In accordance with a circular recently issued by the Ministry of Commerce, which has already been adopted by Business Registration Offices, the regulations relating to the appointment of proxies to attend board meetings and the use of circular resolutions have been amended.

1.       Proxies attending board meetings

The appointment of a proxy to attend a board meeting on behalf of a director is no longer permitted.  Consequently, a director of the company is required to attend the Board meeting in person.

2.       Circulated Board Resolutions

The Ministry of Commerce considers that written board resolutions without holding a physical board meeting are in breach of the provisions of the Civil and Commercial Code and has advised that the circulation of board resolutions is now prohibited.  The board of directors must therefore hold a physical meeting to adopt a resolution and directors who live overseas may be required to attend the meeting in person in order to achieve a quorum.     

Accordingly, existing articles of association which contain provisions in respect of a proxy attending board meetings on behalf of a director and the circulation of board resolutions will become void and should be removed.  The registration of new articles of association which contain these prohibited provisions will be rejected by the Registrar at the Department of Business Development.

These new regulations may cause problems for those companies whose directors reside in several countries and where arranging for the whole Board to meet in one location may be difficult.

Readers are encouraged to seek advice from their legal counsel to determine the effect of these regulations on their own business.