MEETING OF THE BOARD

Meetings of the Board are covered in Section 173 of the Act, while quorum is covered in Section 174. – According to the Act, the first Board meeting must be convened within 30 days of the company’s incorporation. A minimum of four Board meetings must be held annually, and no more than 120 days may pass between two meetings that follow the first one, which must be held within 30 days of the date of incorporation.

WHAT IS BOARD MEETING?

A corporation operates through its board of directors and is considered to be a separate legal person from its members. A board of directors is a collection of directors who manage operations on the company’s behalf. The directors hold board meetings to observe the company’s operations for that reason. The board meeting is a formal gathering of a firm’s board of directors that is convened periodically to discuss problems and company policies.

PURPOSE OF BOARD MEETING

Every business that has registered with the MINISTRY OF CORPORATE AFFAIRS(MCA) is expected to hold board meetings four times per year about the significance and relevance of the legal components of valid corporate board meetings. The illustrious case of Dr. T.M. Paul v. City Hospital Pvt. Ltd., 1998, has been cited in support of this. This case serves as a prime example of how minute irregularities can have significant legal consequences and ultimately result in the invalidation of meetings. This instance also demonstrates how crucial board meetings are to a company’s operation, yet if some minor details that are frequently forgotten are ignored, it can have major consequences. This article will explore a few of these often-overlooked issues, such as the nomination of new directors, the discussion of items not on the agenda, and the service of meeting notices. A varied group of directors who are responsible for the company’s situation must convene a board meeting. The following are the principal justifications for calling a board meeting:

  • for the board of directors’ ongoing direction, supervision, and advice.
  • to develop policies that support the corporate objectives.
  • to make sure the business is on track to achieve its objectives.
  • to figure out the company’s strategic strategy for achieving its goals.
  • to distribute the money in a way that helps the business achieve its goals.

POWER OF BOARD

According to Section 179, Sub-Section 3 of the 2013 Companies Act, the Board of Directors has the following authority to use at a board meeting:
The Board may only act in accordance with resolutions adopted at meetings to exercise the following powers:

  • to contact shareholders regarding unpaid dividends; to authorize the buyback of securities under section 68.
  • to issue securities, including debentures, whether within or outside of India.
  • to borrow money.
  • to invest the company’s funds.
  • to make loans available, to guarantee loans, or to offer security for loans.
  • to accept the Board’s report and the financial statements to expand the company’s business.
  • to authorize an acquisition, merger, or restructuring of the business.
  • to take over or acquire a significant part in another business.
  • any other item that may be required.

RESTRICTIONS OF POWER DIRECTORS

Only with the company’s permission, granted by special resolution adopted at the general meeting of the firm, is the board of directors free to use certain rights.
The following restrictions have been placed on the board:


  • To sell, lease, or dispose of an endeavor, a specific resolution must be approved by the membership at a general meeting.

  • The amount of remuneration it got as a result of any merger or amalgamation to invest in trust securities in any other manner.
  • special resolution issued by the company’s general meeting must indicate the total amount of money that the Board of Directors
  • may borrow. Only special resolutions passed at the general meeting may be used to borrow money.

  • any obligation owed by a director to be remitted or given time to be repaid.

  • If the total amount donated in a given fiscal year reaches 5%, no donations may be made to a charitable trust without the company’s prior approval. A unanimous general meeting resolution must be adopted to do this.
  • A firm may give any amount, directly or indirectly, to any political party, with the exception of Government companies and companies that have been in operation for more than three fiscal years. No contribution may be made unless authorized by a resolution adopted by the membership in unanimity at the general meeting.

NECESSITIES OF VALID BOARD DIRECTOR

NOTICE

Every director of the company must receive a written notice of the board meeting and the agenda at least seven days before it takes place. The notice may be delivered by mail or electronic means to the director’s registered address. The meeting shall be deemed invalid if no notification is given. If the board of directors has no objections, the notice time may be shortened.

QUORUM

Quorum is the minimal number of directors necessary for a board meeting to be valid. A legitimate meeting requires a quorum of either two directors or one-third of the total number of members, whichever is higher. The directors who participated by video conference or any other audiovisual method are included in the calculation of the quorum.

DUE DATE OF BOARD MEETING

PARTICULARSONE PERSON COMPANY, SMALL COMPANY
DORMANT COMPANY
OTHER COMPANIES
first of board meetingwithin 30day from incorporation.within 30days from incorporation.
intervals between meetingsminimum gap can be 90days.maximum gap cannot be more than120day.

Board of Directors’ authority that must be used during a meeting that has been properly called

According to Section 179 of the Companies Act of 2013 and Rule 8 of the Companies (Meeting of Board and its Powers) Rules 2014, the Board may exercise the following powers through a resolution adopted at a duly called Board Meeting:

  • To contact shareholders over unpaid debt.
  • To approve the purchase of securities back.
  • To publish securities, such as debentures, both inside and outside of India.
  • To take out a loan.
  • To invest the company’s funds.
  • To make loans, offer guarantees, or offer security for debts.
  • To accept the Board Report and the financial statements.
  • To diversify the Company’s business.
  • To accept a merger, consolidation, or rebuilding.

References:

l. https://www.livelaw.in

2.Dr. N.V. Paranjape.

3.The companies act 2013.

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