What is a Board Meeting Quorum
Investopedia defines a quorum as:
“A quorum is a minimum level of interest or attendance required before an official meeting or action can take place.”
It is important to differentiate the term ‘quorum’ with a vote. A vote can take place, because there is a quorum.
In company board meeting terms, a quorum is the smallest number of board members who can meet to allow for a properly constituted meeting as stated in corporate charter.
In general, in South African law, the default number of directors needed for a quorum is a simple majority. The law also sets out a process whereby a director with a financial interest in a matter on the agenda, must disclose interest and recuse from the meeting during discussions or voting on affected matters.
Role of a Quorum in Company Board Meetings
In South Africa, a company as defined by the COMPANIES ACT (71) of 2008 is managed and guided by its board of directors.
It is the duty of the board of directors (board) of a company to manage and guide the affairs, assets and individuals in the organisation they are responsible for. Decisions relating to the management of the organisation are communicated and recorded as resolutions. For any action to arise out a board decision, a resolution needs to be voted on.
For a resolution to be legal and binding, the resolution needs to be passed by a winning vote of a quorum, during a properly constituted board meeting.