Rules of Procedure of the Board of Directors

What should a Rules of Procedure contain?

A general order of business must contain the basis for the work of the Board of Directors. As such, there are no legal requirements as to what the content should be specifically, as it depends on the company’s size, industry, resources and more. However, there are specific areas that the Board of Directors should consider in the Rules of Procedure based on the company’s needs, including:

• Organization of board meetings

• Notice of Board meetings

• Board decision-making and decision-making procedures

• The composition of the board ( composition has an impact on whether the various areas of competence are fulfilled )

• Division of work ( who stands for what )

• Supervision of the Executive Board

• Book and protocol keeping, etc.

• Written and electronic meetings

• Confidentiality

• Alternates ( whether another person may attend a board member if the board member is prevented from attending a board meeting, for example )

• Accounting

• Ensuring the presence of the necessary basis for revision

Signature and acceptance of all board members

After the Rules of Procedure have been drafted, they must be signed by every member of the Board of Directors. This signifies that they have thoroughly read and accepted the document. Whenever a new member of the board is admitted, it is necessary to present the Rules of Procedure to them and obtain their signature as well. Additionally, it is important to keep in mind that any changes to the board, such as a new member joining, necessitates the preparation of a decision report.

The rules of procedure must be constantly updated

As a company grows and evolves, it is imperative that its policies and procedures remain relevant and effective. To this end, a regular review of the Rules of Procedure is strongly recommended. At a minimum, this review should take place annually to ascertain that the document is current and continues to facilitate optimal decision-making by the Board of Directors and any newly appointed members. Further, it is important to note that board members have the ability to propose amendments or additions to the Rules of Procedure throughout the year. Any proposed changes will be adopted with a majority vote in favour of the proposal. By consistently assessing and updating the Rules of Procedure as necessary, the company can best position itself for future success.