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ACCA Applied Skills · Corporate and Business Law (Global) · Company directors

Epsilon Co has 3 directors. Its articles state that the minimum number of directors is 3. One director dies, leaving 2 directors. The remaining directors wish to act. Which statement is most accurate under the general rule applied to boards falling below the minimum?

The two remaining directors may act only to appoint further directors to restore the minimum or to call a general meeting for that purpose. When the board falls below the quorum or minimum, its powers are limited to curing that shortfall.

  1. AThey may act only to appoint further directors to restore the minimum or to call a general meeting for that purposeCorrect
  2. BThey may continue to manage all aspects of the business without restriction
  3. CThey may not do anything until a court order is obtained
  4. DThey may only act if the auditor consents

Explanation

Where the number falls below the minimum required by the articles, the remaining directors' authority is typically limited to filling vacancies or calling a general meeting to do so. They cannot carry on the full business as normal. No court order or auditor consent is required for those limited acts.

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