Meetings are conducted to take decisions about the company. When directors take decisions about the company in a meeting we call it as Board Meeting.

Quorum

Quorum means the minimum number of directors who are required be present at the meeting to make the proceedings valid. Section 174 of Companies Act, 2013 deals with the quorum for Board Meeting.

Section 174 is not be applicable for One Person Company as it has only one director on its Board.

As per Section 174(1) quorum for Board meeting shall be one- third of total strength or 2 directors whichever is higher. For the purpose of quorum, directors participated through Video conferencing or audio visual means shall also be counted.

Provided that the quorum shall not be less than two members. Any fraction of number of Director shall be rounded off as one. Total strength shall not include directors whose places are vacant.

Example

Suppose Ltd. has total 9 directors on its Board. The quorum for board meeting shall be one-third of total strength or 2 directors whichever is higher. In the given case 3 members shall be the quorum (9*1/3=3 or 2 whichever is higher)

The Companies Act, 2013 lays down only minimum quorum, which can be increased by the company by its Articles by stating a higher quorum, which was decided in Amrit Kaur Puri v Kapurthala Flour, Oil & General Mills Co (P) Ltd.

Example

Suppose ABC ltd in its articles provided for 5 directors as quorum and it has 12 directors on its board. The quorum for board meeting shall be one- third of total strength or 2 directors whichever is higher. But here in the given case quorum shall be 5 directors as the articles provided for larger quorum than stated in the Act.

As per section 174(2) if at any time the number of directors is reduced below quorum, then the continuing directors may act for the purpose of increasing the number of directors to that fixed for quorum, or of summoning a general meeting of the company and for no other purpose.

Example

Suppose PQR Ltd has 8 directors on its board. Due to Flight crash 7 directors out of 8 died. The option available for the company is

1. To appoint a director by the remaining 1 director for increasing the number of quorum to 2 or

2. Summon a General meeting of the company.

Interested Director shall not be counted for the purpose of quorum, have no voting right in respect of matter in which he has interest and not allowed to participate in discussion of such matter.

Example

Suppose Pltd has 9 Directors on its board. Only 7 directors present at meeting, out of that 6 are interested directors, one is participating through video conferencing. Whether the company has quorum for board meeting?

Analysis:

The quorum for Board meeting shall be one- third of total strength or 2 directors whichever is higher. Interested director shall not be counted for the purpose of quorum. When the director participate through video conferencing, he is counted for quorum but, if he has interest in any matter, then not counted for the purpose of quorum. In the given case there is no valid quorum (9-6=3*1/3=1 or 2 whichever is higher shall be the quorum) required for the meeting as there is only one director, cannot be considered as quorum.

As per section 174(3) where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time.

Example

Suppose N Ltd has 9 directors on its board. Out of 9 directors 7 are interested and all attended the board meeting. Whether the company has required number of quorum?

Analysis:

The quorum for Board meeting shall be one- third of total strength or 2 directors whichever is higher. Interested director shall not be counted for the purpose of quorum. Where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time.

In the given case the quorum for board meeting shall be 2 directors (9*2/3=6 director, here it is 7, so more than 2/3rd   is  interested and not interested directors are 2 shall be the quorum.

As per section 174(4) where a meeting could not be held for want of quorum, then unless articles of the company otherwise provide, the 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.

If in the adjourned meeting also quorum is not present, then the meeting stands dissolved. The quorum shall be present not only at the time of commencement of meeting but also while transacting business.

Example

Suppose B Ltd has 7 directors on its board. All the directors participated in the meeting. But after 3 items of agenda 4 Directors left. Whether the company adjourn the meeting for want of quorum?

Analysis:

A board meeting shall be 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, when the quorum necessary for the meeting is not present.

In the given case quorum is present at the beginning of the meeting but gradually reduced, so there is no adjournment of meeting and also the quorum shall be present while transacting the business. Hence the meeting will get over at the stated time by considering only the items which has required quorum.

Disclaimer: This article is for general information of the user and shall not be construed as legal advice. Author has exercised utmost care while writing this article, but still this article may contain some error or mistake.

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Qualification: Student - CA/CS/CMA
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Location: Palakkad, Kerala, India
Member Since: 08 Jan 2023 | Total Posts: 2

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