Meetings of Board

Yashika Sood 
on 17 October 2019


Introduction

Meetings of the board and committees come under the Company's Act- 2013. Board meetings are held by the members of the Board which is a group of people (in case of big companies) or selected people(in case of small companies) who decide and discuss the ongoing events pertaining to the loss and profit of the company.

It is deemed as the highest level of the meeting. The board meetings are organized to provide a perspective as per the law to run the company's decisions and affairs as a company is not an actual legal entity to make its own decisions as a whole.

The board of directors being the supreme authority in a company acts as the legal entity taking decisions and managing the affairs for the company, based on common consent.

The Interval of Board Meetings

As a major part of a company's aspect, a board meeting is set to be held at frequent intervals in a year, based on the company's size.

  • As per Section 173 of the Companies Act, 2013 - A Public Limited Company must hold its first board meeting within the first 30 days of its incorporation date. Moreover, the meetings are to be held 4 times a year not exceeding the gap of 120 days between 2 meetings.

  • As per the small/one-person company- The meeting must be held once in each half of the financial year without failing to hold these meetings in the gap of 90 days.

And, if there is a case of an emergency meeting or a meeting held at short notice, the presence of at least one independent director is crucial.

It is also imperative for these meetings to be held in their proper time to meet certain guidelines and for the company to have an effective working and management.

To Call for the Meeting

These board meetings must receive their call notice before 7 days of the date of the meeting including the time, date, venue, and agenda of the meeting before it is sent to all the members of the board.

1. The call can be forwarded to the respective members through a post, by hand delivery, or by any electronic means. If a meeting is held at very short notice, then the below points must follow the emergency:

  • For the company that needs an independent director must have the presence of an independent director,
  • If the absence in one such case is noticed, the information must be spread among all the directors, also
  • The information or discussion is to be first ratified by at least one independent director before making it a final one.

2. If there is no requirement of an independent director then the meeting can be called at any such short notice without any conditions applied.

Section 174 Quorum for Meetings of Boards:

To be conducted the meeting as a valid one, there is a quorum that signifies the appropriate or a minimum number of members in a board meeting.

  • According to Section 174 of the Companies Act, 2013, the minimum number of members of the board required for a meeting is 1/3rd of the total number of directors or two directors (the higher is preferred).

  • In the case of One Person Company the rules of Section 174, do not apply, though a minimum of two directors must be present in any other form of company.

  • The meeting is by default adjourned to the same place and time, the next week if the meeting could not be held for the want of quorum. The adjourned meeting is held irrespective of the day and date until it falls on a national holiday, in which case it is extended to the following day.

  • In case, there is a reduced number of members as required by the quorum, the directors present at that time are allowed to hold the meeting for either calling a general meeting or to simply increase the number of directors.

  • In the case of interested directors(a director interested under section 184(2)), if the number is equal to or exceeds the 2/3rd of total strength, the strength then falls to be the quorum of the interested directors, which is not less than 2.

Participation of Directors

As per Rule 3 Meetings of Board through Video Conferencing or other Audio Visual means of the Companies (Meetings of the Board and its Powers) Rules, 2014

For all the directors to be able to actively take part in the decision making of the company, they ought to be present when the meeting is scheduled, physically, through video conferencing, or any other audio/visual means.

“The notice of the meeting shall be sent to all the directors under the provisions of sub-section (3) of section 173 of the Act.”

If a director or a member is to attend the board meeting through a video conference, there is a procedure to be followed and noted:

  • The notice of the meeting is to include information about the choice of being present through a video conference mode and also the essential information enabling them to participate in this way.

  • If a director of the meeting chooses the video conferencing mode to show his presence then he/she ought to inform beforehand either to the company's secretary or the Chairperson, allowing them to make suitable arrangements accordingly.

  • There is also an option for a director to inform his way of being present in the meeting at the beginning of the calendar year to make his/her choice clear of choosing an electronic mode.

Provided that such declaration shall not debar him/her from participating in the meeting in person, in which case he/she shall intimate the company sufficiently in advance of his/her choice to participate in person.

In the absence of any intimation under clause (c), it shall be assumed that the director is attending the meeting in person.

In a meeting to be held where some or one of the director chooses the electronic mode of making their attendance, it is not just their responsibility that makes the meeting a success, but there are certain duties to be followed up by the company secretary or the chairperson.

  • They need to take simple and certain measures to safeguard the very integrity of the meeting by making sure the identifications are proper and there is enough security to start with the meeting safely.

  • The proper transmission of the electronic mode should also be looked after and its ability to work and proper working pieces of equipment must be checked beforehand to reduce the risk of any issues that may hinder the smooth flow of the meeting.

  • They also assure that the concerned director is the only one attending or having access to the processes of the meeting through video conferencing mode or other audiovisual means, and no other person is given that permission.

As per the company, it needs to make the required steps are taken that lead to the success of the meeting being attending in an electronic mode, be it a video conferencing mode or an audiovisual connection.

Notations made in fulfilling the requirements of the meeting

A roll call taken by the Chairperson shall include the following things concerning every such director who's taken the video conferencing or electronic mode as a way to attend the meeting. It shall state-

  1. Name
  2. The location from where he's contacting
  3. confirmation of receipt of the agenda and meeting
  4. that no one other than the concerned director is attending or having access to the proceedings of the meeting at the location mentioned in clause (b);
  • After the roll call is done, the company secretary is to say the names of the persons present in the meeting other than the directors, who're asked to be there by the chairperson or who have asked for the chairperson's permission confirming the required quorum to be complete.

  • Every member shall identify himself/herself for the record before they set out any thoughts or information on the agenda or business.

  • If a proposition is objected to and there is a call to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote.

  • From the commencement of the meeting and until the conclusion of such meeting, no person other than the Chairperson, Directors, Company Secretary and any other person whose presence is required by the Board shall be allowed to have access to the place where any director is attending the meeting either physically or through video conferencing without the permission of the Board.

  • At the end of every discussion item, the chairperson shall announce the summary of the decision made and also, he takes the names of the people, names of the directors, who disagreed with the decision taken by the majority["and the draft minutes so recorded shall be preserved by the company till the confirmation of the draft minutes in accordance with sub-rule (12)"].

  • The statutory registers which ought to be placed at the venue shall be placed there and with the signatures of the directors where they ought to. The same goes for the directors participating through the electronic mode if they agree with the effect it is so recorded in the minutes of the meeting.

  • It is a crucial step to circulate the draft minutes of the meeting among all the directors within fifteen days of the meeting in writing or an electronic mode, as chosen by the Board.

Every director who attends the meeting(in any form, physically or electronically) shall give their confirmation or writing in the draft minutes of the accuracy of the proceedings agreed in the meeting. It might be provided in about seven days or in the time as decided by the board after receipt of the draft minutes failing in which his approval shall be presumed.

After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson.

Rule 4 Matters not to be dealt with in a Meeting through Video Conferencing or other Audiovisual means:

Though the attendance and presence of a member of the meeting are appreciated by any means, there are a set of rules as to which few decisions require a physical appearance. Such matters include:

  • Audit Committee Meetings for consideration of accounts
  • Approval of the annual financial statements
  • Approval of the prospectus
  • Approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover, and
  • Approval of the Board's report.

Section 118 Minutes of proceedings of General Meeting, the Meeting of the Board of Directors and other Meeting and Resolutions passed by Postal Ballot:

  • Every company ought to make minutes of the proceedings of every general meeting of any class of shareholders
  • or creditors,
  • and every resolution passed by postal ballot
  • And every meeting of its Board of Directors or
  • every committee of the Board,

so as to be prepared and signed in to be prescribed and kept within thirty days of the conclusion made of every meeting. It is so, or the passing of the resolution by postal ballot in books shall be kept for that purpose with their pages serially-numbered.

Every minute made of the proceedings of a meeting shall be true and it shall have the same summary of matters discussed and agreed upon.

The minutes shall include all the appointments made in the meetings.

As for the meeting of the Board of Directors or a committee is considered, all minutes must include-

  • The names of all the directors present in the meeting
  • And, also the name of the directors who do not consent with the resolutions passed in the meeting

As of the opinion of the Chairman of the meeting, these matters shall not be included in the minutes that-

1. is or could reasonably be regarded as defamatory of any person, or
2. is irrelevant or immaterial to the proceedings, or
3. is detrimental to the interests of the company.

  • The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in sub-section (5).
  • The minutes kept as per the provisions of this section shall be evidence of the proceedings recorded therein.
  • Where the minutes have been kept in accordance with subsection (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.
  • Not a single document implying to be a report of the proceedings of any general meeting of a company shall be distributed or displayed at the expense of the company unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
  • Every company needs to observe secretarial standards concerning general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
  • The company is liable to a penalty of twenty-five thousand rupees if any default is made in complying with the terms of this section for any meeting, and every officer of the company who is in default shall be liable to a fine of five thousand rupees.
  • Any person found guilty of vandalizing in any sort with the minutes of the proceedings of the meeting, is slapped with imprisonment for a term which could go further up to two years and with fine which shall not be less than twenty-five thousand rupees, but it may stretch to one lakh rupees too.

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