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Director Resolution

As the director of a Singaporean company, you must hold a board meeting if you need to discuss and pass resolutions on matters relating to the current and future state of the company. FOZL Singapore has summarised tips on how to conduct a board meeting below for your reference.

01. The objective of the Board

A board meeting is a meeting of a company’s board of directors at which the directors discuss company business and pass resolutions to make decisions about the company. Such business may include.

  • Business expansion plans

  • Property acquisition

  • Review of financial reports

  • Recruitment of talents

If the directors agree on certain issues, they may choose to adopt a board resolution at a board meeting by signing copies of documents containing decisions and statements.

Board resolutions

Board resolutions are official documents that record the decisions or intentions of the board members representing the company. Section 157A of the Singapore Companies Act provides that the business of the company shall be managed by, or under the direction or supervision of, the directors. This management, direction, and supervision usually require major decisions by the board of directors. A board resolution records these decisions, such as a change in ownership structure, the voting of new board members, or the sale of shares in the company. The Board has significant responsibilities in making major decisions for the company.

 Board resolutions are therefore important as they record these decisions and ultimately become the directors’ credentials in managing the business. The Singapore Companies Act does not specify which management actions require a board resolution. This depends on the company’s articles of association, which vary from company to company, and this determines the specific requirements for board resolutions and when resolutions are required. As a result, companies may have different board resolutions. However, there are usually some common issues faced by most directors that require a board resolution. These include:

  • Appointment of Scheduled Members, Auditors, Company Secretary

  • Borrowing money and mortgaging company property

  • Opening a bank account for the company

  • Sale of company assets

  • Approval of a merger or acquisition

  • Share issues

According to Section 179(1)(a) of the Singapore Companies Act, at least 2 members must be present for a company to constitute a quorum at a meeting of the company.

However, the exact number of board members required to constitute a quorum at a meeting depends on the company’s constitution. Some companies use 2 as their quorum (e.g., for private companies). A resolution of the directors of a company may be passed when a majority of the members present on the company’s board of directors approve it.

Once the resolution document has been completed, a copy needs to be kept on file by the company’s statutory secretary.

02. How board meetings are conducted

The Singapore Companies Act does not regulate board meetings. Meetings of the board of directors of a company should be held in accordance with the company’s articles of association. The articles of association are documents that give rights, powers, and duties to the officers and members of the company.

For most articles of association, it is standard to include the following meeting rules.

  • Notice of upcoming meetings sent to all directors

  • Quorum for Board meetings (i.e., the minimum number of directors required to attend a meeting)

  • Directors’ resolutions and voting mechanisms

  • Appointment of the Chairman of the Board of Trustees

  • How to record or keep minutes of board meetings

Company directors should refer to their articles of association for rules that may vary from company to company. This also applies to companies that have adopted, but amended, the Model Constitution.

If your company has registered its use of the Model Constitution with the Accounting and Corporate Regulatory Authority (ACRA) but has not made any changes to it, a board meeting should be held in accordance with paragraphs 83 to 94 of the Model Constitution.

The Model Constitution sets out a number of rules relating to board meetings, including:

  • Any Director may request the Company Secretary to call a meeting of the Board of Directors

  • Quorum refers to at least two directors unless there are other candidates

  • If the quorum requirement is not met, the directors may only take action to increase the number of directors or to call a general meeting. (All other steps taken by the directors will be deemed to be invalid and ineffective)

  • The directors may elect a chairperson to attend meetings and decide how long the chairperson will serve

  • A director may not vote on any transaction or proposed transaction discussed at a board meeting if he has an interest in that transaction (explained below)

  • If there is no consensus on the issues that arise during the meeting, a vote will be taken and a majority of the directors will decide on the course of action to be taken by the company

  • If the votes are equally divided between the opposing parties, the President of the Conference shall take the final and casting vote.

  • If there is only one director, he may pass a resolution by recording it (e.g., writing or typing it) and signing the minutes

03. Legal responsibilities to be aware of at board meetings

Before calling or attending a board meeting, directors should conduct due diligence on the matters to be discussed at the meeting to ensure that they are able to discharge their duties to the company in accordance with the Singapore Companies Act and common law. This includes disclosure of any conflicts of interest and the duty to act honestly.

For example, under section 156 of the Singapore Companies Act, a director who has an interest in any transaction or proposed transaction with a company is obliged to disclose the nature of such interest at a board meeting.

In addition, the High Court has ruled that notice of a board meeting must be given to all directors in order to be effective. The law prohibits the omission of notice to certain directors as this would allow certain directors to act without the consent of other directors. This could be harmful to the company.

Finally, since board meetings will be conducted according to the specific rules set forth in each corporation’s bylaws and the directors should have fiduciary duties to the corporation, it is advisable to follow industry practice when conducting board meetings.

This can include preparing for the meeting by understanding the requirements related to the conduct of the meeting and maintaining strict confidentiality of the issues discussed during the meeting. This ensures that directors are not perceived to be failing in their duties when board meetings are held.

04. Minutes of Board Meetings

Section 188 of the Singapore Companies Act requires that the minutes of all board meetings must be recorded within 1 month of the meeting. The minutes are recorded by the company secretary and signed by the chairman of that meeting or the chairman of the subsequent board meeting.

The minutes of a board meeting may be used as evidence of the minutes of the meeting and shall contain the following basic information.
Date and time of the meeting
Decisions made by the directors
Conflict of interest disclosure for specific directors

Note: Companies and corporate officers who fail to comply with their obligation to enter minutes into company records face a penalty of up to S$2,000 in addition to liquidated damages.

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