ELECTION OF DIRECTORS 2021/22
Guidance for Candidates for Director (Standing for YesCymru's National Governing Body)
These notes will help you complete the necessary steps to stand for The National Governing Body and become a Director (if elected) of YesCymru Cyf, the new company limited by guarantee, which will be legally responsible for running all aspects of YesCymru Cyf.
The election will be conducted by an Independent Scrutineer.
Please familiarise yourself with the proposed BYELAW 2: Election of Directors
You should also be aware of the seven legal duties of the Director, a description of which we set out below in Appendix 1 below. The Companies Acts of 2006 and 2016 govern the way in which companies and their directors must operate. Before deciding finally on whether to stand for election you might usefully look at these.
The Byelaws (when approved by the Board) will set out the policy areas to which Directors will be appointed by the Board. Clearly, that can’t be done until after these elections. Appendix 2 sets out the kind of areas for which individual Directors will need to take detailed responsibility so that they can advise their colleagues on policy matters. If you feel you can contribute to one or more of these areas, please make that clear in the information you provide in support of your nomination. That information will be provided to Members so that they can choose which candidates to vote for.
Note: Appendix 2 only provides examples of work areas. The Board will decide which jobs it requires Directors to do.
The seven duties of a company director
The seven statutory duties owed by each director to the company form the basis of what being a company director is all about.
You can use professionals to manage some of these things on a day-to-day basis (for example, an accountant) but you, personally, are still legally responsible for your company’s records, accounts and performance.
You may be fined, prosecuted or disqualified from being a company director if you do not meet your responsibilities.
Your company’s constitution
The first of the duties is that a director must only act within their powers under the company’s Articles of Association.
These are an important set of rules for your company and for your Board. As a director, it is important to be entirely familiar with the Articles of Association as they may constrain your decision-making powers in certain ways.
If you exceed your powers, then related decisions could be reversed and you might even have to compensate the company for any resulting financial losses. You must also have full regard to the Byelaws and bear in mind that Byelaws which are in conflict with the Articles of Association are null and void. The Board must also be prepared to amend, delete or make new Byelaws as the situation requires. This can be done by resolution of the Board although Members can object at a General Meeting and require the Board to make changes to the Byelaws.
Promoting the success of the company
The second major duty of a company director is to promote the success of the company.
The duty states that a director must act in a way that they consider, in good faith, would be most likely to promote the success of the company for the beneﬁt of its members as a whole. When making decisions, directors must also consider the likely consequences for various stakeholders, including employees, volunteers, suppliers, customers and communities. They should also consider the impact on the environment, the reputation of the company, company success in the longer term and of all the members.
A duty to promote the success of the company may seem like an obvious task for a director. However, it brings with it a number of implications. Board decisions can only be justified by the best interests of the company, not on the basis of what works best for anyone else, such as particular executives, members or other business entities.
The third major duty requires directors to exercise independent judgement. Directors are meant to develop their own informed view on the company’s activities. Directors are not delegates who simply implement the commands of other parties.
In the case of YesCymru Cyf this means that no director shall behave as if they are a delegate of any area of Cymru nor should they accept any instruction, from the members who elected them, to act or make a decision in a particular way. They should always respect the confidentiality of Board meetings and never ‘report back’ to Groups or Councils in the structure. The Board will, itself, advise the wider membership of matters of importance which need not be kept confidential.
Directors should always exercise their responsibility to make their own decisions independently. They should research the question and gather information rather than rely solely on the knowledge or judgement of other directors or experts.
A director needs to form their own view, and this may require some effort and research – especially if they are not already familiar with key aspects of the company’s activities.
Exercise reasonable care, skill and diligence
The duty of directors to exercise reasonable skill, care and diligence in their role is vital.
The benchmark is that of a reasonably diligent person with the general knowledge, skill and experience that could reasonably be expected from a person carrying out the director’s functions. Directors with specific professional training or skills (such as a lawyer or accountant) are held to a higher standard in related issues than less qualified colleagues.
This underlines the importance of preparing thoroughly for meetings and taking advantage of all training opportunities in the role. It also means that all meetings should be provided with papers setting out the decisions to be made and explaining the relevant background and the reasons for these decisions. Directors should not expect to raise matters at Board meetings unless proper notice has been given and information on the topic has been provided to the Board in a timely manner.
Conflicts of interest and personal benefits
The remaining 3 legal duties relate to the need for directors to avoid or manage conflicts of interest which may affect their objectivity.
If situations arise which impose multiple claims on a director’s attention or loyalty, it is essential that they disclose them to fellow Board members. It will then be up to the other non-conflicted Board members to decide how to manage or approve the conflict and maintain the integrity of the Board’s decision-making process.
Examples of conflicts of interest include situations where the director has relationships of a business or personal nature with persons or entities that are affected by the company’s activities. It could also relate to situations where the director may be considering taking advantage, on a personal basis, of property, information or opportunity which belongs to the company.
Gifts or benefits from third parties are also a potential threat to a director’s objectivity and should be refused unless the Board collectively decides otherwise.
Most importantly, directors have a statutory duty to disclose any direct or indirect interest in proposed or existing transactions or arrangements with the company.
Keeping a record
The purpose of the minutes of Board meetings is to provide a record of the Board’s decision-making process.
Minutes should be as full as possible (but not a verbatim account). They should set out the matter being discussed, refer to the papers setting out the matter, summarise accurately the arguments made on either side and record the vote or consensus. Minutes must be kept for ten years, by law. The minutes provide vital evidence that you carried out your legal duties. A lawyer once said that the test of a good set of minutes is whether a High Court judge could read them, without further explanation being given, and have a complete understanding of the matter being recorded.
Board meetings must always be conducted in a business-like manner. Directors are expected to behave politely and considerately to their colleagues and keep the Directors’ Code of Conduct in mind. It could amount to a breach of that Code of Conduct if groups of Directors hold meetings to discuss Board business in a way which excludes other Directors and are contrary to the Articles or Byelaws.
Regular attendance at meetings is vitally important to maintain one’s legal duties to the Company. The Byelaws provide that Directors who are absent from three meetings in a row without reasonable excuse may be dismissed from office.
Directors’ responsibilities will continue between meetings and require them to maintain attention to their role. If any decision is taken outside of meetings then the matter must be reported to the next Board meeting and minuted.
Most Directors will be given an area of policy to oversee and be the person who is well-placed to advise the Board. Management and operational responsibility in those areas will be a matter for the Chief Executive or another senior member of staff. Where a Director volunteers to carry out operational work, i.e. work that is not Board work, they do so on the same basis as other volunteers and will be responsible to a line manager or the Chief Executive.
The Chair will have oversight of the overall governance of the Company but that does not remove that responsibility from individual Directors.
Below are the kinds of areas where a Director(s), appointed by the Board, will have detailed responsibility so that they can advise their colleagues on policy matters.
The following are examples only and the Board will decide which jobs it requires Directors to do.
The Board will elect a Chair who will chair the Board and General Meetings. The Chair has oversight and accountability for the effective work of the Board.
The Board may also elect a Vice-Chair who will act for the Chair as and when required.
Oversight of the administration of the Board’s business (for example, ensuring the preparation and distribution of agendas, minutes and reports) can best be performed by a Director who would work closely with the administrative staff concerned. This is the normal role of a Committee Secretary.
In order to deal with Company Law matters, registrations, compliance and governance issues (inc HR and staff management until the appointment of a Chief Executive) it is usual to appoint or elect a Company Secretary. This work may be done by a suitably qualified Director, a member of staff or a volunteer. The Company Secretary, if a Director, should chair a Board committee on Governance and Compliance, which will keep the Board informed. Otherwise, a Director should be appointed to chair this committee, which should include the Company Secretary as a member.
A Finance Director would chair the Finance Committee and the Audit and Risk Assurance Committee, working with YesCymru Cyf’s accountants and finance staff to report the management accounts to each Board meeting. They would be responsible for the oversight of the preparation of accounts for external audit and to establish internal audit processes, and for risk assurance systems. If the volume of work proves to be high, an assistant Finance Director could be appointed from the Board.
Perhaps the most important part of the work of YesCymru Cyf will be lobbying and advocacy on the need for independence. This will be a major and vital part of the work of the Board and a number of Directors may be needed to deal with policy formation and to design strategy for dealing with different sectors (such as the Senedd, Political Parties (in Cymru and in the UK Parliament), Local Authorities, Business, the Third Sector, Cultural Organisations, Academia and, of course, the citizens of Cymru). Directors appointed to chair Board committees for any of these topics (or groups of topics) will work with the relevant staff manager(s) to define a common lobbying strategy and its execution in the different sectors.
A Director(s) should chair the Board’s Communications Committee(s) which looks at policy on internal and external communications, including press and media. A single person (preferably a staff member or qualified volunteer should be designated to approve and issue all communications).
A designated media spokesperson for YesCymru Cyf is essential. At the discretion of the Board, they may be invited to attend Board meetings, if not a Director.
A Director would chair a Membership Development Committee, providing essential contact with Members, using staff support, as available
A Director would chair a Group Development Committee, which would oversee liaison with, and the development of, Groups by the responsible staff or by volunteers.
A Director would chair the Procurement Committee. This committee should also include the Finance Director (or any Assistant Finance Director).