Quorum for board meeting companies act 1956. Veto Rights Relating To Quorum And Voting On Resolutions 2022-10-30
Quorum for board meeting companies act 1956 Rating:
4,5/10
648
reviews
A quorum refers to the minimum number of members required to be present at a meeting for the proceedings to be valid and decisions to be legally binding. In the context of a board meeting of a company, the quorum is specified in the articles of association of the company, which is a document that outlines the rules and regulations governing the functioning of the company.
According to the Companies Act 1956, which is the primary legislation governing the incorporation and functioning of companies in India, the quorum for a board meeting of a company is two directors. This means that at least two directors must be present at a board meeting for the proceedings to be valid.
However, it is important to note that the quorum requirement may vary depending on the size and nature of the company. For example, a company with a larger board of directors may specify a higher quorum requirement in its articles of association, while a company with a smaller board may specify a lower quorum requirement.
It is also worth noting that the quorum requirement for other meetings, such as general meetings of shareholders, may be different from that of board meetings. In such cases, the quorum requirement is specified in the articles of association of the company, and it is important for the company to follow this requirement to ensure the validity of the proceedings.
In conclusion, the quorum for a board meeting of a company is specified in the articles of association and is typically two directors. It is important for the company to ensure that the quorum requirement is met in order for the proceedings to be valid and decisions to be legally binding.
Veto Rights Relating To Quorum And Voting On Resolutions
Lord Krishna Sugar Mills Ltd. The board might benefit from scaling back its meeting frequency if it considers its workload and current structure. Author may be reached at admin karactfilings. Note that a private company may have just one director. Sandeep Paper Mills P. Where there is no such disinterested quorum the advisable action should be to increase the strength of the Board by appointing disinterested additional directors or place the matter of such appointment before the members in a general meeting in terms of articles of association of the company. Especially now, since many organizations have virtual or hybrid meeting options , not meeting quorum should be a rare occurrence.
There is no perfect formula or number to use, although sometimes by-laws or legislation specify what should be used. The ideal way to ensure the compulsory presence of any particular person would be to fix the number of quorum at such a figure that without the presence of a particular person quorum could never be constituted. Thus quorum is the least number of members who are required to be present at a meeting of a body of persons so as to make it a valid meeting. Thus, in terms of the provisions of section 87 special voting rights cannot be provided to members of the same class. Thus, in order to defeat a resolution the votes cast against it should be more than the votes cast for it in the event of ordinary resolution. Hence if there are adjournments of board meetings due to absence of quorum, the company has to ensure that provisions of section 173 of the Companies Act 2013 {frequency of Board meeting} are continued to be complied and there is no leeway. It was held in an earlier case of Fateh Chand Kad v Hindsons {Patiala} Ltd.
Where the number of directors was reduced below the quorum, the directors couldnot act. Articles can provide differently It is apparent that the articles of association of a company can provide differently in case the Board meeting could not be held due to lack of quorum. Some boards set a high quorum, such as at 100 percent, hoping to ensure full representation. When members are unable to be physically present, they may fully participate by teleconference. Here, for example, the adjournment can be done on any other day and the time and place of the adjourned meeting can also be differently provided. Though there is no special resolution in the case of Board meeting, there is no prohibition either to provide for the same in the articles. This often backfires and the boards find themselves never able to reach quorum.
Reverse Veto Rights in the Articles of Association Generally in the case of joint Ventures the JV parties provide certain special rights such as mandatory presence to form a valid quorum, mandatory affirmative vote to pass a resolution etc to each of them or any one of them, in the articles of association of the Joint Venture company. And while having members attend meetings in-person is often preferable, establishing a policy that allows board members to attend virtually via phone or webcam can allow for flexibility should something come up, such as unforeseen business travel? Amitav Ganguly BACKGROUND The Directors of a company function and exercise most of their powers at priodical meetings of the Board. Disinterested Quorum Hence it is clear that the directors forming the quorum of the Board meeting must be disinterested. This is an approach that, ultimately, tries to correct a bad situation with a worse remedy, sending the wrong message to members about their obligation to attend meetings. Parmeshwari Prasad Gupta v. The court further observed that any article in the Articles of any company is couched in a wide language in this behalf it will be the duty of the court to read the said clause or article consistent with the statutory provisions. The meeting will be adjourned to the same time and place as the original meeting on the same day the following week.
It provided that the Central Government may, by notification, specify the matters which shall not be assigned within a meeting through video conferencing or other audiovisual means. State laws generally define quorums as requiring a majority of voting board members, although some states allow for quorums as low as one-third. To ensure that quorums are frequently reached, the board must instill a focus on decision-making and leadership. Provided that an urgent business may be transacted at a shorter notice subject to the presence of at least one Independent Director; in case of absence of Independent director from the meeting decisions taken at such meeting shall be transmitted to all the directors and shall be effective only after the ratification of such decision by at least one Independent director. Some earlier case laws It was held in the case of Balakrishna v Balu Subudhi AIR 1949 Pat 184 that the quorum during the board meeting was required at every stage.
Procedure under the Companies Act, 1956 for holding general meeting through electronic mode
The quorum for the transaction of the business of the directors shall be fixed by the directors and unless so fixed shall be two. This will be over and above the usual physical participation of the directors at the Board meeting. Section 173 1 of The Act states that after the first Board meeting, board meetings shall be held so that not more than 120 shall intervene between two consecutive meetings, and minimum 4 board meetings shall be held every year. Some earlier case laws It was held in the case of Balakrishna v Balu Subudhi AIR 1949 Pat 184 that the quorum during the board meeting was required at every stage. Paragaon Utility Financiers P. Section 287 2 of the Companies Act, 1956 fixed the Quorum for Board Meeting is the actual strength divided by three or two directors, whichever is higher.
The term, according to New Webster's Dictionary, means "power or right of forbidding; to withhold assent to; to reject". Sunder Lal Jain v. Under this Section, unless the Articles of Association of the company provide for a larger quorum, the minimum quorum must be: For public companies: Number of Members of the Company Quorum Not more than one thousand. If such harmonious reading is not possible, the clause in table A or the relevant article contained in the Articles of a company will have to yield to the provisions contained in the statute. According to Section 9 of the Act any provision in the articles contrary to the provisions contained in the Act, to such extent of repugnancy, is void.
While calculating the one-third of the strength, any fraction therein has to be rounded of to one. This sub section {1} provides the quorum for a meeting of the Board of Directors of a company. Requirement of Quorum under the Companies Act, 2013: General Meetings: Section 103 of the Act states the quorum required for a General Meeting. Disinterested Quorum Hence it is clear that the directors forming the quorum of the Board meeting must be disinterested. Also the general meeting can make the appointment. The first question which arises is whether such affirmative voting rights can be provided under the Act? It is up to your organization to determine what is a good balance between the need for full representation and what is realistic. Hence, in the present case, provisions of Section 285 are not violated.
This is a new provision. It is legally possible to appoint additional director in the Board in terms of section 161 of the Companies Act 2013. Nothing else should be transacted in that meeting, and all other decisions at that meeting, being against statutory provisions, would be null and void even if they were in the interests of the company. The reason is that, quorum denotes a "minimum number" out of the total numbers and not a particular person. Murari Mohan Kajriwal v. What this section prescribes is a statutory minimum quorum for conducting a valid Board meeting. Any fraction arising in counting of one-third will be rounded off as one.
Dabhol Power 2004 120 Com Cases 560 Bom. Section 288 2 of the Act of 1956 Pertinently the provision in section 288 2 of the erstwhile Companies Act 1956 relating to such adjournments not deeming to contravene the requirement of holding meeting at least once in every three months and holding minimum four numbers of Board meetings every year in terms of section 285 of that Act , does not find place in the new provisions. A quorum must be present before any business can be transacted legally at a meeting. Section 173 2 of The Act states that the participation of directors in a board meeting may be either in person or through video conferencing or other audiovisual means, as may be prescribed, which can record and recognise the participation of the directors. Though different class of equity shares with different voting rights can be issued, the special right can be given by providing for graded votes, say Class A shares will have one vote and Class B shares will have two vote per share. It was held in an earlier case of Fateh Chand Kad v Hindsons {Patiala} Ltd. To ensure that the companies follow this regulation and that such meetings are held properly, it requires a quorum to be met for it to be deemed as a valid meeting.
%3B.jpg)
