Sports Q&A – Corporate governance - key things to know
29 June 2018
I’m taking on an in-house role with a professional sports team and will have responsibility for ensuring the board meets its corporate governance requirements. What are some of the key things I should know?
Corporate governance basics
Understandably, most teams dedicate more time to thinking about:
- record books than minute books;
- making statements on the field than filing confirmation statements; and
- practice and performance on the pitch than payment practices and performance.
That is why this month’s Q&A looks at questions in relation to these less thought about topics.
Does a board meeting require board minutes?
Yes, under the Companies Act 2006 (the “Act”) minutes of all board meetings must be taken and kept for at least 10 years. Failure to take and keep minutes is a criminal offence on the part of every officer of the company in default.
Thankfully, maintaining a minute book is a lot easier than making it into the record books. Minutes of board meetings can be held in hard copy or electronic format. Common practice is that, if appointed, a company secretary will be responsible to the chairman of the meeting for the preparation and retention of board minutes. The chairman and the other members of the board are responsible for confirming their accuracy. An item of business at the succeeding board meeting will usually be to approve the minutes of the last meeting.
Unlike shareholder meetings, board meetings are almost entirely unregulated by the Act. This means that the content and format are not overly prescribed. However, it is good practice to start all minutes by recording the date, time and venue where the meeting was held, and how it was held (i.e. in person or by telephone). The minutes should record those directors and other attendees present, together with apologies from directors unable to attend. The list of directors present should demonstrate there was a quorum (which is determined by a company’s constitution).
It is also important when preparing minutes to take into account directors’ statutory duties (as set out in the Act) and duties under any other legislation which is applicable in the circumstances. It will depend on the nature of the business being discussed and decided as to exactly what references are made but the minutes should demonstrate that the directors have considered and observed their responsibilities to the company and complied with their statutory duties.
What is a confirmation statement confirming?
The purpose of the confirmation statement is for the company to confirm that it has notified the Registrar (i.e. Companies House) during the course of the year of all of the events in relation to which it has a duty of notification. Such events include a change of registered office, directors/company secretary, persons with significant control and where the company keeps it records.
The confirmation statement itself cannot be used to notify the Registrar of any changes in relation to these matters. This must be done by using applicable forms filed prior to the submission of the confirmation statement. However, the confirmation statement can be used to notify the Registrar of certain changes including, for example, changes to shareholder information.
Unlike making statements on the pitch, which most teams will hope will happen on a weekly basis, confirmation statements only need to be made once a year but failure to do so is a criminal offence on the part of the company and each of its officers.
When must payment practices and performance be published?
The Reporting on Payment Practices and Performance Regulations came into force on 6 April 2017. These Regulations require large companies to publish on a government portal information in relation to their standard payment terms and how promptly they pay supplier invoices. Therefore, just like poor performance on the pitch, poor performance off the pitch, can cause reputational damage.
For the purposes of the Regulations, a large company is a company which exceeds two or more of the following thresholds in the two preceding financial years:
- £36 million annual turnover;
- £18 million balance sheet total; and
- An average of 250 employees in the financial year.
There are two criminal offences under the Regulations: it is an offence not to publish a report and it is also an offence to knowingly or recklessly publish a report or information that is misleading, both of which are subject to an unlimited fine.
Where can I get more information?
There’s some useful guidance on the basics of running a limited company here on the Companies House website. Another thing which it’ll be important for you to get to grips with is the duties of the team’s directors. We’ve previously prepared a guidance note on directors’ duties that can be found here which should be helpful.