MEETINGS OF BOARD OF DIRECTORS
Shareholders are the owners of a company. However, they cannot participate in the day-to-day activities of the company as they are spread over a wide geographical area. Therefore, there is a separation in the ownership and management of the company. The ownership lies in the hands of the shareholders as aforesaid whereas the management vests in the directors of the company. Directors are said to be the brain of a company as they are responsible for decision making over various matters concerning the company subject to the provisions of the company law in force.
When such directors function collectively, they are known as the Board of Directors. It must be noted that an individual decision of a director shall not have any effect over a company, and so it is the collective decision arrived at by the Board of Directors which shall prevail and apply. The most convenient way for the directors to take such collective decisions is by calling meetings of directors known as Board Meetings. The Companies Act, 2013 has also mandated every company to hold Board Meetings. We shall further look upon the legal provisions relating to Board Meetings in detail.
About Board Meetings: (Sec 173)
The provisions relating to Board meetings under the Companies Act, 2013 are as follows
1) The first Board meeting of every company shall be conducted within 30 days from the date when it is incorporated.
2) A company shall hold at least 4 Board meetings every year.
3) The gap between two Board meetings shall not exceed 120 days.
4) Secretarial Standard 1 (SS-1), issued by ICSI, relates to Board meetings. It states that at least 1 Board meeting shall be held in each quarter of the calendar year.
If the year of incorporation is of less than 12 months, then a proportionate number of Board meetings shall be held by the company accordingly.
Notice for Board Meetings:
1) Notice of Board Meeting shall be served to every director at least 7 days prior to the date of the meeting at the address available with the company.
2) The notice may be served either by hand delivery, speed post, registered post, or even electronically.
3) In case of the notice being served by speed post or registered post, two more days shall be added to the minimum no. of days required for serving the notice.
4) When a Board Meeting is called at shorter notice, it must be conducted in presence of at least 1 Independent Director.
If the Independent Director fails to be present at the meeting, the decision arrived at the meeting shall be circulated to all directors and must be ratified by at least 1 independent director.
The decisions must be ratified by a majority of directors if the company is not required to have an independent director.
Agenda for Board Meetings:
1) An Agenda for the Board Meeting shall be provided to all directors, at least 7 days prior to the Board Meeting.
2) Agenda shall consist of the matters to be dealt with or discussed at the Board meeting.
The quorum for Board Meetings: (Sec 174)
Provisions relating to a quorum for Board Meetings under Companies Act 2013 are as follows:
1) Quorum means the minimum number of persons. The minimum number of directors required to be present at the Board Meeting is:
- 1/3rd of the total directors OR
- 2 directors.
(the quorum for the Board Meeting shall be such number of directors that are greater in number from the above options)
3) If the directors interested personally in the matters to be dealt with at the meeting are 2/3rd or more of the total number, the directors who have no such interest shall be the valid quorum for the meeting but they shall not be less than 2 in number.
4) The absence of quorum shall lead to the adjournment of the Board Meeting to the next week, with the place of the meeting and the day being the same. If it’s a National Holiday, it must be held on the following working day.
Attending E-Board meetings:
1)The directors are allowed to attend the Board Meetings electronically by the use of audio-visual means subject to compliance with the rules prescribed.
2) Such directors can also be counted for the purpose of quorum.
3) Matters such as approving financial statements, prospectus, a scheme of merger/acquisition/takeover/demerger, Board’s Report shall not be dealt with at the electronically held Board Meetings.
Owing to the restrictions imposed due to the danger of COVID-19, companies had to conduct their Board Meetings and other meetings electronically.
Board Meetings of specific companies:
1) Companies like One Person Company, Dormant company are required to hold at least 1 Board Meeting in each half of the calendar year.
2) The gap between the above two meetings shall be at least 90 days.
3) Companies that are not for profit are required to conduct at least 1 Board meeting within every six months of the calendar year.
Conclusion:
Board meetings are thus essential to be conducted so as to constantly keep a check on the functioning of the company, making required changes to the earlier decisions, making new decisions whenever needed. It is also a way of conveying to the shareholders that the directors are actively involved in running the company and are not negligent towards it. [i]
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, 5thVoice.News shall not be responsible for any errors caused due to human error or otherwise.
