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As per the provisions ofThe Companies Act 1956 & Secretarial Standards a company should conduct atleast 1 meeting in a quarter i.e.. 4 meetings a year. Where the company holds only 1 meeting (just complyingwith the mandatory requirement) in a quarter, the items/proposal which may require urgent approval & implementation would have to wait till next board meeting & this may adversely affect profitability, if the proposal/ item is financially sensitive. In order to avoid such a situation, the company may opt passing ofcircular resolution U/S 289 of the Companies Act 1956. Where the Board directs the Company Secretary to proceed with circular resolution U/s 289, the Company Secretary of the company should ensure the following.

As a Preliminary step the Company secretary should ensure that the articles of the company contains an enabling provision for passing of resolution by circulation by the Board. Then he shall discuss the matter with chairman and obtain his advise/consent on the same.

No item should be passed through a circular resolution, where the Act has expressly provided that such item/business should be passed/considered only at board meetings.

The CS has to ensure that the proposed circular resolution is not for the purpose of any of the following:

To fill a casual vacancy occurred in the Board.

To make calls on shareholders in respect of money unpaid on shares.

To issue debentures

To borrow moneys otherwise than on debentures

To invest the funds of the company

To make loans

To make calls on shareholders in respect of money unpaid on shares.

To delegate to any committee of directors, managing director, manager or any other principal officer of the company or in the case of branch office of the company, a principal officer of the branch office, the powers specified in clauses (c), (d) and (e) of subsection (1) of sec 292

To make any political contribution

To proceed forfeiture of shares

To disclose interest by a director who is in any way directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into on behalf of the company.

To give general notice of interest specifying firms or bodies corporate in which the director may be deemed to be concerned or interested.

To accord consent to a contract in which a director or other specified persons are interested

To give a notice of disclosure of interest by a deemed director under section 307.In the case of a public company or a private company, if it is a subsidiary of a public company, to appoint a person as a managing director, if he is already a managing director or manager of any other company, by an unanimous resolution.

To invest in the shares of any other body corporate or to make loan to other body corporate or to give a guarantee or provide security in connection with a loan to or by a body corporate. In the case of a public company or a private company, if it is a subsidiary of a public company, to appoint a person as a manager, if he is already a manager or managing director of any other company, by a unanimous resolution.

To make a declaration of solvency where it is proposed to windup the company voluntarily.

To review accounts & quarterly/ half yearly financial results (Clause 41 Listing Agreement) and limited ��review report. Secretarial Std directs that no CR should be passed for this purpose.

To note of minutes of Board meeting

To appoint/remove CFO/ & CS

To take note of certificate of compliance with various applicable laws

To sanction any proposal or to consider any business which should be passed only in a Board/ committee meeting(as per applicable provisions of the Act)


The resolution which is to be passed, is to be circulated by hand, or by post, or by facsimile, or by e-mail or by anyother electronic mode to such number directors being not less in number than the quorum ( Quorum - should not be less than mandatory quorum under the Act and not below the quorum fixed by AOA) �fixed for meeting of the Board or committee, together with all the necessary papers to all the directors who are in India at the time of circulation of the resolution.


The Resolution should be considered as 'passed' (sanctioned/reviewed) on the date on which directors then in India, being not less than the Quorumsigns it orthe majority of the Directors entitled to vote on the Resolution, approves it.

The interested directors are not entitled to vote on the resolution.

Confirmation of Resolution & drafting ofMinutes

The circular resolution is to be placed in the next Board Meeting for noting and full body of resolutionis incorporated in the minutes of that meeting. The Secretarial Standards (SS-1) provides that dissent of directors (if any) (SS -1).

While drafting the minutes the CS should incorporate in the minutes a statement that the interested director has not voted.

Notice to Shareholders

The CS should make arrangements to intimate the shareholders the relevant items/business (passed through Circular Resolution) which may have an impact/effect on their interests/rights.

Prepared by Victor J. Uruvath�

Trainee CS Professional Programme.

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