A quorum is the minimum number of members required by law, Articles or the Charter of a group or entity that must be present at a meeting to transact business. According to Wikipedia, “a quorum is the minimum number of members of a deliberative assembly necessary to conduct the business of that group”. Roberts Rule of Order states that “a quorum should be as large a number of members as can reasonably be depended on to be present at any meeting except in very bad weather or other unfavourable condition.”
Typically, the Board Charter or Articles of Association of the Company specifies the quorum for a meeting. However, in the absence of any specific provision in the Board Charter or Articles, reference is usually made to the provisions of the Companies and Allied Matters Act 2004 (CAMA).
Section 264 of CAMA provides that “unless the Articles otherwise provides, the quorum necessary for transaction of the business of directors shall be two where there are not more than six directors, but where there are more than six directors, the quorum shall be one third of the number of directors, and where the number of directors is not a multiple of three, the quorum shall be one third to the nearest number”.
Therefore, for the proceedings of a meeting to be considered as binding, the requisite quorum must be formed.
The appropriate quorum for a Board meeting would vary per organisation and it is important that the Board does not set a high quorum requirement that hinders the ability of Directors to transact Board business or too low that a few directors can take binding decisions. Nevertheless, setting a minimum quorum for a meeting ensures that majority of directors are up to speed on important developments, paving the way for clear communication, and sound decision making. Setting a realistic quorum requirement and sanctioning Directors for excessive absenteeism is an effective way of achieving balance.
The requirement for quorums is intended to keep Boards balanced and cohesive. Establishing a quorum is often the first order of business at a board meeting and the Company Secretary has the responsibility of notifying the Board Chairman if the meeting is not likely to have a quorum and confirming same at the Board meeting.
The Chairman presiding at a meeting at which a quorum is not formed at the beginning can cure the defect by waiting to confirm if other members will join. Where it is clear that other Directors will not join, he has to adjourn the meeting. It is instructive to state that in the event that Directors present at an inquorate meeting proceed to discuss any matter and take decisions in respect thereof, such decisions shall not be binding nor enforceable. In the case of Mega Blow Moulding Limited v. Sarantos, the court addressed the validity of a resolution passed at an inquorate Board meeting. In reaching its decision, the court found that the Board meeting did not comply with the quorum requirements and accordingly ruled that the resolution passed at the meeting was invalid.
Virtual meetings (i.e. teleconferencing or video conferencing) offer a practical solution to Director availability to attend Board and Committee meetings as it affords directors who are unable to be physically present at meetings the opportunity to honour their board commitments.
The Companies and Allied Matters Act is silent on virtual meetings. For the avoidance of doubt, it is recommended that the Articles or Board Charter provide for virtual meetings and Directors who attend Board meetings remotely will be accounted for in determining quorum.
Generally, it is rare for board meetings to have seamless attendance at each meeting during the year. Thus, if the Board lacks the required quorum to transact its business and decides to proceed due to the level of urgency of the agenda items, any decision made at that meeting shall be invalid.
The Companies and Allied Matters Act provides that a quorum should be formed at the beginning of the meeting and no business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. In practice, one issue that sometimes arises is that of the “vanishing quorum”. This refers to the situation where a quorum is present at the beginning of a meeting but lost at some point during the meeting. It is noteworthy that if the meeting is quorate at the beginning but loses quorum during the meeting, this fact must be brought to the attention of the Chairman immediately and the meeting should be concluded and consequently adjourned.
Following quorum protocols keeps the board balanced, independent and effective. The Board Chair should ensure that meetings are duly quorate from beginning to the end and the Board should continuously review its policies on quorum and Director attendance at meetings to optimize Board effectiveness