Under the UK Companies Act 2006, meetings are a fundamental part of the corporate governance framework, ensuring that key decisions are made transparently and in accordance with the law. The Act covers both Directors’ meetings and Shareholders’ meetings and provides the structure for how these meetings are to be conducted. But what happens when a meeting involves only one person? Is a meeting of a single individual considered valid under the Companies Act? We discuss whether a meeting of just one person can be valid under the context of both Directors’ and Shareholders’ meetings.
Meetings of Directors involving only one person
The Companies Act 2006 sets out the powers and responsibilities of Company Directors. Directors are entrusted with the day-to-day running of the company and are required to make decisions in line with both the company’s interests and statutory obligations.
The law is relatively flexible regarding Directors’ meetings. The Act does not explicitly demand that a meeting be held with multiple participants. Under Section 249 of the Companies Act 2006, a meeting of Directors can be called and held with just one Director present.
This is assuming the company only has one Director and the Articles approve the company only having a single Director. Or the company has multiple Directors, and the quorum for decision-making by Directors is set at one.
For example, in a private limited company with a sole Director, that individual can hold a valid Directors’ meeting alone and make decisions. No quorum is necessary because the single Director is the whole decision-making body. Such a meeting can be referred to as a decision of the Director and is legally binding as long as it is recorded in the minutes and signed by the Director.
Shareholders’ Meetings and the Role of One Person
It is more complicated when we consider Shareholders’ meetings. The Companies Act 2006 requires that shareholders meet to make certain decisions, such as approving accounts, electing Directors, and resolving fundamental matters like amendments to the Articles of Association or the company’s constitution.
A general meeting of shareholders requires a quorum, which varies depending on the company’s articles of association. For private companies, the quorum can be one or more if specified by the Articles. For public companies, the quorum is usually a minimum of two shareholders.
In a private company, if the Articles prescribe a quorum of two or more, at least two people will be required to attend the meeting, and one or both of the individuals can hold proxies for many more Shareholders. Under the law of England and Wales, the courts have decided that a meeting is a coming together of more than one person and that one individual holding multiple proxies is insufficient to meet the requirements of a quorum or two or more persons.
What if a company has only one shareholder? In this case, a meeting can still be valid. Under the Companies Act 2006, section 281(1), a single shareholder can hold a valid meeting, and that shareholder may make decisions by resolution. The shareholder must still follow the prescribed process, such as providing notice of the meeting and recording the resolutions being passed.
The rules for Scottish Companies
In Scotland, the Courts have taken a slightly different approach; a Scottish Court held that a meeting had taken place under Scottish law, even though a single individual holding multiple proxies sufficient to achieve quorum had been present. The judge found that, for the purposes of Part 26A, at least two or more people could come together by appointing a common proxy. The judgment is of limited direct relevance to English and Welsh companies because it is a decision under Scottish law and arguably limited to Part 26A of the Companies Act 2006.
Conclusion
In summary, the Companies Act 2006 allows a meeting of one person to be considered a valid meeting for Directors’ meetings with a sole Director or a quorum of one Director, as well as for Shareholders’ meetings, where the quorum is also one Shareholder or the company has a sole Shareholder. For public and private companies where the Articles require a quorum of more than one Shareholder, a meeting with just one individual is invalid.
This flexibility allows for streamlined decision-making, particularly in small private companies where the structure may involve only one individual in either role. However, it is essential to ensure that all statutory requirements are met and proper records are kept to ensure the legitimacy of these decisions.