What a Board Is For

1.1Corporate governance in one paragraph

Corporate governance is how a company is directed and checked: who decides what, on what information, and who watches them. A company with outside investors usually writes those rules down. This workbook follows one such set of rules, a board charter, through its first year. You are a junior in-house lawyer at the company and its assistant company secretary.

1.2Why an investor asks for written rules

Brackenholme Foods Limited makes chilled ready meals for supermarkets, in Wakefield. Margaret Holroyd founded it and still runs it as chief executive. For thirty years its board met when it needed to, and the minutes ran to a page a year. That was lawful, because a private company may run on trust.

In September 2025 an investment fund, Calderbank, paid £14,000,000 for 35% of the shares. A family trust, whose trustees are Margaret and her brother, holds 55%, and Margaret holds the last 10% herself.

So Calderbank cannot outvote the family, and it cannot run the company. Its 35% can block a special resolution, such as a change to the Articles, but it cannot pass one. What it bought was the right to see how the company is run. Its condition for investing was a real board:

• an independent chair and a second independent director
• a written list of what the board decides and what management decides
• proper information before every decision

Margaret had built a profitable business without any of that. To her, governance meant slower decisions, and a hint of distrust from people who had chosen to back her. In February 2026 the board adopted the Board Charter, which binds every director and every manager with authority under it.

1.3Who owns, who directs and who runs

Company law sorts the people around a company into three layers, and each decision belongs to one of them.

The layers are not the people. Margaret sits in all three, as a shareholder, a director and the chief executive. A director who also works in the business, like Margaret and the chief financial officer, is an executive director. A non-executive director has no job in the company.

1.4Five seats, and who counts as independent

The charter fixes the board's shape, so nobody can change the balance by leaving a seat empty.

Margaret and the chief financial officer know the business, and Rachel, the investor's director, knows the money. Edmund and a second independent director owe nothing to either side, and Edmund chairs the board.

Under paragraph 1.6, a director is an Independent Director only if the board decides, when she joins and every February, that she:

• has not worked for the company, or done material business with it, in the last three years
• has no family tie to a shareholder holding more than 10%
• was not nominated by a shareholder, and does not work for one

Rachel is a non-executive, but she fails the third test. She is the Investor Director, nominated by Calderbank. She may take Calderbank's views into account, but she must use her own judgement and vote as she judges best for the company (section 173).

Independence matters most for the quorum, the number of directors who must be present before a meeting can decide anything. The charter sets three, and at least one must be an Independent Director (§4.4). So neither the family nor Calderbank can decide anything without a neutral director in the room. The chair has no casting vote, an extra vote to break a tie, so a tied vote fails.

1.5Twenty decisions for the board, the rest for management

The first argument was over which decisions the board keeps. A Matter Reserved is a decision that only the board may take, and Schedule A lists them. Everything else is decided under Delegated Authority, where a named manager approves a matter alone, within a limit in Schedule B.

Calderbank wanted forty Matters Reserved and Margaret wanted ten. Rachel argued that “a board that reserves everything runs nothing and learns nothing.” Margaret answered that “a founder who needs permission to buy a forklift will leave.” The board settled on twenty, each with a money threshold or a reason, and Schedule B gave management real room.

A quieter argument was over the line between the two lists. Margaret feared the board's list would grow until it reached into everything. Calderbank feared that a matter left to management would never reach the board. One paragraph answers both.

“The Board does not decide it” protects management, because the board cannot take over a matter it has not reserved. A matter above everyone's limit still goes to the board, but it does not join the list. The last sentence protects the investor, because any two directors can raise anything. It takes two, so no single director can pull a matter in, and none can keep it out.

1.6Six meetings a year, and information in between

The other argument was over how often the board meets. Calderbank wanted a meeting every month. Margaret wanted four a year, because each meeting means a Board Pack, a bundle of papers for five busy people to read. Four meetings, though, leave three months in which the board learns nothing.

The board settled on six meetings a year, and filled the gaps in two ways:

• Every director gets monthly management accounts within 15 business days (weekdays other than bank holidays) of each month end (§7.1).
• The chair may call an urgent meeting on 48 hours' notice, or less if delay would harm the company (§4.2).

1.7Where the charter sits among the rules

The charter is the smallest of three rulebooks. The company's articles of association (its constitution) sit above it, and they win where the two differ. The Companies Act 2006 sits above both, and it gives directors their duties. The charter adds procedure but no duties, so read it as the company's way of obeying the law.

Only the board can change the charter, by a resolution passed on the chair's recommendation, and it reviews the charter every February (§10.5). So neither shareholder can rewrite it alone, and the board cannot change it without the chair.

In its first year the charter is tested four times:

• The chief executive proposes a packaging contract with a company her husband owns.
• A site manager splits one purchase into four orders, each under his limit.
• Three directors sign a “written resolution” to renew the company's overdraft.
• A laboratory finds listeria in a sample from a chilled chicken pasta line.

1.8Your job

Your job is the board's paperwork, and the paperwork is how the charter works. A good minute proves that the right people decided, on the right information, at the right time.

• For every request, ask first which layer the decision belongs to.
• Check every minute for a quorum: three directors present, one of them independent.
• Check whether a matter is reserved before anyone commits the company to it.
• For any change to the charter, check that the chair has recommended it.
• Keep the three shareholdings on file: the public register of who controls the company starts from them.