Board decisions checklist

Board decisions can be made in one of three ways: at a meeting, by written resolution or informally. Whatever method is used, use our checklist to make sure the decisions are valid.

Decisions, decisions

Board decisions are usually made in the form of resolutions, passed either at a board meeting or as written resolutions. They are also allowed to be made informally. In reality, many board decisions will be made informally and then formalised at a meeting or in writing.

For resolutions passed at a meeting or in writing to be valid, the correct procedure must be followed. This will be set out in your company’s articles, so will be different for each company. These rules make sure that decisions are made fairly and by the whole board, to prevent a director from being omitted by mistake or deliberately frozen out of the company’s management.

As well as the procedural aspects of making decisions, directors must always ensure that they abide by their fiduciary and other duties.

Invalid decisions

If something goes wrong, an invalid decision can be challenged by the shareholders or other directors. It could lead to action being taken against a director for breach of duty. Luckily, a decision that was not made properly can be ratified by all of the directors. If the decision was significant, the board may consider it prudent to ask the shareholders to ratify the decision.