Passing the Resolution by Circulation is an alternative method for urgent matters instead of convening the Physical Board Meeting. Resolution shall be considered as passed when approved by the majority of Directors.

As per the provisions of Section 175 of Companies Act, 2013, For passing the Resolution by Circulation, the resolution has to be circulated in draft with necessary papers, 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 electronic means(E-mail or fax) and has been approved by a majority of the directors or members, who are entitled to vote on the resolution.

Power: However if not less than 1/3rd of the total number of directors of the company 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.

Agendas not be passed by resolution by circulation

1. Chapter 12,rule 8 of the companies (meeting of board and its powers) rules, 2014

2. Chapter 12, rule 4 of the companies (meeting of board and its powers)rules, 2014

The following matters shall not to be dealt with in a Meeting through Video Conferencing or Other Audio Visual Means:

  • the approval of the annual financial statements;
  • the approval of the Board’s report;
  • the approval of the prospectus;
  • 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]; and
  • the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

3. Section 179(3) of Companies Act, 2013

(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;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;]

(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;

4. Secretarial standard -1 ,annexure A

i. General Business Items

  • Noting Minutes of Meetings of Audit Committee and other Committees.
  • Approving financial statements and the Board’s Report.
  • Considering the Compliance Certificate to ensure compliance with the

provisions of all the laws applicable to the company.

  • Specifying list of laws applicable specifically to the company.
  • Appointment of Secretarial Auditors and Internal Auditors.

ii. Specific Items

  • Borrowing money otherwise than by issue of debentures.
  • Investing the funds of the company.
  • Granting loans or giving guarantee or providing security in respect of loans.
  • Making political contributions.
  • Making calls on shareholders in respect of money unpaid on their shares.
  • Approving Remuneration of Managing Director, Whole-time Director and Manager.
  • Appointment or Removal of Key Managerial Personnel.
  • Appointment of a person as a Managing Director / Manager in more than one company.
  • In case of a public company, the appointment of Director(s) in casual vacancy subject to the provisions in the Articles of the company.
  • According sanction for related party transactions which are not in the ordinary course of business or which are not on arm’s length basis.
  • Sale of subsidiaries.
  • Purchase and Sale of material tangible/intangible assets not in the ordinary course of business.
  • Approve Payment to Director for loss of office.
  • Items arising out of separate Meeting of the Independent Directors if so decided by the Independent Directors.

iii. Corporate Actions

  • Authorise Buy-Back of securities.
  • Issue of securities, including debentures, whether in or outside India.
  • Approving amalgamation, merger or reconstruction.
  • Diversify the business.
  • Takeover another company or acquiring controlling or substantial stake in another company.

iv. Additional list of items in case of listed companies

  • Approving Annual operating plans and budgets.
  • Capital budgets and any updates.
  • Information on remuneration of Key Managerial Personnel.
  • Show cause, demand, prosecution notices and penalty notices which are materially important.
  • Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
  • Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company.
  • Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company.
  • Details of any joint venture or collaboration agreement.
  • Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
  • Significant labour problems and their proposed solutions. Any significant development in Human Resources/ Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
  • Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
  • Non-compliance of any regulatory, statutory or listing requirements and shareholder services such as non-payment of dividend, delay in share transfer etc.

Therefore Except the above mentioned Acts and including additional provision as per the Articles of Association of Company, all other Resolutions can be passed through Circulation.

Procedure as per secretarial standard-1

1. Proposed Resolution to be passed should be sent in draft together with necessary papers to all Directors at postal address or email address registered with company. Every Resolution shall carry a serial Number

2. The same should be circulated by Hand, speed Post or by registered post, or by courier or by email or by any other recognized electronic mode.

3. Explanatory Note shall be given for each Business proposed to understand the meaning, scope and implications of the proposal.

4. If Interest of any Director arises through the matter shall be communicated. In cases where the interest of a Director is yet to be communicated to the company, the concerned Director shall disclose his interest before the last date specified for the response.

5. Procedure to give assent or dissent and Last date on which assent can be given shall be mentioned. Not more than 7 days shall be given to the Directors to respond, Additional 2 days is allowed in case of speed post/ by registered post/ or by courier.

6. If Majority assented, Resolution passed shall be noted by the Members present in the Next Board Meeting.

7. Passing of Resolution by circulation shall be considered valid as if it had been passed at a duly convened meeting of the Board.

Note:

1. If not less than one-third of the total number of directors of the company demands that resolution under circulation must be decided at a meeting, the responsibility arises of the Chairman to put that in the Meeting.

2. If approval of majority of Directors entitled to vote is not received by the last date specified for approval, the Resolution shall be considered as not passed.

FREQUENTLY ASKED QUESTIONS:

Q.1 Is Resolution along with Draft proposed to be circulated should be sent to Interested Directors also?

Ans: Yes

2. If Resolution along with Draft could not be sent through Email Id or Postal Address registered with Company or in absence of such details or any changes thereto?

Ans: Refer to any of the addresses appearing in DIN registration of the Director

3. For how long should the proof of sending and delivery of draft should be kept?

Ans: Not Less than 3 years

Author Bio

Qualification: CS
Company: N/A
Location: New Delhi, IN
Member Since: 08 Jan 2020 | Total Posts: 3
TORCH BEARER TO LIGHT CORPORATE DOORS. An Young Professional with strong academic background, Associate Member of Institute of Company Secretaries of India. View Full Profile

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