Board resolution by circulation

No, because it is not passed by majority of the directors (i.e. 3 in your case).  Director not traceable is still a director as per records of company and MCA and hence will be included in the total number of directors.

Pre-conditions for passing a circular resolutions

• Any act required to be done by the Board , apart from the acts which are specifically required to be done by calling a meeting of the Board , may be done by the Directors by passing a circular resolutions,

• Any resolutions passed by circulation would not mete out with the need for holding a meeting once, at least in three months, as mandated under section 285,

• In any case, if the number of Directors present in India is less than the number which is necessary to form the Quorum, had there been a meeting of the Board or the members, the resolution by circulation stands prohibited.

Procedure for Documentation for passing a circular resolutions:

• The draft of the resolution, in duplicate, shall be circulated with all necessary papers (if any) to all the directors then in India and the usual address in India, of Directors who at that time are abroad.

• The circular shall have to be approved/disapproved by majority of all the directors and return the duly signed copy to the company. In case some directors are outside India, at the time of circulation of the resolution, then majority of those in India can approve the resolution, provided that such majority is not less than the number of the quorum.

• A copy of the circular resolution shall be enclosed to the agenda of the immediately next Board Meeting mentioning in the notes that the said resolution was voted for, or against by so many numbers of Directors and that it was passed by majority of Directors.

Matters requiring sanction at the Board Meeting & not by mere circulation

• Filling of casual vacancy in the Board u/s 262

• U/s 292, the power to make:

• To make calls on shares

• To issue debentures

• To borrow money otherwise than by debentures

• To invest the funds of the company

• To make loans.

• Sanction of the Board for certain contracts in which particular directors are interested u/s 297

• Disclosure to the Board of Director’s interest in the transaction of the company u/s 299

• Disclosure of a Director’s shareholding to the Board u/s 308

• Approval of the appointment of a person as a Managing Director or Manager in more than one company u/s 316 & 386

• Sanctioning of inter-corporate loans, investments, guarantee and other security u/s 372-A.

Thank you both!