Easy to use procedure for approval of loans to directors, including shareholder and director approval and written resolution and administration requirements.
Exception applies – approval by BR
BM
Calling: Any director, or they can authorise secretary if there is one (art 9).
WR: any D, permitted art8(2)
Notice: To each director before meeting (art 9(1) & (3)) wherever he is in the world – can be waived
(art 9(4).
Reasonable in circumstances (Re Homer).
Need not be in writing, may be oral (art 9(3) & La Trinidad).
Proposed date, time, place and method of communication (art 9(2)) skype, texting allowed provided
Ds can communicate information and opinions (art10(1)).
No need to specify business of meeting (La Companie) – good practice to include draft loan
agreement.
WR: all eligible directors (art8).
Declarations: Declare interest in loan s177** (consider exceptions/procedure)
Cannot vote or form quorum if conflict of interest (art 14)** (consider exceptions)
Disapplying art 14 temporarily using art 14(3) by OR – allows director to count in quorum (as cannot
reduce quorum to 1 art 11) – alternative to amending articles permanently by SR (s21) (allows abuse
by Ds).
WR: Ds that would not be eligible at BR do not vote (art 8(3)).
Quorum: Two (art 11), interested director can still attend but does not vote (Haynes v Bristol Plant
Hire).
WR = same as GM art 8(4)
Resolve to: 1. Approve draft loan agreement. 2. Execute loan agreement. 3. Elect director to deal
with admin.
Voting: Simple majority, over 50% (art 7).
One vote per director (art 7).
Communicated in all sorts of ways (art 10) – usually show of hands or oral assent ‘yes’/descent ‘no’.
If deadlock, negative prevails (art 7(1)) – unless there is chairman appointed (art 12) who has casting
vote (art13(1)) they also have control of agenda (art12(1) – unless they are the one excluded
(art13(2)).
WR: unanimous (art 8). Ds sign and return to C – R passed when required consents received.
Admin: Written records must be kept for all decisions for 10 years from date of R passed (art 15).
Minutes recorded and kept at R/O or SAIL for 10 years – or offence by every officer of C in default
(s248) – must be hard copy or reproducible as hard copy (s1135(1)) – open to inspection by Ds
(Petronius Clothing Co), but no SHs (Mariqita and New Orenlada Mining Co.) – only visible by SH
agreement or litigation e.g. s994unfair prejudice petition.
WR: no requirement to records minutes as s248 does not apply (but good practice).
Keep written record for 10 years (art 15).
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