Quorum of meeting

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2014 A Pvt Ltd Company having 2 Director and 2 member. They want to convene baord meeting for passing resolution for a contract in which one director is interested. As per companies act 2013, interested director cannot cannot participate in the discussion and for forming a quorum atleast 2 director is required. Then how will the resolution be passed?

If the 1 director and 1 member out of 2 is interesed in the contract then also how will the resolution be passed as per companies act 2013?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 August 2014 Can you tell me which section says so in Companies Act,2013.

I know that section 300 of 1956 act had such a restriction.

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2014 Section 188 of Companies Act 2013 have such restriction.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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19 July 2025 Scenario 1:
Private Ltd Company with 2 Directors and 2 Members

One Director is interested in the contract.
Quorum for board meeting requires at least 2 directors present.
Interested director cannot participate in discussion or voting as per Section 188(2) of Companies Act 2013 (related party transactions).
Issue:
If one director is interested and cannot participate, only one director remains. But quorum is 2 directors. So, how can the meeting proceed or resolution be passed?

Answer:
Section 174(1) of Companies Act 2013 says: Quorum for a private company board meeting is minimum 2 directors or such higher number as per AoA.
If one director is interested and disqualified to participate, only one director is physically available.
In this case, the board cannot form a quorum to pass the resolution at a board meeting as per the statutory requirement.
What are the options?
Seek Members' Approval:
Since board meeting quorum can’t be met, the resolution for related party transaction can be passed at a general meeting (members' meeting) by special resolution as per Section 188(1).
Interested director must abstain from voting.
Increase Number of Directors:
Add an independent or another director to the board so quorum can be formed excluding interested director.
Hold the Meeting with Written Consent (if AoA permits):
Sometimes board resolutions can be passed by circulation or written consent, but quorum rules still apply.
Scenario 2:
If 1 Director and 1 Member (out of 2 each) are interested in the contract, how to pass the resolution?

Board meeting quorum still requires 2 directors.
If one director is interested, only one director remains — quorum fails.
For member approval, interested members must abstain from voting.
So, if 1 member is interested and does not vote, resolution requires approval of the other member.
Relevant Sections:
Section 174 – Quorum for Board meetings
Section 188 – Related Party Transactions and restrictions on interested directors
Section 101 & 102 – Members' meetings and voting

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