Bureaucratic regulations and the conduct of meetings
“Consider whether the application and imposition of bureaucratic regulations and practices governing the conduct of meetings tend to prevent them achieving the ends for which they are commonly held.”
An unattributed aphorism defines a committee as “a body which keeps minutes but wastes hours”! Meetings of a wide variety of bodies - from the boards of multinational corporations to the semi-formal gatherings of volunteers involved in small community groups - are subject to regulations of varying degrees of complexity underpinned by sanctions of varying degrees of complexity. Inevitably, therefore, there arises a tension between the need to ensure that the decision-making process of such organisations is regulated in a way that adequately protects the interests of the stakeholders (including private individuals and the public purse) and the constriction of the ability of a body to make clear and efficient decisions by the imposition of unnecessarily complex bureaucratic procedures.
In the area of law relating to the proceedings of limited companies, the importance of legal regulation is relatively easy to justify: such companies may be very large in terms of size and turnover and there may be many shareholders whose interests and rights of representation in the decision-making process of the company must be protected. For these reasons, the Companies (Tables A-F) Regulations 1985 enacted pursuant to the Companies Act 1985 provide a comprehensive and detailed code (@ Table A, r.36 et seq.) for the calling and proceedings to be adopted at General Meetings. Such safeguards are clearly necessary: as a matter of common sense and natural justice there should be adequate notice of such meetings (r.38) and they should be quorate (r.40).
A consequence of failure to insist upon such formalities would be the ability of an organised minority to orchestrate the taking of decisions which did not meet the approval of and may in fact be directly contrary to the interests of members. The need to prevent such mischief has been repeatedly underlined by the courts: in Neil McLeod & Sons Ltd , Lord President Clyde stated “…a meeting is not properly constituted if only one individual is present, for there is no one for him to meet. This echoes the leading case of Sharp v Dawes and the principle has even been extended to situations in which although only one person is present he is authorised to act as a proxy for others (Re Sanitary Carbon Co ).
However, there is scope for criticism of the current structural requirements on the ground that prescriptive regulations relating to meetings and voting may fail to reflect modern commercial reality. The Company Law Steering Group cast doubt upon the efficacy of Annual General Meetings in that members of public limited companies are often widely geographically dispersed and find it impractical to attend meetings. For this reason, many attendees are proxies and therefore meaningful debate is precluded. For the same reason, where a high percentage of shareholders are institutions such as pension funds, a formally convened meeting is unlikely to produce any different voting than that which has been decided in advance. By contrast, the same consultation document noted the concerns of certain companies at the disproportionate influence (at the very least in terms of the ability to delay or disrupt meetings) which can be exercised by parties with very limited shareholdings but a strong and vocal agenda such as environmental pressure groups.
Happily, the courts have historically been prepared to adopt a realistic approach to non-compliance with regulations requiring meetings where common sense militates against strict adherence. This has given rise to what is known as ‘the Duomatic Principle’ propounded by Buckley J namely that where it can be shown that “all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in a general meeting would be.” Accordingly, it is possible to examine the law relating to decision-making by companies and identify a largely satisfactory regime which, although the subject of long and detailed legislative provision can be justified by the importance of protecting members and which is tempered by a willingness on the part of the judiciary to allow a pragmatic approach to prevail over slavish observance of the rules.
Regrettably, not all legislative regulation of the conduct of meetings can be regarded as so well settled and receiving of general approval. For example, the Trade Union Recognition (Method of Collective Bargaining) Order 2000 provides a specified method of bargaining in cases in which unions and employers cannot in certain circumstances agree. To supply such a framework for dispute resolution is commendable in principle but the regulations descend to such a degree of prescriptive detail (such as r.24 and r.25 which enshrine in legislation such union entitlements as word-processing facilities and the use of a room with a secure cabinet) that it is difficult to perceive how the decision-making process is streamlined and sensible discussion and compromise facilitated.
A similar instance of over-enthusiastic regulation of the conduct of meetings is to be found in the School Governance (Procedures)(England) Regulations 2003. Traditionally, school governing bodies have consisted of hard working and committed volunteers from such interested groups as parents and teachers with nominated representatives of the local authority and others from the community able to bring to bear a wide range of knowledge and experience. However, the desire to grant schools greater autonomy has spawned a raft of legislation which now regulates almost every aspect of a system which had hitherto functioned with a great deal of goodwill and a high degree of mutual co-operation. Traditional consensus is apparently precluded by r.12 which provides that:
Every [emphasis supplied] question to be decided at a meeting of the governing body shall be determined by a majority of the votes of the governors present and voting on the question.
(A cynic may wonder what now occurs in the event of governors having to agree as to which type of biscuit to have with their coffee.)
Thus it may be concluded that while a certain degree of formal regulation of meetings is essential to protect the interests of the stakeholders in the particular organisation, a degree of balance such as that recognised by the Duomatic Principle in company law is essential if the proceedings of certain meetings are not to be impeded at best or, at worst, descend into farce.
Tags: adequate notice, bureaucratic regulations, common sense, multinational corporations, natural justice, sanctions
