Summary: Board meetings are essential for corporate governance, as directors make decisions on behalf of the company. The Companies Act, 2013 mandates specific rules for these meetings, including their frequency, notice, quorum, and record-keeping. Companies must hold at least four board meetings annually, with no more than 120 days between meetings. Smaller companies and certain types, like One Person Companies, need only hold two meetings each year, with a 90-day gap between them. The first meeting must be held within 30 days of incorporation. Notices for meetings must be given to all directors at least seven days in advance, and the agenda is usually included, though not required by law. The quorum for a meeting is defined as either one-third of the total board or two directors, with some exceptions. If a meeting lacks quorum, it is adjourned automatically. Directors can participate in meetings via video conferencing, and such meetings are valid if they meet specific criteria. The minutes of the meeting must be recorded and signed within 30 days, summarizing the discussions and decisions. If a director is interested in an agenda item, they must disclose it and may be excluded from voting on it.
A company, being an artificial person, needs human agents to take decisions, perform actions and ensure compliance with legal obligations. Collective body of the directors is entrusted with the responsibility of managing the company’s affairs. A director cannot individually exercise the power of the board unless the board has specifically delegated that power to him. The company Act, 2013 mandates that the board of directors shall convene minimum number board meetings in each calendar year. The non-compliance with this requirement has specific consequence. The Board can pass resolution either at duly convened board meeting or by circulation.
Frequency of the Board Meeting Section 173
First Board Meeting: It shall be held within thirty days from the date of incorporation. Where as IFSC shall hold first board meeting within sixty days of date of incorporation.
Subsequent Board Meeting: Every company shall hold four board meetings in each calendar year. The interval between two consecutive board meetings shall be a maximum of 120 days. Where a board meeting is adjourned for want quorum and at the adjourned board meeting also no quorum is present, meeting stand cancelled. Adjourned meeting is considered as a mere continuation of the original meeting. Therefore, maximum permissible interval of 120 days will be counted from the date of original meeting.
Relaxation:
(1) A One Person Company (OPC), Small Company, Dormant company, and Start-up Private company are required to hold at least one board meeting in each half of the calendar year. This effectively means that two meetings are required in each calendar year. The minimum Gap between two board meetings will be 90 days. No meeting is required if the OPC has only one director.
(2) Section 8 company shall hold at least one board meeting within every six-calendar months.
Notice of Board Meeting Section 173(3)
1. Notice of Original Board Meeting: A notice of board meeting shall be given to every director, including to those who are not entitled to attend the meeting. The notice must be served at least seven days before the scheduled date of the board meeting. Notice will be served to the director’s address registered with the company. Such registered address can be in India or outside India. Where the Article or resolution or agreement specifies that the meeting should be held on a particular day of the week or month or at prescribed interval, notice of the meeting shall be given, even if the meetings are held on pre-determined date or at pre-determined intervals. It would be more prudent to serve the notice of the meeting to both the original and alternate directors appointed under section 161(2) of the Act. Notice of the meeting shall be given to the interested director means a director within the meaning of section 184(2) of the Act.
2. Notice of Adjourned Board Meeting: A notice in regard to the adjourned Meeting should be given to all the directors. Where a board meeting adjourned for want of quorum as required under section 174 of the Act, then, unless the articles of the company otherwise provide, meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.
Notice shall inform the director about the option available to them to participate through electronic mode. Director can exercise such option and intimate his intention at the beginning of the year.
If notice of a meeting is not given to one of its directors, meeting of board of directors is invalid and resolutions passed at such meeting are inoperative.
Meeting at shorter notice: Urgent business can be transacted at a meeting called at a shorter notice. Meeting called on short notice must be attended by at least one independent director. If any independent director is unable to attend such a meeting, the resolution passed at that meeting must be circulated to all the directors and will be final once ratified by at least one independent director. Where a company is not required to appoint an independent director under section 149(4) read with Rule 4, a meeting can be called up at a shorter notice without any condition regarding the presence of an independent director.
Mode of serving notice: – Notice in writing of every meeting shall be given by hand or by post or by registered post or by e-mail or by facsimile or by any other electronic means. Notice cannot be given by ordinary post since the proof of delivery or acknowledgment is not available.
Agenda in the Notice: Typically, an Agenda is a list items or topic to be discussed, acted upon at a meeting. The Company Act, 2013 does not specify a requirement to include the agenda in the notice of the meeting. The Notice can be interpreted as an intimation of the meeting and does not necessarily require the inclusion of the agenda. However, given the importance of board meetings and the responsibilities placed on the directors for decisions made, it is essential for them to be properly prepared and informed about the items to be discussed. Usually, the company’s Article make it mandatory to include the agenda in the notice.
Participation in a Board Meeting:
Director can participate in the board meeting either in person or through video conferencing or other audio-visual means. Only such video conferencing or audio-visual can be used for participation in meeting, which are capable of recording and recognising the presence of the director as well as recording and storing the proceeding of the meeting.
Quorum for Board Meeting Section 174:
Quorum means the minimum number of directors whose presence is necessary for holding of a meeting. Quorum needs to be present not only at the time of commencement of meeting but also throughout the meeting. Companies Act lays down only minimum number of directors to form a quorum, company by its article can provide for a higher number of quorum. The Directors who participate by video conferencing or other audio-visual means shall also be counted for quorum.
(i) Quorum for a board meeting: Quorum of a board meeting shall be higher of one third of its total strength or two directors. Any fraction of one-third shall be rounded off as one.
(ii) Quorum in case of interested directors: If, at any time during the course of meeting, the number of interested directors exceeds or is equal to two-thirds of the total strength of the board of directors, the quorum shall consist of directors who are not interested and are present at the meeting; however, their number must not be less than two. Interested directors for this purpose means a director within the meaning of section 184(2).
Any fraction of two-thirds shall be rounded off as one.
An interested director within meaning of section 184(2) shall neither be counted for quorum nor entitled to participate in respect of an item business in which he is interested. However, in the case of a private company that has not committed default in filling its financial statement under section 137 or its Annual Return under section 92 with the registrar, an interested director may participate in that business after disclosure of his interest.
(iii) Quorum in case of section 8 company: Quorum of board meeting shall be lower of eight members or 25% of its total strength. This benefit is available only when section 8 company has not committed default in filling its financial statements under section 137 or Annual Return under section 92 with the Registrar.
(iv) Number of directors reduced below the Quorum: The Continuing directors may act for the purpose of increasing the number of directors to that fixed for the quorum or for calling a general meeting, and not for other purpose. In such a case, the board can appoint additional directors under section 161(1) of the Act, if authorize by the Articles.
(v) Adjournment of Meeting for want of Quorum: Where a board meeting adjourned for want of quorum, then, unless the articles of the company otherwise provide, meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.
Minutes of Board Meeting Section 118:
Minutes means a formal written record of the proceedings of a Meeting. Minutes can be kept in physical or electronic form.
Preparation of Minutes: Every company shall prepare, sign and keep minutes of proceeding of every meeting of the board. Minutes shall be prepared within thirty days of conclusion every meeting.
Content of Minutes: It shall Contain fair and correct summary of proceedings at the meeting. Chairman of the meeting has the exclusive discretion in regard to the inclusion or non-inclusion of any matter in the minutes if he has opinion that the any matter is defamatory of any person, irrelevant or immaterial, or detrimental to the interest of the company.
Author Bio
