SECRETARIAL PRACTICE

of intention to propose any candidate other than one recom
mended by the board must be given to the company. The
powers of the directors should be specified, and, in most cases,
ample powers of delegation given. Proceedings at board
meetings may be fully regulated.

It is usual to insert a provision empowering a director to
contract with the company, but any such provision must be
subject to the restriction that he must declare his interest
[s. 149] and is usually subject to the further restriction that
he may not vote in respect of such contract. A directors’
indemnity clause against liabilities incurred in the conduct
of the company’s business, other than liabilities due to the
directors’ wilful act or default, was often inserted and was
effective (see hereon re City Equitable Fire Insurance Co. Lid.
(1925) 1 Ch. 407). Under s. 152 of the Act of 1929, however,
(1) the provisions of such a clause are made void except that
provisions in force at the commencement of the Act will remain
effective for six months from that date, (2) any transaction in
force is protected for a period of six months, and (3) the
company may under any such provision indemnify any
director, manager, officer, or auditor against any liability
incurred by him in the successful defence of any civil or
criminal proceedings, or in connection with any successful
application to the Court under s. 372 for relief from liability for
negligence, default or breach of trust or duty. A provision
should, therefore, still be inserted limited to such indemnity
as is authorised by the third exception mentioned above.

Provisions as to accounts and audit are, in practice, usually
inserted as a reminder of the provisions of the statutory law
(ss. 122, ef seq.). Express provision should be made, except
in the case of a private company, to give effect to the statutory
obligation to send a copy of the balance sheet and all docu-
ments required by the Act to be annexed thereto to each
shareholder (s. 130).

It is desirable to give the board power to form a reserve
fund, subject to whatever special conditions may be advisable
in each case. Where power is taken to create redeemable
preference shares (s. 46), special provision should be made
as to the Capital Redemption Reserve Fund referred to in
that section.
Amongst the regulations as to payment of dividends, it
should be provided that interim dividends may be paid, that
no larger dividend may be declared than is recommended
by the board, and that no dividend shall bear interest against
the company.