Chapter XII of Companies Act – Meeting of Board of Directors and its Powers

174 to 176

www.edutap.co.in
 Companies Act 2013 -> Section 174 (1) – Quorum for Meetings of Board

Quorum for Meetings of Board

The quorum for a meeting of the Board of
Directors of a company shall be
1/3rd of its total strength or two directors,
whichever is higher
Total Strength does not include directors
whose places are vacant
The participation of the directors by video conferencing or
by other audio-visual means shall also be counted for the
purposes of quorum
Except: If certain cases are not to be approved in electronic
meeting such as Approval of financial statements then for
those cases members attending through electronic means
shall not be counted

Exception:
In case of section 8 company The quorum for a meeting of the Board of Directors of a company shall be
8 members or 25 per cent, of its total strength whichever is less subject to that is should not be less than 2
 Concept Check

A company being not a section 8 company has 11 director. The two seats are vacant. What shall be the minimum number of
directors' present in meeting constitute a quorum in this case?
1. 1
2. 2
3. 3
4. Any of the above
Ans: Option 3

A company is a section 8 company has 4 directors. What shall be the minimum number of directors' present in meeting
constitute a quorum in this case?
1. 1
2. 2
3. 3
4. Any of the above
Ans: Option 2
 Companies Act 2013 -> Section 174 (2) – Quorum for Meetings of Board

Quorum for Meetings of Board

If number of directors are reduced below Remaining Directors will not be able to
Quorum due to vacancy then take any decision. So what do they do?

They can increase the directors to

constitute a quorum by appointing
alternate Directors or additional directors

OR

Summon a general meeting and appoint

new directors in general meeting
 Companies Act 2013 -> Section 174 (3) – Quorum for Meetings of Board

Quorum for Meetings of Board in case of Interested Directors

In case number of Interested Directors >= 2/3rd of the total strength of the Board of Directors

Then the quorum shall be minimum of 2 directors who are not interested directors i.e. minimum of 2 non-interests
director shall be present at the meeting

Term Explainer: Interested Directors

Any directors who is interested in entering into contract with some other body corporate in which he holds more than 2%
shareholding of that body corporate
 Companies Act 2013 -> Section 174 (4) – Quorum for Meetings of Board

Adjournment of Meeting

When a board meeting of the Board could not be held because quorum was not there then unless the articles
of the company otherwise provide, the meeting shall automatically stand adjourned

The next meeting shall take place on the same day at the same time and place in the next week. If that day is a
national holiday, then the next day which is not a national holiday and at the same time and place.

Note: Any fraction of a number shall be rounded off as one i.e. 3.3 shall be rounded of to 4
 Concept Check

A company being not a section 8 company has total 12 directors. Out of this 9 are interested directors. In this case what
shall be the minimum number of non-interested directors' present in the meeting to constitute a Quorum?
1. 4 interested directors
2. 8 interested directors
3. 2 non-interested directors
4. 12 directors in total irrespective of whether they are interested or not
Ans: Option 3

A company being not a section 8 company has 4 directors and none of them is interested director. The two seats are vacant.
What shall be the minimum number of directors' present in meeting constitute a quorum in this case?
1. 1
2. 2
3. 3
4. Any of the above
Ans: Option 2
 Terms

Term Explainer: Resolution by Circulation

Generally, important matters are discussed at the meetings of Board of Directors and accordingly resolutions are passed, but
sometimes the approval is urgent in nature and the board cannot wait for board meeting to happen

In such cases the resolution by circulation is passed in which the details of the resolution to be passed are drafted and send
to registered address of directors and their approval is taken
 Companies Act 2013 -> Section 175 – Passing of Resolution by Circulation

Passing of Resolution by Circulation

To pass a resolution by Circulation following conditions need to be met

1. The resolution has been circulated to all the directors, or members of the committee at their addresses registered
with the company in India by hand delivery or by post or by courier, or through such electronic means

2. It must be approved by a majority of the directors who are entitled to vote on the resolution

3. If one-third or more of the total number of directors of the company think that any resolution under circulation
must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.
 Companies Act 2013 -> Section 176 – Defects in Appointment of Directors not to Invalidate Actions Taken

Defects in Appointment of Directors not to Invalidate Actions Taken

The actions or decisions taken by the director when he was in office would not become invalid, just because it was
subsequently noticed that his appointment was invalid by reason of any defect or disqualification
 Concept Check

If _______ or more of the total number of directors of the company think that any resolution under circulation must be
decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.

1. 1/5
2. 1/3
3. 2/3
4. 2/5
Ans: Option 2
Thanks