to the UAE Companies Law). In LLCs, the memorandum of association can provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director LLCs, the minimum quorum for board meetings is set out in the memorandum of association. Unless the memorandum of association stipulates otherwise, voting at board meetings may be on a simple majority basis. When decisions are made in writing, the unanimous agreement of all directors is usually required, although the memorandum of association may specify otherwise.
Dubai International Financial Centre
The manner in which directors can make decisions is set out in the company's articles of association (subject to adherence to the DIFC Companies Law). In private companies, the articles of association typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must be given to all), unless agreed otherwise by the directors. Unless the articles of association stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the articles of association may specify otherwise.
The manner in which directors can make decisions is set out in the company's constitution. In private companies, the constitution typically provides directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telephone meeting or a written resolution. Other than single director companies, the minimum quorum for board meetings is generally two directors (although notice must generally be given to all). Unless the constitution stipulates otherwise, voting at board meetings is on a simple majority basis. When decisions are made in writing, however, the unanimous agreement of all directors is usually required, although the constitution may specify otherwise.
Directors have the duties of care and loyalty to the corporations that they oversee. Directors must exercise these duties by becoming informed, prior to making a business decision, of all material information that is reasonably available, including reasonable alternatives (duty of care), and by acting in the best interests of the company and putting the company first (duty of loyalty). Directors typically discuss actions at one or more meetings, ask management questions and consider a decision and its alternatives. Any director with an interest in the outcome of the decision should disclose all material facts relating to that interest and recuse themselves from the deliberations and decisions regarding the matter. Once the board has satisfied its obligation to become informed, it will vote on the action, either by a vote at the meeting or via a written consent. Usually a majority vote is required to approve an action, although the nature of approval depends on a number of factors, including the company’s charter documents and whether the company is seeking a vote of the independent directors to protect the board against claims of self-dealing or conflicts of interest.
The company's articles of association determine the manner in which directors can make decisions. In most cases, decisions are made by resolutions which are passed at quorate meetings (by simple majority, unless the articles stipulate otherwise) or via round robins (ie written resolutions, which must be permitted by the company's articles and typically must be signed by all the directors of the company).
Each and every director (as the case may be) must exercise independent judgment and must act within the powers of the company in a way that they consider, in good faith, to promote the success of the company for the benefit of its shareholders as a whole. Decisions are made either through a general meeting where the board votes with a minimum quorum (of at least two directors being present after notice is given to all) or through a written resolution being passed.
Angola
What type of company is typically used in group structures?
In Angola, the most common type of company used in group structures is the private company limited by shares. This guide therefore focuses on the management of private limited companies.
Angola
What is a "director"?
There is no complete definition of the term "director" in Angolan law. Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director.
What are the different types of director?
Directors validly appointed as such, through a shareholders' resolution, may be executive or non-executive.
The executive directors are responsible for the management of the affairs of the company.
The non-executive directors are responsible for the general supervision of the performance of executive directors’ duties.
Angola
Who can be a director?
A director must be at least 18 years old. In the event of a legal person being appointed as a director, it must appoint an individual to exercise the office in their own name. The legal person must share liability with the person appointed by it.
Foreign directors must hold a work visa, ordinary visa or residency card.
Minimum / maximum number of directors
Under Angolan law there is no maximum number of directors. The company’s articles of association may, however, specify a greater minimum number and/or specify a maximum.
The management of private limited companies is carried out by a board of directors, composed of an odd number of members.
It may be agreed in the articles of association that the management shall be exercised by one single director when:
- The number of shareholders is only two (which can only happen in cases where the State, public companies or entities legally equivalent to the State hold the majority of the share capital).
- The share capital does not exceed an amount equivalent, in national currency, to USD50,000.00.
Angola
How are directors appointed?
Directors must be appointed by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).
A resolution appointing a director must be filed at the company’s registry office.
Directors must be appointed for the period fixed in company’s bylaws, which must not exceed four calendar years with re-appointment being permitted.
How are directors removed?
Any member of the board of directors may be dismissed (either with cause, or without cause) at any time by means of a resolution approved by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).
A director may also resign at any time through the issuance of a resignation letter addressed to the Chair of the board of directors, or in case of the resignation of the Chair, to the company’s audit board or audit committee.
The resignation or the resolution on director’s dismissal must be filed at the commercial registry.
Angola
Typical management structure
Typically, the management of private limited companies is carried out by a board of directors and supervision by a supervisory board, made up of an odd number of members, elected by shareholders at a general meeting.
One of the directors is appointed as Chair of the board of directors.
How are decisions made by directors?
The manner in which directors can make decisions is set out in the company's bylaws. In private companies limited by shares, the bylaws typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telematic means (provided that the company ensures the authenticity of declarations and the security of communications, registering the content of all interventions) or an unanimous written resolution.
Directors must meet at least once a month, unless otherwise provided in company’s bylaws.
The validity of the resolutions of the board of directors depends on the presence of the majority of its members.
In relation to the minimum quorum, the board of directors must not approve resolutions without the absolute majority of votes of the directors present.
Authority and powers
The board of directors has exclusive and full powers to represent the company.
The powers of representation of the board of directors are performed jointly by the directors.
Acts performed by the directors, on behalf of the company and in the use of the powers conferred upon them by law, shall bind the company before third parties, irrespective of any limitations that may be established by the articles of association or by decisions of shareholders, whether published or not.
Directors shall bind the company if, by affixing their signature, they indicate that intention.
Delegation
Subject to Angolan law restrictions, and unless otherwise provided in the bylaws, the board of directors may delegate powers to one or more directors to deal with certain managing matters. However, the board retains overall responsibility for the company's operations and management.
The board of directors can also appoint attorneys to perform certain acts or categories of acts, without the need for an express contractual clause.
Angola
What are the key general duties of directors?
The key duties of a director are set out in the Angola Companies Law, pursuant to which the director:
- Must observe a duty of care towards the company, demonstrate capability, technical competence and an understanding of the company's business considered appropriate for the role, and execute its tasks with the diligence of a careful and earnest manager.
- Must observe a duty of loyalty towards the interests of the company, serving the long term collective interests of the shareholders and taking into consideration the interests of other stakeholders such as employees, clients and creditors by ensuring the sustainability of the company. As a specific realization of this duty, the directors must not pursue or develop, directly or indirectly, other activities in direct competition with the company, unless duly authorized by the general meeting of shareholders.
- Must carry out any acts deemed necessary or appropriate to achieve the corporate purpose in line with the resolutions adopted by the shareholders, the bylaws and the applicable law.
- Are responsible for drafting merger and spin-off plans, in addition to other documents required or appropriate for the full legal and economic transparency of the transaction, as well as preparing a report in case of change of the company's legal form (i.e. a change to a different type of company).
- Are responsible for performing and executing all managing acts not specifically reserved by law or bylaws to the general meeting of shareholders.
- Are responsible for, following a shareholders resolution (except an unlawful resolution or resolutions that are not compliant with the company's by-laws), taking all necessary measures to execute such resolution, as promptly as possible (namely resolutions making any amendments to the company’s bylaws).
In addition, if agreed by the shareholders and set out in the company’s bylaws, the directors must also decide on and implement:
- The acquisition, disposal and encumbrance of real estate of the company.
- The disposal, encumbrance and lease of the business establishment of the company.
- The subscription or acquisition of other companies' shares or the disposal and/or encumbrance of these shares.
- The establishment of subsidiaries, agencies, branches or other local forms of representation of the company.
In general, the directors are bound to manage a company in a professional and diligent way, which includes compliance with all legal, statutory and contractual requirements.
What are directors' other key obligations?
The directors are responsible for preparing the annual reports and accounts and other financial statements required by law in respect of each financial year, and must submit them to the general meeting of shareholders and supervisory board, within three months from the end of each financial year, or within five months for companies that submit consolidated accounts or that use the equity method.
The directors are also responsible of preparing and submitting a proposal for the allocation of profits and/or handling of losses to the shareholders, in respect of each financial year.
Transactions with the company
Whenever there is a conflict of interest between the company and a director, the director shall advise the Chair of the board of directors and abstain from voting on the resolution concerning that conflict.
The company may only grant loans or credit to directors, make payments on their account, guarantee obligations that they have contracted or make advances to them on account of the respective remuneration, up to the limit of the monthly amount thereof.
Contracts signed between the company and its directors, directly or through another person, shall be null and void except if they have been previously authorised by means of a decision of the board of directors, in which the director concerned may not participate, and if they have obtained the favourable opinion of the supervisory board.
Angola
Breach of general duties
Directors are severally liable towards the company for the damages caused to the company as a result of their actions or omissions that are not compliant with their legal statutory or contractual obligations, unless they prove that their actions/omissions were not caused with intentional or negligent misconduct.
The directors may also be subject to criminal liability.
A lawsuit against the directors may be brought by:
- The company – in this case a shareholder’s resolution to bring the lawsuit must be approved by the majority of the shareholders, and the lawsuit must be sought within six months from the date of such resolution.
- In the absence of a lawsuit sought by the company, one or more shareholders who jointly own, at least, 10% of the share capital may bring a liability suit against the directors to claim reparation for damages caused to the company.
A company may seek a range of remedies against a director for breach of duty including damages, recovery of misapplied property, accounting for profit made in breach of duty, an injunction to prevent breach and rescission of a contract.
Liabilities on insolvency
If during the course of its management the company goes bankrupt, the directors may incur in liability if the bankruptcy is declared fraudulent or culpable. The crime of fraudulent or culpable bankruptcy is punishable with a penalty of two to eight years' imprisonment.
Other key risks
Personal liability for directors may, in certain circumstances, arise under Angolan legislation including that relating to environmental and health and safety, employment, consumer protection and bribery/anti-corruption. In certain cases, criminal liability may arise.
A director may also be disqualified by the court from acting as a director or from taking part in the promotion, formation or management of a company. A disqualification order can be made for a variety of reasons (e.g. conviction for criminal offences relating to the running of a company, persistent breaches of statutory obligations such as filing documents with the companies register, being found liable for fraudulent or wrongful trading and generally for conduct which makes a director unfit to manage a company).
Angola
How can directors be protected from liability?
The board of directors or the shareholders' general meeting may declare null and void or annul defective resolutions, at the request of any director, shareholder with the right to vote or of the supervisory board, made within one year of becoming aware of the defect that serves as its basis.
The general meeting of shareholders may ratify any resolution or substitute an invalid resolution if it does not concern a matter that falls within the exclusive competence of the board of directors.
Directors shall not execute or allow to be executed resolutions of the board of directors that are null and void.
Directors' and officers' (D&O) insurance is also available. It typically provides both cover for individual directors against claims made against them in their capacity as director, including defence costs (which applies when indemnification by the company is not available), and company reimbursement when it has indemnified its directors (subject to an excess/retention). Policy exclusions typically include claims in respect of a director's fraud, dishonesty, wilful default or criminal behaviour.
What practical steps can directors take to avoid liability?
Directors should:
- Keep informed about the affairs of the company, particularly its financial position, and compliance obligations. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
- Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
- Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
- Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
- Act, not only with diligence, but also with loyalty, keeping in mind that they must act always in the interest of the company, taking into account the long-term interests of the shareholders and considering the interests of other subjects relevant to the sustainability of the company, such as its workers, customers and creditors.
- Also in a group situation, directors should keep in mind that thet must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.
Angola
Luis Filipe Carvalho
Managing Partner
DLA Piper Africa, Angola, ADCA
T: +244 926 612 525[email protected]