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Why are the meetings of the Board important?

The Board of directors of a corporation is in charge of handling the corporation’s businesses on behalf of the shareholders. Basically, to make it viable and to make profits. As a result of that, directors are subject to a series of fiduciary duties of diligence, good judgments, good faith, and loyalty. If the members of the Board never met they will not be able to properly conduct the corporation and any mistake will be adjudicated to them seriously. Additionally, it is also important to understand, that usually, all members of the Board are responsible for the decisions that are taken during the meetings, if there is enough quorum to approve.

Are the members of the Board of directors required to meet? Is it necessary to meet in-person?

Considering that not every decision requires a meeting, it is fair to ask if the members of the Board are required to meet. Under New York Business Corporation Law (NYBCL) Section 708, unless otherwise prohibited by the corporation’s by-laws, the Board of directors can act without a meeting. However, for this purpose, all members of the Board must execute a written document approving such action. Now, considering the development of digital channels of communication and that many businesses already have in place work-from-home policies, meetings are not required to be handled in person. Regardless of the specific rules provided by the corporation’s by-laws under NYBCL, the Board can meet by means of a telephone conference or similar communications equipment as long the members are able to hear each other at the same time.

Protocols to meet online

The members of the Board can meet in person or by means of digital conference equipment. However, it is worth noting that these circumstances do not affect the requirement of proper notice. A meeting of the Board must be properly communicated, so that all members of the Board know when and where is the Board meeting and whether specific protocols of securities must be taken, if any. The notice requirement is usually defined in the corporation’s by-laws. However, if nothing is said in that respect, usually a written notice between 6 to 10 days prior to the meeting is enough. For this purpose, it is important to keep up to date the contact information of the members of the Board. It is also a best practice to include what the valid forms of notice are in the by-laws.

Written by

Giselle Ayala is an attorney focused on immigration, business, marketing, and artist’s transactions.

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