Quorum requirements - applicability of proviso to sec 287(2)

Meetings 1555 views 3 replies

Kishan Shah

Intern I

29 Points Joined June 2011

Whether proviso to sec 287(2) applicable only in case of failure to meet the provisions of section 287(2)?

For example, in a public company, where out of 9 total directors, only 3 directors were present (all of them being interested and covered u/s 300) - would it meet quorum requirements? Applying sec 287(2) - yes. Independent of above, proviso not applicable.

Further, what would be the case if in the above example, instead of 3 directors, 6 directors (all being interested and covered u/s 300) were present?

Many thanks,

Kishan

PS: On a plain reading of the provisions, I am of the first impression that the applicability of the proviso is independent of the outcome of the application of sec 287(2)

Replies (3)

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

Here the Proviso is having over-riding effect over sub-section (2). In your case since all the 3 directors are interested, there is no quorum and resolution cannot be passed.

Thanks

ars

445 Points Joined February 2009

Typically, the pvt. ltd. cos. in India are promoted by few fly members, who are alos on its board.

any item of board decision related to any of the directors i.e related party transaction, e.g. salary, renting of own property to co. etc.- all the directors are deemed to be interested.

pl. tell me what is to be done in this type of case.- Can not the board pass resolution? even having the quorum. What happens in case where husban - wife OR father - son are the only two directors on the board ??

request to reply asap.

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

The concept of interested directors is not applicable to private limited companies. Hence they can pass Board resolution in such cases. Pl refer Sec.287(1)(b) read with Section 300(2)(a) of the Act.