Some interesting concepts worth noting in Companies Bill, 2011 which has now been passed in the Lok Sabha on 18th December 2012, and been submitted with the Rajya sabha. If it is passed by Rajya Sabha, it will move to the Secretariat of the House, where the President of India will go through it and on his assent, it will become an independent Act. (Oh, yeah, we still have a long way to go. You can still continue learning Companies Act, 1956 for exam purposes, rather peacefully.)
As per the Companies Bill, 2011, new definitions have been added.
Of the many definitions newly added, the topic for today's discussion is "Interested Director". Now, I know that this is not going to be a very interesting definition, but what can we do when the MCA is more interested in introducing definitions of interested directors who are disinteresting? So, here goes.
Accordingly, it should be ensured that where atleast 2/3rds of the directors of the company are "Interested Directors", at least 2 persons who are non-interested directors should be present to make it a valid quorum. [Sec. 174(3)]
[I am assuming a case where there are three directors in the company, of which 2 are Interested Directors. What would be the Quorum in this case? This gives us a case where a valid quorum cannot be present for the meeting to approve a resolution.]
I shall now proceed to give you a copy from the Companies Bill, for those that would love to read between the lines:
184.(2) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into—
(a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent shareholding of that body corporate, or is a promoter, manager, Chief Executive officer of that body corporate; or
(b) with a firm or other entity in which, such director is a partner, owner or member, as the case may be,
shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting: Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested.
Why really does MCA strive on introducing this concept? In my opinion, it comes into need, when deciding the Quorum of a meeting. A quorum here, refers to the number of Directors present to cause a Valid meeting to be held. Also, since a Board meeting should be a unbiased in what is decided within, not all the directors can be interested directors. (After all, only if there are some disinterested directors will it make for a Bored meeting no?)
Now then, the table is open for discussions. Doubts, opinions, anyone?
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