GIBRALTAR Law and Practice Contributed by: Adrian Pilcher, Stuart Dalmedo and Louise Anne Turnock, ISOLAS LLP
2.2 Types of Decisions The board of directors of a company is appointed to direct, control and supervise the activities and affairs of a company. Accordingly, the articles of associa - tion ordinarily empower the directors to exercise all decision-making powers of the company which are not required, by the Companies Act or by the articles of association, to be exercised by the shareholders. The Companies Act prescribes a number of matters that are reserved to the shareholders, and that can only be passed by a shareholders’ resolution. These include: • a special resolution (as further discussed in 4.3 Shareholder Meetings ) being required to re-regis - ter a company as a public company; • a special resolution being required to approve the terms of a proposed contract to purchase the company’s own shares or to vary, revoke or renew this authority; • a special resolution being required to make a pay - ment out of capital for the redemption or purchase of the company’s shares; • at least an ordinary resolution (as further discussed in 4.3 Shareholder Meetings ) being required to issue, at a discount, shares in the company of a class already issued; • a special resolution being required to authorise a reduction of the company’s share capital; and • a special resolution being required to dispense with the requirement to hold annual general meetings (as further discussed in 4.3 Shareholder Meetings ). While the statutory requirements cannot be overrid - den by a company’s articles of association, in some instances the Companies Act allows the company to delegate some of these matters to the board of direc - tors under its articles of association. For example, under the Companies Act, changes to a company’s articles of association must be approved by a special resolution, unless the articles of association provide otherwise. 2.3 Decision-Making Processes Board of Directors Board decisions are generally passed in the form of resolutions taken at board meetings. The decision-
making process at board meetings is not covered by the Companies Act. The main statutory provisions relating to board meetings concern minutes of board meetings being kept and disclosure by directors of interests in contracts. Therefore, any meetings of directors are governed by the company’s articles of association and by any rules made by the directors themselves by virtue of powers given to them by the articles of association. This gives companies great flexibility. The articles of association will generally set out, among other things: • the notice periods to be followed in respect of a directors’ meeting; • the process to be followed in cases where not all directors are physically present at the meeting; and • the quorum and voting requirements. In most instances, a board resolution will require a simple majority vote. Gibraltar law does not prevent board meetings from being held anywhere in the world and allows directors to participate at board meetings through electronic means. However, there may be tax consequences for a company in doing so. Where a company’s articles of association allow, the board of directors may also pass a resolution in the form of a written resolution without the need to con - vene a physical board meeting. Shareholders There are three types of resolutions which sharehold - ers can validly pass. Extraordinary resolution An extraordinary resolution is a resolution that has been passed by a majority of not less than 75% of those shareholders who, being entitled to do so, vote in person or, where proxies are allowed, by proxy, at a general meeting of which seven days’ notice has been given (unless the articles of association require otherwise), specifying the terms of the resolution and the intention to propose the resolution as an extraor - dinary resolution.
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