Quorum For Board Meeting Under Companies Act 2013

Quorum-Board-Meeting-Companies-Act-2013

Quorum For Board Meeting Under Companies Act 2013


In terms of section 174 of the Companies Act, 2013, the quorum for a Board meeting shall be one-third of its total strength of directors who are in office or two directors, whichever is higher. Any fraction arising in counting of one-third will be rounded off as one. For example, in a Board having seven directors, the quorum shall be three directors. Where the interested directors exceed or equal two-thirds of the total strength, the number of remaining disinterested directors present at the meeting being not less than two shall be the quorum of that business of the meeting. It is also provided that total strength shall not include directors whose places are vacant. This section also applies to a private company.

The required quorum should be present throughout the continuance of the Board meeting. If any director leaves the meeting for some time and rejoins the meeting, it is advisable to record his period of absence in the minutes of the Board meeting for reference.

Where all the directors except one are interested in a matter, the only way available with the company to resolve the matter is to call a general meeting and get the approval of members to the matter in question. Another way available is to appoint more number of directors on the Board who are not interested in a matter.

The Act provides for the minimum number of directors to constitute a quorum, however, a company may by its articles provide for a large number of directors as its quorum.

If all the directors are interested in a contract, the remedy is to increase the strength of the Board by appointing disinterested directors or to co-opt or appoint additional directors if so authorised by the Articles. Alternately, the contract may be placed before the general meeting for consent of members.
In case there is only one director on Board, he cannot do anything, which can be done by a Board, except calling a general meeting. An Act done without a valid quorum, would be rendered invalid and ultra vires. However, the same may be ratified by the company.

As per section 174(4), if a Board meeting is adjourned for want of quorum then unless the articles of the company otherwise provide the adjourned meeting shall be held at the same day in the next week at the same time and place or if the day is a national holiday till the next succeeding day which is not a national holiday at the same time and place. Therefore, an adjourned meeting should be held only on a working day.
Fresh notice is not necessary if the meeting is adjourned to the same day next week unless Articles otherwise provide. It is however desirable to give notice. In such case, it will not be considered any contravention of section 173 of the Act, if the Board meeting was called in compliance with the terms of section 175 and could not be held for want of quorum.
Previous
Next Post »