As businesses juggle to keep their operations going ILS World has taken an overview of some of the governance issues our clients need to consider now to avoid disputes further down the line. Protocols, procedures, decisions and communications all need to be accurately documented.
Each jurisdiction is governed by different laws, regulations and guidance which all must be taken into account. ILS World does not offer legal advice but we would be a happy to introduce you to a legal adviser.
1. Rules and regulations
Meetings by means of remote communication are permitted under the corporate law of most jurisdictions but a company's Articles of Association will determine if and how board meetings can be held in this way.
In a period when staying at home for many people is mandatory, it is difficult to see why the Courts would object to remote communications if it is agreed by all participants and carried out in an open and organised manner.
If your company's Articles of Association do not currently allow meetings to be held in this manner, now may be a good time to modify them to avoid any issues as to the validity of meetings in the future.
Another possible option would be for the board to pass a unanimous written resolution to indicate their approval of a particular matter. Most standard Articles of Association allow this, but check first.
2. Using the right technology
When technology works well it is empowering, when it fails it is frustrating. Poor technology will mean meetings will be harder to manage, last longer than necessary and be less effective. An audio call or telephone conference will be less risky and offer a more reliable connection but a video conference is more engaging. Everyone will benefit from a test run beforehand.
Virtual meetings benefit from being kept simple and the key is preparation. Before the meeting bear in mind the following:
• All directors are entitled to receive notice to be asked to give their express consent to a virtual meeting
• Before the meeting set out the etiquette to make sure people do not talk over each other. Outline the process for participants who want to speak and explain that voting on resolutions will be made one director at a time to eliminate confusion
• Circulate the link and dial-in details for the meeting on the invitation, on the agenda and by email
• Make sure everyone has clear instructions about how to join the meeting and offer them a practice run
• Whilst working from home, sending out physical board packs could be difficult but emailing board packs in advance is a realistic alternative. Directors should be able to access a secure company email address and documents should be password-protected. Passwords should be sent through in a separate email.
4. Chairing the meeting
Being familiar with the meeting technology and the various tools and functions available to you will help the meeting run more efficiently. Participants must be given the opportunity to be heard - the chair may need to specifically call on certain people by name to make sure they have been given the chance to express their opinion.
Support minute-takers so the meeting is accurately documented, for example before moving on to a new matter it may be useful for the chair to summarise or clarify certain points. Bear in mind that depending on their equipment not all participants may be able to view the documents at the same time as attending the meeting so clear references to what matters are being discussed is essential.
In many jurisdictions electronic signatures are valid. What is acceptable can range from an individual typing their name into a contract, pasting a signature into an electronic version of a document or signatures generated by an e-sign platform such as DocuSign.
The best way of avoiding possible future disputes is to circulate a formal contract for the parties to sign and for the document to be dated, by agreement, once all parties have exchanged signed versions.
The act of signing can be made easier by using an e-sign platform with encryption software - it helps verify the identity of the signatory and gives increased evidential weight to the e-signature process.
Before proceeding with electronic signatures ILS World would advise you to consider the following:
• Communicate with all the relevant parties to agree a method of signature acceptable to all
• Find a way of obtaining scanned copies or pictorial images of signatures in advance so they can be easily inserted into electronic copies of documents
• If speed is not an issue arrange for original documents to be posted between the parties for a physical signature
• Check in advance if witnessing is likely to be an issue, if so, determine who would be the most suitable candidates for witnessing signatures
• Obtain access to an e-sign programme in advance and decide who will co-ordinate the signatures on the platform - one person coordinates the signings and issues invitations to the other signatories. If lawyers are involved which firm will take the lead? It is important to agree protocols and procedures in advance
• What information will you retain as evidence of the signature? E-sign platforms usually provide a certificate with the information collected. If you are not coordinating the signing your protocols should say who will request copies
• To add further evidential weight to the validity of an e-signature you could also request the following:
An email from the signatory confirming they e-signed the relevant document
Where relevant an email from the witness confirming they were physically present to witness the signatory e-signing the relevant document, that they witnessed the-signature and they subsequently inserted their own e-signature into the document.
The ILS World team is skilled in structuring, offshore company formation and the ongoing operation of licensed entities. It is made up of qualified chartered secretaries, corporate governance professionals, accountants, compliance officers and business development managers who will ensure your business meets its compliance and regulatory obligations. For further information please contact firstname.lastname@example.org
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Please note: ILS World does not offer tax advice and would therefore recommend you obtain your own tax advice. If you require an introduction to a tax adviser we would be happy to assist.