Board Meetings of Companies to be held

NUMBER OF BOARD MEETINGS

  • The first Board Meeting shall be held within:
  • 30 days of date of incorporation of the Company
  • As regards subsequent meetings:
  • There should be atleast 4 Board Meeting in every Calendar year. However, there is no such necessity to hold the Board Meeting at every quarter.
  • The gap/ interval between two Board Meeting shall not be more than 120 days.

Note: There is no maximum limit on the no. of Board Meeting to be held.

  • The Central Government (CG) may exempt any class of Company from holding a Board Meeting or may relax certain provisions as regard this section. Some of the relaxations provided to certain Companies are as follows:
  • A One person Company (OPC) having one director, is not required to hold any Board Meeting.
  • In case of other OPC, atleast one Board Meeting shall be held;
  • Within every 6 calendar months and,
  • The gap shall be of atleast 90 days
  • In case of Non- Profit Company (NPO), atleast one Board Meeting shall be held;
  • Within every 6 calendar months.

 

NOTICE OF BOARD MEETING

  • The notice of Board Meeting shall be sent to all directors, including the interested directors, precluded directors, alternate directors and even those directors, who have informed their inability to attend the Board Meeting.
  • The notice has to be in writing (notice through telegram/ fax is allowed)
  • The notice of Board Meeting shall be sent atleast 7 days before the Board Meeting, at the registered address of the directors (even if abroad). However, shorter notice shall be valid in the following cases;
  • To transact an urgent business, and
  • atleast one Independent director(ID) is present at such Board Meeting. Otherwise, the decisions taken at such Board Meeting shall be circulated to all directors and be ratified by atleast one ID.

Note: Where there is no ID in Company, shorter notice shall be valid.

  • Where notice has not been sent to some directors, or sent within an unreasonable shorter period, or where any stranger also participates in the Board Meeting, the meeting shall be considered void. However, even such meeting can be validated if:
  • All directors attend meeting, even without notice and without any objection, or
  • The directors absent at such Board Meeting do not complain.
  • It is not necessary to mention the agenda of Board Meeting in the notice. However, where the business to be transacted in Board Meeting relates to the following, specific notice shall be required:
  • To appoint a person as Managing Director (MD), if he is the manager or MD in another Company.
  • To contract with a related party.
  • To appoint a person as MD or Whole Time Director (WTD)

Note: The articles of Company may require specific notice for certain matters as well.

 

QUORUM OF A BOARD MEETING

  • Quorum means the minimum number of directors required to validate a Board Meeting. Unless quorum is present, no business can be transacted in the Board Meeting.

 

  • The quorum at Board Meeting should be higher of:
  • 1/3rd of total strength (fraction to be rounded off as one), or
  • 2 directors

 

  • In case where the no. of interested directors exceeds 2/3rd of the total strength, the quorum in such case shall be higher of:
  • of remaining disinterested directors, or
  • 2 directors

 

  • In case of vacancy of directors, where no. of directors present and voting are less than the required quorum-

The meeting shall automatically be adjourned for want of quorum, in the next week to same day and same time. (Unless otherwise provided by the articles of Company)

Note:

  • The articles of Company may provide for higher quorum, but not lower.
  • In case of NPO,  the required quorum shall be lower of:
  • 25% of total strength, or
  • 8 members
  • But not less than 2.
  • Participation of directors through video conferencing shall be considered for counting quorum.
  • The required quorum shall be present throughout the meeting.
  • If the decided adjourned date is a national holiday, then the Board Meeting shall be adjourned to the next succeeding date. Further, no fresh notice is required in case of an adjourned meeting, unless required by articles or where the BM is adjourned to an infinite period (sine die)
  • Where quorum is not present, the continuing directors can act only for:-
    • Increasing the no. of directors upto quorum, or
    • Summoning a General Meeting (GM)
  • The above provisions shall not be applicable for OPC.

 

 

VOTING AT BOARD MEETING

  • Every director, irrespective of the number of shares held in the company, shall have one vote. In short- ‘One Director, One Vote’.
  • The method of voting shall only be –‘Show of Hands’.
  • Every resolution at Board Meeting shall be taken by ‘Majority Rule’. However, in the following cases resolution shall be passed only by ‘Unanimous decision’:
  • Power to make Loan
  • Give guarantee/ security
  • Make investments
  • To appoint a person as Managing Director (MD), if he is the manager or MD in another Company.
  • In case of equality of votes, the Chairman of the Board Meeting shall use his ‘Casting vote’ (second vote) to take decision.

 

Note:

  • The Articles of Company may provide for passing unanimous resolution for certain other or all
  • The directors abstained from voting or absent at Board Meeting, shall not be considered for determining majority. Further, the directors interested in the contract or arrangement discussed at Board Meeting shall not participate therein. Even if he does, it shall be considered void.
  • The resolution passed at Board Meeting shall be binding on all directors, even on those absent from Board Meeting.
  • No director can appoint ‘Proxy’ to vote at Board Meeting on his behalf. Even the articles cannot empower such clause.