LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Sec.287-Quorum

jagruti supekar (CA Final) (335 Points)

01 February 2010

While ascertaining Quorum for a Board Meeting u/ s287(2),we hv to calculate 1/3rd of total No.of Director and if according to this,Quorum is not present then we check the applicability of the Proviso to Sec.287(2).For that,we compute 2/3 of total No. of Director.

Now my Q. is that whether for both computation,we hv to round off any fraction to 1 or for 2/3rd,fraction is not rounded off to 1?

For ex-Total No. of Directors=11

then 1/3 of 11=3.33 which is taken as 4.

2/3 of 11=7.33,It should be taken as 8 or 7?

Please clarify the above doubt.Thanks.

Reply
Follow
Share

9 Replies

Jagruti (CS) (Service) (1953 Points)
Replied 02 February 2010

For purpose of 1/3 it is clearly stated in section that any fraction need to be round off to one. Hence you r correct in case of 3.33 1/3 will be 4. For calculating 2/3 nothing is stated in Act. But the conclusion is that if due to interested director quorum is less than 1/3, than quorum will be directors who are not interested though it will be below 1/3, but in any case not less than 2 directors.

1 Like

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 02 February 2010

Hello,

Kindly appreciate carefully first you have to comply with section 287(2) before going to the proviso. If you are through to the section 287(2) then there is no need to check proviso.

Further obviously for the purpose of proviso to section 287 (2) also you have to round off any fraction to one because if as per sub section (2) your answer is 4 then proviso is not applicable.

And if your answer is not 4 then only you have to apply proviso and that means as per proviso your answer is 8 after rounding off.

So the bottom line is first apply sub section (2) and if you got failed to fulfill the conditions of sub section (2) then only apply proviso to section 287 (2).

Best Regards

1 Like

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 02 February 2010

Dear All,

Quorum for a meeting of Board of Director of a company shall be 1/3 of its toral strength and any fraction shall be rounded off as one or two directors wihichever is higher. Thus 1/3rd or 2 whichever is more and any fraction is rounded off as 1. Thus in this case your answer must be 4.

The question of proviso arises only where the number of interested director exceeds or is equal to 2/3 of the total strength of the Board. The number of remaining directors i.e. not interested directors who are present in the meeting, being not less than 2, shall be the quorum during such time. Thus, here there is no question of fraction. Remaing directors will constitute the valid quorum for such time.

jagruti supekar (CA Final) (335 Points)
Replied 03 February 2010

Thanks all for replying my Q.Before asking this Q.,I read & studied the whole provision relating to Quorum i.e.First applicability of Sec.287(2) and then applicability of Proviso to Sec.287(2).But I was confused in the rounding off in both 1/3 & 2/3 of total no. of director.Whether in Both the cases,we hv to round off any fraction to 1.

As Ankur Shrivastav Sir mentioned in the 2nd last line,here there is no Q. of fraction.M unable to unerstand it coz after checking the presence of Quorum u/s 287(2),if Quorum is not present according to Sec.287(2),then we hv to check the applicablity of the proviso to Sec.287(2).This proviso applicable only if No. of interested directors is not less than(means > or =)2/3 of total no.of directors.Here the Q. of fraction arrises.And if proviso is attracted means the No. of intt. directors is > or =2/3 of total no. of directors,then the higher of the bellow will taken as Quorum-

No. of non-interested directors

2 Directors

Sir,I hv solved some practical Qs. on the copy after reading ur ans.,and found that if any fraction is rounded off to 1,in case of 2/3rd calculation,Intt.Directors KABHI BHI,KISI BHI CASE MAIN, 2/3 of total No. of D. SE JYADA NAHI HONGE,AGAR FRACTION KO 1 PAR ROUND OFF KARTE HAI TO. AUR YE PROVISO KABHI BHI APPLICABLE NAHI HO SAKTA.Then it is beyond my understanding that wt is the purpose of this proviso?KYA HAME 2/3 Calculation ME AAYE KISI FRACTION KO ROUND OFF NAHI KARNA CHAHIYE, JISSE IS PROVISO KO IMPORTANCE DIYA JA SAKE.

PLEASE GUIDE ME.Thanks in advance.

jagruti supekar (CA Final) (335 Points)
Replied 03 February 2010

Those 3 Qs.which I solved (r from Munish Bhandari Sir's Book & he also solved the Qs.as any fraction should be rounded off to 1in both the cases.Whether for passing the exam,the same treatment should be done?)are as follows-

1)Total No. of Directors=11,of which No. of Directors Present in Meeting=3,

Non-intt.Directors=3,Intt.Directors=0

2) Total No. of Dir.=11, of which No. of Dir.present in meeting=7,Non-intt.Dir.=2,Intt.Dir.=5.

3) Quorum as per articles of asso.=3,Total No. of Dir.=5,of which intt. Dir.=3,Non-intt Dir=2.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 04 February 2010

Dear Jagruti,

First of all do not mix with section 287(2) and its proviso. The proviso will only be applied in case there is interested director exceeds or is wqual to 2/3 of the total strength of the Board. In such a case remaining directors (being not less than 2) will be deemed to be the valid quorum only for such time.

In other case the quorum is 1/3 of the total strength of the Board and any fraction would be rounded off as 1 or two directors whichever is higher.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 04 February 2010

Further, for determining 2/3 of the total strength, any fraction would not be rounded off as 1.

1 Like

jagruti supekar (CA Final) (335 Points)
Replied 04 February 2010

Originally posted by : Ankur Srivastava
	Further, for determining 2/3 of the total strength, any fraction would not be rounded off as 1.

Hello Sir,

I read the whole provision with full attention & was not mixing Sec.287(2) with its proviso.This is the point at which I was confused.But now my Query has solved.Thank U Sir.