The day to day activities of a company are under the control of its directors therefore, entering commercial agreements is directors’ business and it does not generally require consent of approval of shareholders. A simple board resolution is generally all that is required for a Company to validly enter into a commercial agreement.
Step 1 – Negotiate terms with the relevant party and prepare and agree on a suitable agreement setting out the terms.
Step 2 – Convene a Directors meeting for the purpose of considering the transaction and, if thought fit, approving the agreement. See draft minutes – Minutes – Approve commercial agreement (1931)
Step 3 – Make two fully executed copies of the agreement and return one copy to the counterparty.
Step 4 – File the original board minute together with the other original copy of the agreement in the director’s minute book.
Note: If the agreement is in the form of a deed; it should be signed by two directors or a director and secretary.