Circular board resolutions

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alfred (Querist)

19 January 2013 For a private Ltd company.

a board resolution is to be passed regarding authorising the direct in India to open and operate bank account and statutory compliances.
Are both directors required to sign.
If One director is abroad and one in India
can a circular resolution be passed?
what is a circular resolution?

Ajay Mishra

Ajay Mishra (Expert)

19 January 2013 Hi

It is not a valid resolution, because it is not passed by majority.

Following is the procedure for passing of a resolution by the Board or by a Committee of directors by circulation:
1. Please check the Company’s Articles of Association regarding quorum for the meeting of the Board.
2. Verify the current residential address in India of the Indian directors and usual address in India of directors living abroad from the Register of Directors.
3. Please check whether the resolution can be passed under this section and in urgent nature which cannot wait till the next meeting.
4. Draft of the resolution together with necessary paper, if any, should be circulated to all the directors or to all the members of the committee then in India in duplicate. “Necessary Papers” would refer to those papers or documents which would explain the purpose of the resolution and the urgency for passing it by circulation. A brief note explaining the resolution has to be sent along with the draft resolution.
5. The number of directors in India to whom the draft circular resolution is sent should not be less than the quorum fixed for meetings of the Board or Committee as the case may be or two directors whichever is higher. {Section 287(2)}
6. The draft of the resolutions should be circulated to all the directors or members of the committee who are away from India at their usual address in India. If these directors have furnished their foreign address to the company, the text of the circular resolution should be sent to their foreign address also.
7. The text of the resolution should be approved by all the directors as are then in India who are entitled to vote on the resolution and their number should not be less than the quorum fixed for the Board/Committee meeting.
8. If the text of the resolution is not approved by all the directors in India who are entitled to vote on the resolution, it should be approved by a majority of the directors in India and abroad, who are entitled to vote on the resolution.

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