Board Meetings under Secretarial standard and Company Law

1. Secretarial standard on Board Meetings

Section 118(10) of the Companies Act, 2013 mandated for every company to observe secretarial standards with respect to General and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.

2. Periodicity of the Board Meetings

Section 173 of the Companies Act, 2013 provides that every company, private or public, shall hold:

• the first meeting of the Board of Directors within 30 days of the date of its incorporation; and
• a minimum number of four meetings of its Board of Directors every year (since the word used is “year” and not “financial year”, it shall be interpreted to mean “calendar year” for the purpose of Section 173).

There should not be gap of more than 120 days between two consecutive Board meetings.

The Central Government may, by notification, provide different requirement or modify the requirement for specific class or description of companies.

Section 173(5) provides that in case of:

• one person company,
• small companies,
• dormant companies, and
• [1]a private company (if such private company is a start-up)

one Board meeting is required to be held in each half of the calendar year and gap between 2 meetings is not less than 90 days. In case of one person company, where there is only 1 director, Board meeting is not required to be conducted.

Provided that nothing contained in this sub-section and in section 174[2] shall apply to One Person Company in which there is only one director on its Board of Directors.

The term ‘start-up’ or “start-up company” means a private company incorporated under the Companies Act, 2013 and recognised as start-up in accordance with the notification issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.

As per Para 2.1. of Secretarial Standard (SS) 1 on “Meetings of the Board of Directors” issued by ICSI, an adjourned Meeting being a continuation of the original Meeting, the interval period in such a case, shall be counted from the date of the original Meeting.

IFSC Companies: Provided further that a Specified IFSC private company shall hold the first meeting of the Board of Directors within sixty days of its incorporation and thereafter hold at least one meeting of the Board of Directors in each half of a calendar year.

Provided further that a Specified IFSC public company shall hold the first meeting of the Board of Directors within sixty days of its incorporation and thereafter hold atleast one meeting of the Board of Directors in each half of a calendar year.

Board meetings in respect of Section 8 Companies: In case of Section 8 Companies, section 173(1) shall apply only to the extent that the Board of Directors, of such Companies shall hold at least one meeting within every six calendar months. [Notification No. [F.No.1/2/2014-CLI], dated 5-6-2015]

This exemption is available only if such company has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar – MCA Notification Dated 13-6-2017.

Author’s Note: The word ‘hold’ used above should be distinguished from the word ‘conducted’. The word ‘hold’ means ‘to keep’, whereas the word ‘conduct’ means ‘to carry out’. Thus, if a board meeting was validly called upon but could not be conducted for want of quorum, the provisions of section 173 shall not be deemed as contravened because such a meeting shall be deemed a validly held board meeting.

This is further evident from the fact that as per section 174(4), if a Board meeting is adjourned for want of quorum then unless the articles of the company otherwise provide the adjourned meeting shall be held at the same day in the next week at the same time and place or if the day is a national holiday till the next succeeding day which is not a national holiday at the same time and place.

Thus, on adjournment of a meeting, the meeting having started but not ended will not result in contravention of section 173(1). In case of adjournment of the meeting, it shall be deemed to have been held on the date on which it was started and not on the date when the adjourned meeting was held.

3. Notice of Board Meeting

Section 173(3) of the Companies Act, 2013 stipulates that a meeting of the Board of directors shall be held after giving minimum seven days notice. The notice shall be given in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or post or by electronic means.

♦ Notice to given to: 1. Director who is for the time being in India; 2. Director who is for the time being outside India = At his usual Indian Address; 3. An Alternate Director = Notice to be served to original plus alternate director; 4. An Interested Director; 5. A director who has waived his right to receive notice [Re, Portuguese Consolidated Copper Mines Ltd, it was held that right to receive notice can’t be waived] ♦ Where a director mostly resides abroad, notice must be sent at his foreign address as a part of probity and fairness on the part of the Co. [Dr. Kamal Kumar Dutta v Ruby General Hospital Limited] ♦ If AOA provides any manner for sending notice, follow that manner; ♦ In A.L.AR Arunachalam Chettair Firm v Kaleeswarar Mills Limited, it was held that Notice of Board Meeting is not required if: 1. BOD passes resolution at BM fixing day, time & place for all future BMs; and 2. A copy of such resolution sent to every director; or 3. AOA fixes day, time & place for all future BMs ♦ Notice shall be invalid if intention is mala fide (e.g. to secure absence of some directors notice was not accompanied with Agenda)

MCA Circular No. 28/2011, dated 20.5.2011 has allowed paperless compliance’s by the Companies after considering provisions of the Information Technology Act, 2000 for legal validity of compliance’s under Companies Act through electronic mode. Therefore, the notice of the Board or Committees meetings may also be sent by way of email/electronically to the directors/members of the Committee.

3.1. Calling of board meeting at a shorter notice:

Meeting can be called at shorter notice if atleast one independent director, if any, in the company, shall be present at the meeting and in case of absence of independent directors from such Board meeting, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.

In case of failure to give the notice of Board meeting as required under section 173, every officer of the company whose duty is to give notice shall be liable to a penalty of ` 25,000.

4. Agenda for the Board Meeting

Section 173 does not say that every item, which is discussed at the Board meeting must be specified on the agenda of the Board meeting. In fact, the section does not refer to any agenda. Law does not require an agenda for a meeting of the board of directors and any business whatsoever can be transacted at the Board meeting.

Thus, non-mentioning of an item in agenda, at the highest would only be an irregularity. [Banoo J. Coyajee v Shanta G P Parulekar]. However, it is generally recognised that an agenda sent in advance of the meeting facilitates fruitful consideration of matters put before the Board.

The chairman will be free to allow consideration of matters not included in the agenda. [Suresh Chandra Marwaha v Laids (P) Ltd.].

Therefore, simply because removal of chairman is not mentioned in agenda of meeting, resolution for removal of chairman passed by majority directors, cannot be said to be invalid particularly when chairman himself has raised such issue in meeting. [Kashinath Tapuriah v Incab Industries Ltd.]

5. Who can convene a Board Meeting[3]?

Generally the Secretary or a director on the direction of the Chairman/Managing Director shall call a Board meeting. The Articles describe the procedure in that matter.

Any director can requisition a Board Meeting; On requisition of a Board Meeting by a director, the Manager/Secretary/any Director can summon Board Meeting; Notice of Board Meeting shall be sent under the authority of the company; A secretary has no authority to call Board Meeting on his own; If notice given by secretary without any authority, it will be improper notice; Improper notice may be ratified by Board of Directors

Where a director wants to convene a Board meeting for some urgent issues, he ought to request the managing director of the company to do so. If he convenes the Board meeting for the same issues on the same date at the registered office of the company, where the Board meetings of the company are usually held, there is no reason why the petitioner director should not attend that meeting and to convene a parallel meeting at a different station. Such a step cannot be justified, and the Board meeting convened by the petitioner director is illegal and declared to be null and void. [Sanjiv Kothari v Vasant Kumar Chordia]

6. Quorum of the Board Meeting

In terms of section 174(1) of the Companies Act, 2013, the quorum for a Board meeting shall be:

• one-third of its total strength of directors who are in office; or
• two directors,

whichever is higher.

Any fraction arising in counting of one-third will be rounded off as one. For example, in a Board having seven directors, the quorum shall be three directors. [Explanation to Section 174]

Where the interested directors exceed or equal two-thirds of the total strength, the number of remaining disinterested directors present at the meeting being not less than two shall be the quorum of that business of the meeting [Section 174(3)].

IFSC Companies: In case of IFSC Companies, the interested director may participate in such meeting provided the disclosure of his interest is made by the concerned director either prior or at the meeting – MCA Notification, Dated 4-1-2017.

Directors of private companies: Interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184 – MCA Notification No. G.S.R. 583(E) dated 13th June, 2017.

For the purposes of this sub-section, “interested director” means a director within the meaning of section 184(2).

It is also provided that total strength shall not include directors whose places are vacant.

This section also applies to a private company.

The participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section [Section 174(1)]

6.1. Quorum for Section 8 Companies:

The Central Government vide its Notification No. [F. No. 1/2/2014-CL.I], dated 5-6-2015, provided as follows:

The quorum for a meeting of the Board of Directors of a Section 8 Company shall be:

• either eight members of the Board; or
• twenty five per cent of its total strength,

whichever is less, provided that the quorum shall not be less than two members

This modification is applicable only if such company has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar – MCA Notification Dated 13-6-2017.

6.2. Continuing directors can act to increase the number of directors to obtain quorum, etc.:

The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of:

1. increasing the number of directors to that fixed for the quorum, or

2. summoning a general meeting of the company and for no other purpose [Section 174(2)].

The court held that the appointment of additional director at the Board meeting held by a single director was in accordance with section 161 of the Companies Act, 2013 and there was no violation of the provisions requiring minimum quorum for the purpose of Board meeting under section 174 of the Companies Act, 2013. All the decisions taken at the meeting are valid. [Ranbaxy Laboratories Ltd v Jayaram Chigurupati].

7. Quorum required throughout the meeting

It has been held that the required quorum should be present throughout the continuance of the Board meeting. [Bell v Royal Western India Turf Club Ltd.]

If any director leaves the meeting for some time and rejoins the meeting, it is advisable to record his period of absence in the minutes of the Board meeting for reference.

8. Quorum in case where all directors except one are interested

Where all the directors except, one are interested in a matter, the only way available with the company to resolve the matter is that to call a general meeting and get the approval of members to the matter in question. Another way available is to appoint more number of directors on the Board who are not interested in a matter. [Rajan Nagindas Joshi v British Burma Petroleum Co. Ltd.]

DAY, DATE, TIME AND PLACE FOR HOLDING BOARD MEETINGS

9. Day of holding meeting

Board meetings are normally held during business hours and on a day, which is not national holiday. However, a Board meeting may validly be held on public holiday. MCA has clarified vide its Letter, dated 2-5-1963 that it would not raise any objection if an original Board meeting is held on a public holiday for the convenience of the directors although it considers that an original Board meeting should normally be held only on a working day.

10. Time of holding Board Meetings

Board meetings may be held during business hours or outside business hours. There is no restriction on that matter under the Act.

11. Place for holding Board Meetings

Board meetings can be held at any place whether it be a company’s registered office or head office or any other premises and whether or not it is within the same city, town, village or state in which the registered office of the company is situated. Board meeting can also be held at places other than these places including abroad.

12. Adjournment of Board Meeting

As per section 174(4), if a Board meeting is adjourned for want of quorum then unless the articles of the company otherwise provide the adjourned meeting shall be held at the same day in the next week at the same time and place or if the day is a national holiday till the next succeeding day which is not a national holiday at the same time and place. Therefore, an adjourned meeting should be held only on a working day.

Fresh notice is not necessary if the meeting is adjourned to the same day next week unless Articles otherwise provide. It is however desirable to give notice. [Promod Kumar Mittal v Southern Steel Ltd.]

If meeting is adjourned for want of quorum, sitting fee is payable for adjourned Board meeting also [MCA Circular dated 2-2-1972]

Secretarial Standard 1 on Meetings of the Board of the Board of Directors issued by ICSI and effective from 1st July, 2015, provides that: “National Holiday” includes: (i) Republic Day i.e. 26th January, (ii) Independence Day i.e. 15th August, (iii) Gandhi Jayanti i.e. 2nd October, and (iv) such other day as may be declared as National Holiday by the Central Government. “Quorum” means the minimum number of Directors whose presence is necessary for holding of a Meeting. Every Meeting shall have a serial number. The Chairman may, unless dissented to or objected by the majority of Directors present at a Meeting at which a Quorum is present, adjourn the Meeting for any reason, at any stage of the Meeting. A Meeting may be convened at any time and place, on any day, excluding a National Holiday. A Meeting adjourned for want of Quorum shall also not be held on a National Holiday. Notice in writing of every Meeting shall be given to every Director by hand or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means. Where a Director specifies a particular means of delivery of Notice, the Notice shall be given to him by such means. Proof of sending Notice and its delivery shall be maintained by the company. The Notice of a Meeting shall be given even if Meetings are held on pre-determined dates or at pre-determined intervals. Notice convening a Meeting shall be given at least seven days before the date of the Meeting, unless the Articles prescribe a longer period. Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any. For this purpose under SEBI (Prohibition Insider Trading) Regulations, 2015, “unpublished price sensitive information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:— (i) financial results; (ii) dividends; (iii) change in capital structure; (iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions; (v) changes in key managerial personnel; and (vi) material events in accordance with the listing agreement Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any. To transact urgent business, the Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above, if at least one Independent Director, if any, shall be present at such Meeting. If no Independent Director is present, decisions taken at such a Meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one Independent Director, if any. In case the company does not have an Independent Director, the decisions shall be final only on ratification thereof by a majority of the Directors of the company, unless such decisions were approved at the Meeting itself by a majority of Directors of the company. A Director shall not be reckoned for Quorum in respect of an item in which he is interested and he shall not be present, whether physically or through Electronic Mode, during discussions and voting on such item. Every company shall maintain separate attendance registers for the Meetings of the Board and Meetings of the Committee.

13. Director cannot appoint a Proxy for Board Meetings

The Companies Act provides that it is necessary for the directors to attend the Board meetings personally [Section 173(2)]. Proxies are not allowed at Board meetings and directors are not allowed to appoint their representatives to attend the Board meetings and cast vote on their behalf.

14. Appointment of observer for the Board Meetings

A director cannot appoint a proxy or his representative to attend and cast his vote at the Board meetings on his behalf. However, nominee directors are allowed to appoint observes to attend the Board meetings as per the terms of the loan agreement entered with the company.

A director may also appoint with the consent of the Board, an observer to observe the proceedings of the Board meeting, if he is not available to attend the meeting. An observer has no right to speak or vote at the meeting.

15. Cancellation of convened Board Meeting

When the items of business for which Board meeting was convened have been altered or become non-existent than Board meeting convened may be cancelled by a notice to the director. The Articles of Association of the company may contain procedures regarding cancellation of Board meetings. If the postponement of the meeting is enough, Board meeting will not be cancelled.

PARTICIPATION BY DIRECTORS IN MEETINGS OF BOARD/ COMMITTEE OF DIRECTORS THROUGH ELECTRONIC MODE

16. Meetings of Board through video conferencing or other audio visual means

Section 173(2) of the Companies Act, 2013 allows participation in the Board meeting through prescribed video conferencing or other audio visual means recognized. The Central Government may provide a list of businesses where meeting by means of Video Conferencing shall not be recognized.

Meaning of video conferencing: Explanation to Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 define ‘video conferencing or other audio visual means’ means audio- visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting.

17. Requirement for alteration in the Articles of Association for electronic meetings

Section 13 of the Information Technology Act, 2000, inter-alia provides time and place of dispatch of notices in electronic mode, which may be applicable for the purpose of notice period provided in the Companies Act or in the Article of Association of the company.

Therefore, it is advisable to suitably modify the relevant provisions of the Articles of association of the Company to incorporate the relevant provisions relating to the procedure for dispatch of the notice, counting presence/participation of directors/committee members in the respective meeting, recording of the proceedings through video conferencing, etc.

18. Meaning of Electronic mode

Electronic mode means video conference facility i.e. audio-visual electronic communication facility employed which enables all persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate effectively in the meeting.

19. Responsibility of the Chairman and Secretary for electronic meeting

Rule 3(2) of the Companies (Meetings of Board and its Powers) Rules, 2014 provides for the Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care:

 (i) to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;

(ii) to ensure availability of proper video conferencing or other audio visual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorised participants at the Board meeting;

(iii)  to record the proceedings and prepare the minutes of the meeting;

(iv) to store for safekeeping and marking the tape recording(s) and/or other electronic recording mechanism as part of the records of the company, at least before the time of completion of audit of that particular year;

(v) to ensure that no one other than the concerned director are attending or have access to the proceedings of the meeting through video conferencing mode or other audio visual means; and

(vi) to ensure that participants attending the meeting through audio visual means are able to hear and see the other participants clearly during the course of the meeting.

20. Quorum

A director participating in a meeting through use of video conference shall be counted for the purpose of quorum. [Section 174(1)]

A roll call should also be made at the conclusion of the meeting or at re-commencement of the meeting after every break to ensure presence of quorum throughout the meeting.

Rule 3(5)(a) provides that after the roll call, the Chairperson or the Company Secretary shall inform the Board about the names of persons other than the directors who are present for the said meeting, at the request or with the permission of the Chairperson and confirm that the required quorum is complete.

20.1 A director participating in a meeting through video conferencing shall be counted for the quorum of the meeting

A director participating in a meeting through video conferencing or other audio visual means shall be counted for the purpose of quorum, unless he is to be excluded for any items of business under any provisions of the Act or the rules.

20.2 Quorum must be present through out the meeting

Rule 3(5)(b) provides that the Chairperson shall ensure that the required quorum is present throughout the meeting.

21. Place of the meeting

Rule 3(6) provides that with respect to every meeting conducted through video conferencing or other audio visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting, (the words “which shall be in India” have been deleted by MCA Notification w.e.f 14.8.2014), shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place.

22. Requirement to keep the statutory register before the meetings and authentication thereof

Rule 3(7) provides that the statutory registers which are required to be placed in the Board meeting as per the provisions of the Act, shall be placed at the scheduled venue of the meeting and where such registers are required to be signed by the directors, the same shall be deemed to have been signed by directors participating through electronic mode, if they have given their consent to this effect and it is so recorded in the minutes of the meeting.

23. Procedural requirements for holding electronic meetings

For this purpose, the company shall also comply with the following requirements (para 24) and procedures given in Rule 3(3), which is in addition to the normal procedures required under the Companies Act, 2013 for holding meetings of Board of directors

24. Notice of the meeting

(a) The notice of the meeting shall be sent to all the directors in accordance with the provisions of sub-section (3) of section 173 of the Act.

(b) The notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio visual means, and shall provide necessary information to enable directors to participate through video conferencing mode or other audio visual means.

24.1 Intimation for participating in the meeting through video conferencing

(a) A director intending to participate through video conferencing or audio visual means shall communicate his intention to the Chairperson or the company secretary of the company.

(b) If the director intends to participate through video conferencing or other audio visual means, he shall give prior intimation to that effect sufficiently in advance so that company is able to make suitable arrangements in this behalf.

(c) [4]Any director who intends to participate in the meeting through electronic mode may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for one year:

Provided that such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person.

(d) In the absence of any intimation under clause (a), it shall be assumed that the director shall attend the Board meeting in person.

24.2 Roll call for the meeting

Rule 3(4) provides that at the commencement of the meeting, a roll call shall be taken by the Chairperson, when every director participating, through video conferencing or other audio visual means shall state, for the record, the following; namely:—

(i)  name;

(ii) the location from where he is participating;

(iii) that he has received the agenda and all the relevant material for the meeting; and

(iv) that no one other than the concerned director is attending or having access to the proceedings of the meeting at the location mentioned in clause (b).

24.3 Identification of director before speaking

Rule 3(8) provides that:—

(a) Every participant shall identify himself for the record before speaking on any item of business on the agenda.

(b) If a statement of a director in the meeting through video conferencing or other audio visual means is interrupted or garbled, the chairperson or company secretary shall request for a repeat or reiteration by the director.

24.4 Objection by director on any motion

Rule 3(9) provides that if a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote.

24.5 Restriction on entry at the meeting place

Rule 3(10) provides that from the commencement of the meeting 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.

25. Minutes

25.1 Recording name of the dissenting director

Rule 3(11)(a) provides that at the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decisions taken on such item along with names of the directors, if any, who dissented from the decision taken by majority [and the draft minutes so recorded shall be preserved by the company till the confirmation of the draft minutes in accordance with sub-rule (12)][5].

25.2 Disclosure for particulars for attending the meeting by directors

Rule 3(11)(b) provides that the minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.

25.3 Circulation of the draft minutes of the meeting

Rule 3(12)(a) provides that the draft minutes of the meeting shall be circulated among all the directors within 15 days of the meeting either in writing or in electronic mode as may be decided by the Board.

25.4 Comments on the minutes by the directors attended the meeting

Rule 3(12)(b) provides that every director who attended the meeting, whether personally or through video conferencing or other audio visual means, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

25.5 Entry of the minutes in the minute book

After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act, and signed by the chairperson.

25.6. Minutes book to be prepared and signed in the prescribed manner:

In terms of section 118(1) of the Companies Act, 2013 every company shall cause minutes of the proceedings of every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting in books kept for that purpose with their pages consecutively numbered.

According to the Companies (Management and Administration) Rules, 2014:

(i) The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within 30 days of the conclusion of the meeting.

(ii) Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed by the chairman of the said meeting or the chairman of the succeeding meeting.

25.7 Contents of minute books – exclusions thereof

Section 118(4) provides that there shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting,—

(a) is or could reasonably be regarded as defamatory of any person; or

(b) is irrelevant or immaterial to the proceedings; or

(c) is detrimental to the interests of the company.

Supreme Court of India has decided in the Matter of Kerala State Electricity Board v Hindustan Construction Co. Limited [2009] 91 SCL 183 (SC) that: Confirmation of minutes of Board meeting or any committee meeting does not require confirmation in subsequent meeting; Non confirmation of minutes does not have any effect on the decision taken at the earlier meeting; When minutes of a meeting are placed before the next meeting the only thing that can be done is to see whether the decision taken at the earlier meeting has been properly recorded or not; Once a decision is duly taken it can only be changed by a substantive resolution properly adopted for such change

MATTERS TO BE CONSIDERED BY THE BOARD

26. Matters which shall always be considered at the meeting of the Board

There are specific provisions in the Act which require that certain matters, which are of importance to the company, shall always be considered at a meeting of the Board and accorded approval by resolution as per provisions of section 179 of the Companies Act, 2013, as given below:

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies [In case of Section 8 Companies, this matter may be decided by the Board by circulation instead of at a meeting. [Notification No. [F.No.1/2/2014-CL.I], dated 5-6-2015]. This exemption is available only if such company has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar – MCA Notification Dated 13-6-2017.;

(e) to invest the funds of the company [In case of Section 8 Companies, this matter may be decided by the Board by circulation instead of at a meeting. [Notification No. [F.No.1/2/2014-CL.I], dated 5-6-2015]. This exemption is available only if such company has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar – MCA Notification Dated 13-6-2017.;

(f) to grant loans or give guarantee or provide security in respect of loans [In case of Section 8 Companies, this matter may be decided by the Board by circulation instead of at a meeting. Notification No. [F.No.1/2/2014-CL.I], dated 5-6-2015]. This exemption is available only if such company has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar – MCA Notification Dated 13-6-2017.;

(g) to approve financial statement and the Board’s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed.

It is also provided in the section that the Board may delegate by a resolution to a committee of directors, the managing director, manager or a principal officer of the company, any of the powers at items (d), (e) and (f).

27. Powers of the Board — matters which shall be considered at Board meeting mandatorily

Rule 8 of the Companies (Meetings of the Board and its powers) Rules, 2014 provides that in additions to be matters specified under section 179(3) the following powers shall be exercised only by means of resolutions passed at meetings of the Board, namely:—

(i) to make political contributions;

(ii) to appoint or remove key managerial personnel (KMP)

(iii)  to appoint internal auditors and secretarial auditors;

No MGT 14 filing is required for the following resolutions [vide Companies (Meetings of Board and its Powers) Amendment Rules, 2015, MCA Notification Dated 18-3-2015]: to take note of appointment(s) or removal(s) of one level below the Key Management Personnel to take note of the disclosure of director’s interest and shareholding; to buy, sell investments held by the company (other than trade investments), constituting five percent or more of the paid – up share capital and free reserves of the investee company; to accept or accept or renew public deposits and related matters; to review or change the terms and conditions of public deposit; to approve quarterly, half yearly and annual financial statements or financial results as the case may be.

28. Other matters that are generally placed before the Board meeting

In addition to the items referred to above, there are various other matters, as illustrated below in the routine working of a company which are considered by the Board at Board meetings:—

(a) Issuance of shares.

(b) Allotment of shares and debentures.

(c) Appointment of directors and Managing Director/Whole-time Director.

(d) Consideration of Annual Accounts.

(e) Approval of interim dividend and recommendation of final dividend.

(f)  Appointment of sole selling/buying agents.

(g) Merger and amalgamation of companies.

(h) Capitalisation of reserves and issuance of bonus shares.

(i) Appointment of auditors in casual vacancy caused otherwise than by resignation.

(j) Appointment of whole time secretary for issuance of compliance certificate.

(k) Further, where proposals are initiated by the Board and recommended for the consideration of the company in general meeting, all these matters are first considered at a meeting of the Board.

29. Matters not to be dealt with in a meeting through video conferencing or other audio visual means

Rule 4 provides that the following matters shall not be dealt with in any meeting held through video conferencing or other audio visual means:

(i) to approve the annual financial statements; and

(ii) to approve the Board’s report.

(iii) the approval of the prospectus;

(iv) the Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act (these words have been substituted through MCA Notification w.e.f. 14.8.2014, for the words “consideration of accounts”); and

(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

30. Passing of resolution by circulation

Section 175(1) states that no resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless:

• the resolution has been circulated in draft, together with the necessary papers, if any,
• to all the directors, or members of the committee, as the case may be,
• at their addresses registered with the company in India by hand delivery or by post or by courier, or through such electronic means as may be prescribed, and
• has been approved by a majority of the directors or members, who are entitled to vote on the resolution:

Provided that, where not less than one-third of the total number of directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.

As per Rule 5 of Companies (Meetings of Board and its Powers) Rules, 2014, a resolution in draft form may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means which may include E-mail or fax.

Section 175(2) provides that a resolution under sub-section (1) shall be noted at a subsequent meeting of the Board or the committee thereof, as the case may be, and made part of the minutes of such meeting.

[1] Inserted by MCA Notification No. G.S.R. 583(E) dated 13th June, 2017

[2] Provisions regarding quorum for Board Meetings.

[3] In accordance with Secretarial Standard 1 on Meetings of the Board of Directors issued by ICSI, and effective from 1st July, 2015.

[4] Substituted by the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2017, w.e.f. 13-7-2017

[5] Inserted by the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2017, w.e.f. 13-7-2017.