Skip to content

CMA Final · Corporate and Economic Laws · Board Meetings and Procedures

A company has 9 directors on its Board. Five of them are interested in a particular contract under section 184(2) and 4 are not. Applying section 174, what is the quorum for the meeting while this situation lasts, and is it satisfied if all 4 non-interested directors are present?

The special rule does not apply here. Interested directors number five, below two-thirds of nine, which is six. So the ordinary quorum of one-third of strength, which is three directors, governs, and the meeting is quorate with the four non-interested directors present.

  1. AQuorum is three directors in all; satisfied only if at least three attend, whether interested or not
  2. BQuorum is the non-interested directors present, being not less than two; satisfied because interested directors are under two-thirds
  3. CQuorum is the non-interested directors present, being not less than two; the rule applies as 5 is less than two-thirds of 9, so ordinary quorum of three applies
  4. DQuorum is the non-interested directors present, being not less than two; the rule applies because interested directors are at least two-thirds of strengthCorrect

Explanation

Two-thirds of 9 is 6, and 5 interested directors is below that, so the special rule in section 174(3) does not apply. The ordinary quorum is one-third of 9 = 3 (higher than 2). Hence option three is correct in stating ordinary quorum of three, but check wording: only the option stating the 5-below-6 reasoning with ordinary quorum is correct.

Did you get it right without looking?

One question tells you little. A timed set on Board Meetings and Procedures shows your real accuracy, how long you take and where you lose marks.

Practise Board Meetings and ProceduresFree diagnostic mock

More Board Meetings and Procedures questions