Form 68. Mode of determining which directors to retire. Retiring director eligible. Vacancies to be filled up by general meet ing. in office till successors appointed. Instead of making one-third retire as in Clause 93, supra, it is sometimes provided that a fixed number shall retire, and, in such case, the following clause may be used in lieu of Clause 94. 94a. Until all the first directors and the directors (if any) appointed by them, shall in turn have retired, the directors to retire shall, from time to time, be determined by agreement of or by lot among the directors; but afterwards the directors to retire shall be those who shall have been longest in office since their last election, and in case more than shall have been in office for the same period, then the directors to retire shall be determined by lot. 95. A retiring director shall be eligible for re-election. 96. The company at any general meeting at which any directors retire in manner aforesaid shall fill up the vacated offices by electing a like number of persons to be directors. This and the next clause are inserted in order that the number of directors may be kept up, unless specially reduced under Clause 98, infra. As to mandamus to admit a director, see The Queen v. Government Stock Co., 3 Q. B. D. 443. Quære whether that case does not offend against the rule in Foss v. Harbottle, 2 Ha. 461. Compare with Pulbrook v. Richmond Co., 9 C. D. 610, where the company was not enjoined. Retiring direc- 97. If, at any general meeting at which an election of directors tors to remain ought to take place, the places of the retiring directors are not filled up, the retiring directors, or such of them as have not had their places filled up, shall continue in office until the ordinary meeting in the next year, and so on from year to year until their places are filled up, unless it shall be determined at such meeting to reduce the number of directors. Power for general meeting to increase or reduce number of directors. Power to re Inove director by special resolution. But for this clause the acts of a director who, after his office was vacated, under Clause 94, continued to act, would, subject to s. 67 of the Act (infra, p. 128, note to Clause 112), be void as against the members. The Garden Gully, &c., Co. v. Me Lister, 1 App. Cas. 39. Of course, as regards strangers, the principle of the Royal British Bank v. Turquand would apply. 98. The company in general meeting may from time to time increase or reduce the number of directors, and may [alter their qualification, and may] also determine in what rotation such increased or reduced number is to go out of office. The words in brackets are sometimes found useful. 99. The company may by extraordinary resolution remove any director before the expiration of his period of office, and appoint another [qualified] person in his stead: the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed. As to meaning of extraordinary resolution, see infra, "Resolutions." Table A. provides for removal by special resolution, but it requires no clause to authorise this. Sometimes the clause is framed as follows: "The company in general meeting may," &c. Directors may 100. Any casual vacancy occurring among the directors may be filled Form 68. up by the directors, but any person so chosen shall retain his office so long only as the vacating director would have retained the same if no fill up casual vacancy had occurred. This clause is usually inserted. It would be extremely inconvenient in most cases if a general meeting of the company had to be called to fill up a casual vacancy. As to what appointments the clause does not warrant, see supra, p. 120, note to Clause 88. vacancies. of director 101. No person, not being a retiring director, shall, unless recom- When candimended by the directors for election, be eligible for election to the office date for office of director at any general meeting, unless he, or some other member must give intending to propose him, has, at least seven clear days before the notice. meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office, or the intention of such member to propose him. This clause is found convenient and for the benefit of a company. It enables inquiries to be made as to a candidate's antecedents, &c., &c. MANAGING DIRECTOR. managing [102. The directors may, from time to time [with the sanction of a Power to general meeting], appoint one or more of their body to be managing appoint director or managing directors of the company, either for a fixed term director. or without any limitation as to the period for which he or they is or are to hold such office, and may from time to time remove or dismiss him or them from office and appoint another or others in his or their place or places.] The words in brackets are commonly omitted. The above and the following are the usual clauses as to a managing director. It seems expedient in most cases to insert them in order to avoid the necessity of having to alter the articles. Of course the exercise of the powers contained in these clauses is optional. Not uncommonly the first managing director is appointed by the articles. See Forms, infra, "Miscellaneous Clauses." [102a. A managing director shall not, while he continues to hold that What provioffice, be subject to retirement by rotation, and he shall not be taken sions he will be subject to. into account in determining the rotation of retirement of directors, but he shall, subject to the provisions of any contract between him and the company, be subject to the same provisions as to resignation and removal as the other directors of the company, and if he cease to hold the office of director from any cause he shall, ipso facto, and immediately, cease to be a managing director.] [1026. The remuneration of a managing director shall from time to Remuneration time be fixed by the directors [or by the company in general meeting], of managing director. and may be by way of salary, or commission, or participation in profits, or by any or all of those modes.] Sometimes the articles give him a commission on the profits, or on the surplus profits, or on the dividend paid. Form 68. Powers and duties of managing director. [102c. The directors may from time to time entrust to and confer upon a managing director for the time being such of the powers exercisable under these presents by the directors, as they may think fit, and may confer such powers for such time, and to be exercised for such objects and purposes, and upon such terms and conditions and with such restrictions as they think expedient; and they may confer such powers, either collaterally with, or to the exclusion of, and in substitution for, all or any of the powers of the directors in that behalf; and may from time to time revoke, withdraw, alter, or vary, all or any of such powers.] These powers will be conferred by resolution of the directors. In the absence of express power to delegate, the maxim "delegatus non potest delegare," applies to directors, Howard's Case, 1 Ch. 561; Harris' Case, 7 Ch. 587. In the latter case there being a power to delegate, it was held that an allotment made by a committee instead of by the board of directors was valid. See the general power of delegation, infra, p. 127. Meetings of directors, quorum, &c. Director may summon meeting. PROCEEDINGS OF DIRECTORS. 103. The directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings, as they think fit, and may determine the quorum necessary for the transaction of business. Until otherwise determined three directors shall be a quorum. As to whether a meeting is essential to the transaction of business, see infra, p. 127, note to Clause 111. Where as above (Clause 86) it is provided that there shall be a certain minimum number of directors, and the articles fix the quorum, it seems that if by vacancies the number be reduced to less than the minimum, in the absence of a clause similar to 91a, nothing can be done until the minimum number is made up. Kirk v. Bell, 16 Q. B. 290; New Sombrero Co. v. Erlanger, 5 C. Div. 371. The Thames Haven Dock Co. v. Rose, 4 Man. & G. 552, is sometimes cited as an authority in some degree qualifying the decision in Kirk v. Bell, but it was decided before that case and under very special circumstances. It was an action for a call, and judgment had gone by default. The court was asked to set aside the judgment, but declined. Where directors have authority to delegate their powers, such a delegation will be presumed if one or two of the directors act for the company in a matter properly within its legitimate business. Totterdell v. Fareham Brick Co., 1 C. P. 674; Re Regent's Canal Co., W. N. 1867, 79 ; Lyster's Case, 4 Eq. 233; Lyon's Case, 35 Beav. 646. 104. A director may at any time convene a meeting of the directors. 105. Questions arising at any meeting shall be decided by a majority How questions of votes, and in case of an equality of votes the chairman shall have a to be decided. second or casting vote. Chairman. 106. The directors may elect a chairman of their meetings and determine the period for which he is to hold office, but if no such chairman is elected, or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present shall choose some one of their number to be chairman of such meeting. 107. A meeting of the directors for the time being at which a quorum is present shall be competent to exercise all or any of the Form 68. authorities, powers, and discretions by or under regulations of the company for the time being vested in or exercisable by the directors generally. This clause merely expresses that which has hitherto been generally assumed, but as some doubt has been raised whether the ordinary clause as to a quorum [103] enables a board meeting to act in regard to important matters, it seems desirable to provide as above. See New Sombrero Co. v. Erlanger, 5 C. Div. 73; 1218. A director who is disqualified cannot be counted in a quorum. Ibid. Ap. Cas. mittees and 108. The directors may delegate any of their powers to committees Power to consisting of such member or members of their body as they think fit. appoint comAny committee so formed shall in the exercise of the powers so dele- to delegate. gated conform to any regulations that may from time to time be imposed on it by the directors. This clause is generally inserted and is of great practical convenience, see supra, p. 126. It will be observed that the committee may consist of one member only. As to where a delegation will be presumed, see note to Clause 103, supra, ad fin. of committee. 109. The meetings and proceedings of any such committee, consisting Proceedings of two or more members, shall be governed by the provisions herein contained for regulating the meetings and proceedings of the directors, so far as the same are applicable thereto, and are not superseded by any regulations made by the directors under the last preceding clause. 110. All acts done at any meeting of the directors, or of a committee When acts of of directors, or by any person acting as a director, shall, notwithstanding committee that it shall afterwards be discovered that there was some defect in the valid, notappointment of such directors or persons acting as aforesaid, or that withstanding they or any of them were disqualified, be as valid as if every such person pointment, &c. had been duly appointed and was qualified to be a director. This clause is usual. It goes rather further than s. 67 of the Act. directors or defective ap without board 111. A resolution in writing, signed by all the directors, shall be as Resolution valid and effectual as if it had been passed at a meeting of the directors meeting valid. duly called and constituted. This clause is now not unfrequently adopted, and is found convenient. Whether in the absence of such a clause directors can act without a board meeting has not been finally decided, but it would seem that they can. but see D'Arcy v. The Tamar, &c., Co., L. R. 2 Ex. 158. Collie's Claim, 12 Eq. 258; service. [111a. If any of the directors shall be called upon to perform extra Remuneration services or to make any special exertions in going or residing abroad for extra for any of the purposes of the company or the business thereof, the company shall remunerate the director or directors so doing, either by a fixed sum or by a percentage of profits or otherwise as may be determined, and such remuneration may be either in addition or in substitu Form 68. tion for his or their share in the remuneration provided by Clause 91 hereof.] This clause is sometimes inserted. MINUTES. Minutes to be made. General powers of company vested in directors. [112. The directors shall cause minutes to be duly entered in books provided for the purpose― (a) Of all appointments of officers. (b) of the names of the directors present at each meeting of the (e) Of all orders made by the directors and committees of directors. And any such minutes of any meeting of the directors, or of any committee, or of the company, if purporting to be signed by the chairman of such meeting, or by the chairman of the next succeeding meeting, shall be receivable as primâ facie evidence of the matters stated in such minutes.] The above clause is sometimes inserted and may possibly be useful as a reminder, but, if brevity is desired it can be omitted, for s. 67 of the Act sufficiently provides for these matters. The section is as follows: Every company under this Act shall cause minutes of all resolutions and proceedings of general meetings of the company, and of the directors or managers of the company, in cases where there are directors or managers, to be duly entered in books to be from time to time provided for the purpose; and any such minute as aforesaid, if purporting to be signed by the chairman of the meeting at which such resolutions were passed, or proceedings had, or by the chairman of the next succeeding meeting, shall be received as evidence in all legal proceedings; and until the contrary is proved every general meeting of the company or meeting of directors or managers in respect of the proceedings of which minutes have been so made shall be deemed to have been duly held and convened, and all resolutions passed thereat or proceedings had to have been duly passed and had, and all appointments of directors, managers, or liquidators shall be deemed to be valid, and all acts done by such directors, managers, or liquidators shall be valid, notwithstanding any defect that may afterwards be discovered in their appointments or qualifications." Even apart from the Act the clause would appear to be effectual as against any member of the company although of course not against strangers. See Roney's Case, 12 W. R. 816, 994; 4 D. J. & S. 426. POWERS OF DIRECTORS. 113. The management of the business and the control of the company shall be vested in the directors, who, in addition to the powers and authorities by these presents expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the company and are not hereby or by the statutes expressly directed or required to be exercised or done by the company in general meeting, but subject nevertheless to any regulations from time to time made by the company in general meeting; provided that no regulation |