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Andreas Neocleous & Co LLC
shall be deemed to constitute a quorum. However, if the meeting was convened on the
requisition of members it will be dissolved and not adjourned.
Unless the articles of association provide otherwise, voting is initially on a show of hands,
with eachmember having only one vote, regardless of the size of shareholding. Anymember
may demand a poll, on which members present can vote according to their shareholdings
and proxy votes can be used.
Most resolutions may be passed by a simple majority but certain matters may be approved
only by an extraordinary resolution or a special resolution, both of which require a three
fourths majority of those voting. Resolutions in a compromise or arrangement require
a majority in number representing three-quarters in value of the members or class of
members in order to be binding.
What exactly is the internal liability of the BoD members?
Fiduciary duties
In general directors owe a duty to their company to manage it in accordance with the
provisions of the law and with the memorandum and articles of association. They are liable
to the company for loss caused by illegal or ultra vires acts.
The fiduciary duties owed by directors have been examined on a number of occasions,
particularly where the company concerned has been involved in a take-over bid.
Duty of skill and care
In addition to their fiduciary duties, directors owe a duty of care at common law not to act
negligently inmanaging the affairs of the company. The standard requiredmay be higher in
the case of directors employed in a professional capacity or who are qualified or experienced
in some relevant discipline.
Statutory duties
Directorsareunderastatutorydutytodiscloseandrecordinaregister:directors’shareholdings,
director’s salaries and pensions and loans to officers, including directors. Directors who are
directly or indirectly interested in a contract or proposed contract with the company must
declare the nature of their interest (Companies Law section 191).
Under which conditions can BoD members be released from their (internal) liability?
If a director has an interest in an entity with which the company contracts, his fiduciary
duty to the company requires him to give proper notice of that interest to the board or the
company. His failure to do so may entitle the company to rescind the contract, provided it
is possible to restore the status quo. Alternatively, the articles of association may authorise
such a contract whether or not prior notice has been given by the director, or the company
in a general meeting may ratify the contract.
Under which conditions may the company waive its claims against a BoD member for
damages it suffered as a result of his/her unlawful action?
In addition to imposing duties and liabilities on directors, the Companies Law gives
protective relief to directors in certain cases. In any proceedings against a director for
negligence, default, breach of duty or breach of trust, if the director who is or may be liable
has in the opinion of the court acted honestly and reasonably and, having regard to all the
circumstances of the case, ought fairly to be excused, the court may wholly or partly relieve
him from his liability on such terms as the court thinks fit (Companies Law section 383(1)).