Board Meeting under Companies Act
1. Meetings of Board (Sec 173)
a. Every company shall hold its first board meeting within 30 days from the date of incorporation. After the first board meeting, every company shall hold minimum four board meetings in a calendar year.
b. In holding board meetings during the year, there shall not be more than 120 days gap between two consecutive board meetings.
c. The above mentioned gap of 120 days stands extended by a period of 60 days till next two quarters i.e. till 30th September 2020 (as per general circular no. 11/2020 dated 24.03.2020) issued by the Ministry of Corporate Affairs in view of Covid 19 outbreak.
d. In case of one person company, dormant company, small company, section 8 company and private company (if such private company is a start-up) this section is deemed to have been complied if at least one board meeting has been held in each half of a calendar year and the gap between two meetings shall not be less than 90 days.
e. In case of specified IFSC private company (Note – 1) and specified IFSC public company (Note – 2), it shall hold its first board meeting within 60 days from the date of incorporation and thereafter, shall held atleast one meeting in each half of a calendar year.
f. Every officer whose duty is to give notice under this section, fails to do so shall be liable to a penalty of rupees twenty five thousand.
2. Meetings through video conferencing or audio visual means
a. The participation of directors in a meeting of Board may be either in a person or through video conferencing or audio visual means as may be prescribed which are capable of recording and recognising the participants and storing the proceedings of meetings alongwith date and time.
b. The notice of meeting shall inform the participants that the option available to them and shall provide the necessary information to them for participating through video conferencing or audio visual means.
c. Any director who intends to participate through video conferencing or other audio visual means shall intimate such participation at the beginning of the calendar year and such declaration shall be valid for one year but such declaration shall not debar the director from attending the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person. In the absence of declaration, it shall be assumed that the director shall attend the meeting in person.
d. At the commencement of the meeting, a roll call shall be taken by the Chairperson where every director participating through video conferencing or audio visual means shall state for the record namely : – the name , location from where he is participating, that he has received the agenda & all the relevant material for the meeting and that no one other except the concerned director is attending or have access to the proceedings of the meeting.
e. From the commencement of the meeting and until the conclusion of such meeting, no person other than the Chairperson, Directors, Company Secretary and any other person whose presence is required by the Board shall be allowed access to the place where any director is attending the meeting either physically or through video conferencing without the permission of the Board.
3. Notice for Board Meeting
a. Every board meeting shall be held by giving at least seven days notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
b. In order to transact urgent business, board meeting can be called by giving shorter notice subject to the condition that at least one independent director should be present at the meeting.
c. In the absence of independent directors from such meeting of the Board, decisions taken at the meeting shall be circulated to all the directors and shall be final only on ratification thereof by atleast one independent director, if any.
4. Quorum for Meetings of Board (Sec 174)
a. The quorum for meeting of Board of Directors of a company shall be one third of the total strength or two directors, whichever is higher and the participation through video conferencing or audio visual means shall also be counted for the purpose of quorum.
b. In case of section 8 company, quorum shall be eight members or 25 percent of total strength whichever is less. Provided that the quorum in case of section 8 company shall not be less than two members.
c. If the number of directors which are required to maintain quorum reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for increasing the number of directors to that fixed for quorum or for summoning a general meeting and for no other purpose.
d. Where at any time the number of interested directors exceeds or is equal to two-third of total strength, the number of directors who are not interested and present at the meeting, being not less than 2, shall be the quorum during such time.
e. In case of specified IFSC public company and specified IFSC private company, interested director may participate in the meeting provided that the disclosure regarding his interest is made by the concerned director prior or at the meeting.
f. In case of private limited company, interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184 (Note – 3).
g. Where a meeting of the board could not be held due to want of quorum, then articles of a company unless otherwise provide, the meeting shall stand adjourned to the same day at the same time and place in next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday.
h. For the purpose of this section, any fraction shall be rounded off as one and total strength shall not include directors whose places are vacant.
5. Matters Not to be Dealt within Meeting through Video Conferencing or Other Audio Visual Means
a. The following matters shall not be dealt in any meeting through video conferencing or audio visual means :-
i. The approval of annual financial statements;
ii. The approval of Board’s report;
iii. The approval of prospectus;
iv. The Audit Committee Meetings for consideration of financial statement including consolidated financial statement if any, to be approved by the board under section 134(1) of the Act and
v. The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
b. Where the quorum is present through physical presence of directors, any director may participate through video conferencing or other audio visual means.
c. For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on 30th September 2020, the meeting related to matters specified above in point (a) can be held through video conferencing or other audio visual means. (Notification dated 19th March 2020 which is further amended by notification dated 23rd June 2020 issued by Ministry of Corporate Affairs).
Note
1. Specified IFSC Private Company – A private company who is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 read with Special Economic Zones Rules, 2006.
2. Specified IFSC Public Company – An unlisted public company who is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 read with Special Economic Zones Rules, 2006.
3. Section 184 of Companies Act
(1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.
(2) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into—
(a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent shareholding of that body corporate, or is a promoter, manager, Chief Executive Officer of that body corporate; or
(b) with a firm or other entity in which, such director is a partner, owner or member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting:
Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested (In case of section 8 company, only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees, then only it is considered as concerned or interested).
(3) A contract or arrangement entered into by the company without disclosure under sub-section (2) or with participation by a director who is concerned or interested in any way, directly or indirectly, in the contract or arrangement, shall be voidable at the option of the company.
(4) If a director of the company contravenes the provisions of sub-section (1) or subsection (2), such director shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to one lakh rupees, or with both.
(5) Nothing in this section —
(a) shall be taken to prejudice the operation of any rule of law restricting a director of a company from having any concern or interest in any contract or arrangement with the company;
(b) shall apply to any contract or arrangement entered into or to be entered into between two companies or between one or more companies and one or more bodies corporate where any of the directors of the one company or body corporate or two or more of them together holds or hold not more than two per cent. of the paid-up share capital in the other company or the body corporate.
Author Bio
the post is not updated. MCA notification which came on 21 June 2021. has omitted the rule 4 of company (board meeting and its powers) rules 2014. therefore, the matters mentioned in your post which earlier required to be transact via passing resolution in meeting duly convened only. now these all matters can be approved by video conferencing also.