Quorum
A quorum is the minimum number of directors who must be present at a board meeting in order for the meeting to be valid. The quorum requirement for board meetings is set out in the Canada Business Corporations Act (CBCA). Under the CBCA, a quorum is present at a board meeting if at least one-half of the total number of directors are present in person or by proxy.
However, the CBCA also allows companies to set their own quorum requirements in their articles of incorporation. This means that companies can have a higher or lower quorum requirement than the one set out in the CBCA.
Voting
Board decisions are made by majority vote. This means that a proposal must receive more than 50% of the votes cast to pass. However, the CBCA allows companies to set their own voting requirements for certain types of decisions. For example, the CBCA requires a two-thirds majority vote for decisions to increase the company’s authorized capital or to sell all or substantially all of the company’s assets.
Voting by proxy
Directors may vote by proxy at board meetings. A proxy is a written authorization given by a director to another person to vote on their behalf.
To be valid, a proxy must be in writing and signed by the director. The proxy must also specify the matters on which the proxyholder is authorized to vote.
Voting requirements for special resolutions
A special resolution is a type of board resolution that requires a higher voting threshold than a regular resolution. The CBCA requires a special resolution for certain types of decisions, such as:
- Amending the company’s articles of incorporation
- Approving a merger or amalgamation
- Dissolving the company
To pass a special resolution, the proposal must receive at least two-thirds of the votes cast by all of the directors.
Conclusion
The quorum and voting requirements for board meetings in Canada are set out in the CBCA. However, companies can set their own quorum and voting requirements in their articles of incorporation.
By understanding the quorum and voting requirements for board meetings, directors can ensure that meetings are conducted properly and that decisions are made in accordance with the company’s constitution.
This article is for informational purposes only and is not legal advice. Contact us today to discuss your specific situation.