Q&As

What are the options available to a community interest company (CIC) limited by guarantee in the event the directors are unable to meet quorum requirements to make a board decision?

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Published on LexisPSL on 12/10/2017

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • What are the options available to a community interest company (CIC) limited by guarantee in the event the directors are unable to meet quorum requirements to make a board decision?
  • Amending the articles
  • Members’ approval
  • Delegation of decision making powers

The Companies Act 2006 (CA 2006) applies to community interest companies (CICs), and the directors of a CIC are subject to the statutory duties set out in CA 2006, ss 171-177, in the same way as any other company limited by shares or guarantee. The relevant duty to be observed in a situation where a director is entering into a transaction with a company is the duty to declare an interest in a proposed transaction or arrangement under CA 2006, s 177, which states in subsection (1):

‘If a director of a company is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, he must declare the nature and extent of that interest to the other directors.’

CA 2006, s 177 sets out details of how to declare the interest. It must be declared before the company enters into the transaction or arrangement.

For further guidance and precedents relating to CA 2006, s 177, see:

  1. Practice Note: Declaration of a director's interests—the statutory provisions

  2. Practice Note: Declaration of a director's interests—articles of association

  3. Precedent: Declaration of a director's interests in a proposed transaction or arrangement—notice in writing

  4. Precedent: Declaration of a director's interests in a proposed transaction or arrangement—general notice

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