Inside a real business: SuperGroup's board minutes

The Gateway takes a close look at a big company's key documents

SuperGroup is the company that owns the Superdry business - a UK manufacturer of American and Japanese-inspired clothing catering primarily to the 15 to 25 age group. After beginning life on a market stall in 1985, the Superdry label has expanded rapidly. The group now has more than 200 stores in 40 countries worldwide as well as a thriving online business, with revenues totalling over £313 million in the most recent financial year. The group went public with a share issue in 2010 and in February 2011 saw further expansion with the acquisition of its distribution partner CNC Collections BVBA.

However, 2012 was a tumultuous year for the group. A management dispute led to the resignation of one of its original co-founders, which was followed by a reported "shareholders rebellion" against the board of directors. To top it off, the group made less money than expected.

What do its corporate documents reveal about the company? In this issue, we consider some of its recent board minutes.

What might SuperGroup's board minutes say?

Time and date

Board minutes start with the date and time of the board meeting to which they refer. It's usually possible for board meetings to be arranged in an ad hoc way - for example, most companies permit them to be set up at short notice and for them to be announced by email or word of mouth, as long as every director eligible to attend has been appropriately notified in good time.

SuperGroup's articles permit any director to call a board meeting "on reasonable notice", which doesn't have to be in writing and can be "given to him personally or by word of mouth". Directors not currently in the UK don't need to be given notice of board meetings, unless they've made specific arrangements with other directors before their trip to receive notice of them.

SuperGroup has made a number of new board appointments over the past year, some of which may have been done through board resolutions made at board meetings held during this time. Susanne Given was appointed in April 2012 after being poached from department store John Lewis, while the following December Deloitte auditor Minnow Powell and experienced director and Kingfisher plc chief operating officer Euan Sutherland were appointed.

Attendance

Next, the minutes will usually state who attended the meeting. In order for the gathering of a number of directors to be an official board meeting, it must be quorate - that is, a specified minimum of number of directors, known as a quorum, must be in attendance. If a quorum is present, decisions can then usually be made by the board on the basis of majority approval determined by shows of hands, with the chair having the casting vote in the case of a tie.

However, directors don't actually have to attend a meeting to pass resolutions: most companies allow their directors to make binding board decisions by circulating written motions, the term for a potential resolution before it's been passed, to be signed.

SuperGroup's quorum for meetings is two directors. The board can make decisions on a simple majority basis, with the chair of the board exercising a second casting vote if necessary.

The appointments of Given, Powell and Sutherland might have been made through the use of written resolutions rather than at a board meeting, as SuperGroup's articles permit these.

Resolutions

Board minutes will usually next state the resolutions made at the meeting, sometimes including reasons for the decision or even records of discussions between the directors about the motions.

It was widely reported at the time Given joined SuperGroup as a director that she had been appointed and awarded the new role of chief operating officer to allow co-founder and fellow director Julian Dunkerton to focus on strategy.

Powell and Sutherland, meanwhile, were appointed to replace dismissed former directors Indira Thambiah and Steven Glew, both of whom left under a cloud.

Both Thambiah and Glew were on SuperGroup's audit committee during the 2011-2012 financial year. Arithmetic errors in its accounts for this year led to an overinflated profit forecast that the company failed to meet, leading to a dramatic drop in SuperGroup's share price, wiping some £170 million off its market value.

They were also both part of SuperGroup's remuneration committee. A remuneration committee sets the pay and other remuneration terms of a company's senior employees and this team at SuperGroup was heavily criticised by shareholders for awarding overly generous packages. Particularly censured was Given's pay deal of a £350,000 base salary plus a guaranteed share award worth £900,000 and a guaranteed bonus for 2013 of £350,000.

Signatures

Board minutes containing motions need to be signed by enough directors to give evidence that a majority of those who were present at the meeting agree with them being passed as resolutions.

Written motions, by contrast, must usually be signed by every director entitled to receive notice of a board meeting to be passed as resolutions.

Directors don't always have to physically sign documents themselves; they can appoint another person to sign for them by setting up an arrangement known as a power of attorney in advance. For obvious reasons, it's usual in a corporate context for powers of attorney to only give a director's delegate the right to sign specified listed documents on their behalf, not any document.

If SuperGroup's new directors were appointed through board resolutions, it's very possible that some of these decisions were not unanimous.

For instance, the appointments of new directors Sutherland and Powell were somewhat controversial. Their predecessors Thambiah and Glew were ousted following a shareholders' rebellion at the company's 2012 AGM. This was led by co-founder, former director, and former head of the group's wholesale and international divisions Theo Karpathios who resigned as a director in summer 2012, reportedly after a major rift with former business partner Dunkerton. It's thought that Dunkerton and some of his fellow remaining directors were in favour of keeping their former colleagues Thambiah and Glew at the company rather than appointing Sutherland and Powell to replace them, despite the auditing and remuneration issues mentioned earlier.

Where written resolutions are used, as is usual in corporate proceedings, SuperGroup's articles take the practical step of permitting its directors to sign separate copies of them rather than forcing them to all sign the same piece of paper, which could be difficult and time-consuming to arrange.

It's also likely, as it's usual in the corporate world, for the signatures of SuperGroup's directors to resolutions to be accepted by other board members, and any appropriate action taken, on the basis of emailed versions of signed documents on the understanding that hard copies will follow in the post.

Next steps

Board minutes will usually mandate certain directors or the company's secretary to carry out the actions necessary to effect the resolutions made.

For example, where the board is authorising the company to take on a loan, the directors will be authorised to sign the loan agreement and related documents. The appointment of a new director meanwhile will involve changes being made to the company's internal and external records. The register of directors and their details that the company is required to hold by law must be updated, and notification of the appointment must be also sent to Companies House, the UK corporate registry, within 14 days.

SuperGroup appears to have made all required filings in relation to the recent changes to its board of directors. These registration documents, though not the resolutions by which the decisions registered were made, are available publicly through Companies House.

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