Board Meeting

Every company registered with Ministry of Corporate Affairs needs to hold board meetings quarterly. In this meeting, the powers to be exercised by the board of directors as stated in section 179, Sub-section 3 of the Companies Act, 2013.

What is Board Meetings?

A company being an artificial person is working through its board of directors and having distinct entity from its members in the eye of law. Board of Directors is a group of directors who oversee the activities on behalf of the company. For that purpose, the directors conduct the board meetings as to see the activities of the company. The board meeting is a formal meeting of the board of directors of a company which is held at intervals to discuss the issues and policy of the company.

Purpose of Board Meeting

Every company registered under MCA are required to hold a board meetings quarterly. A diverse body of directors is required to hold a board meeting who are accountable for the position of the company. The following are the major purposes of convening board meeting:

  • For regular direction, guidance and oversight provided by the board of directors.
  • To craft the policies in support of the goals of the company.
  • To ensure the company is on track with regard to meet the company goals.
  • To determine the strategic plans to achieve the goals of the company.
  • To disperse the funds in a way that supports the objective of the company.

Power of Board

Powers to be exercised by the Board of Directors in a Board Meeting as stated in Section 179, Sub – Section 3 of the Companies Act, 2013:

The Board shall exercise following powers only by means of resolution passed in its meeting:

  • to make calls on shareholders in respect of money unpaid on their shares;
  • to authorise the buy-back of securities under section 68;
  • to issue securities, including debentures, whether in or outside India;
  • to borrow monies;
  • to invest the funds of the company;
  • to grant loans, or give a guarantee, or provide security in respect of loans;
  • to approve financial statement and the Board’s report;
  • to diversify the business of the company;
  • to approve amalgamation, merger or reconstruction of the company;
  • to take over a company, or acquire a controlling, or substantial stake in another company;
  • Any other matter which may be prescribed.

Restrictions on power of directors

The board of directors is free to exercise certain powers only with the consent of the company, given by way of a special resolution passed during the General Meeting of the company.

There are certain restrictions imposed on the board, which are as follows:

  • It is important to get approval by way of a special resolution passed at a general meeting in order to sell, lease or dispose of an undertaking.
  • To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation.
  • To borrow money it has to be done by way of special resolution passed at the general meeting, every special resolution passed by the company in general meeting has to specify the total amount money that can be borrowed by the Board of Directors.
  • To remit or give time for the repayment of, any debt due from a director.
  • Contributions to a charitable trust, no contributions can be made without the prior permission of the company if the total amount contributed exceeds five percent in any financial year. This has to be done via a unanimous resolution passed at the general meeting.
  • Limit on political contributions; a company apart from a Government company and a company which has existed for over three financial years may contribute any sum directly or indirectly to any political party. No contribution can be made unless the member of the unanimously decides so by way of a resolution passed at the general meeting.

Necessities for a valid Board Meeting

Notice

A written notice of board meeting along with the agenda must be sent to every director of the company not less than 7 days prior to board meeting. The notice can be given by post or electronic means at the registered address of the director. Without serving a notice, the meeting will be treated as invalid. The notice period can be shorter if the board of directors have no objection.

Quorum

To conduct a valid board meeting quorum is the minimum number of directors required for the same. The required quorum for a valid meeting is one-third of its total strength or two directors, whichever is higher. For the purpose of quorum, the directors who participated through video conferencing or any other audiovisual means are counted.

Due date for Board Meeting

Particulars

One Person Company, Small Company and Dormant Company

Other Companies

First Board Meeting

Within 30 days from incorporation

Within 30 days from incorporation

Subsequent Board Meeting

At least one board meeting in each half of the calendar year

Minimum 4 board meeting every year, at least once in every three months

Intervals between Board meetings

Minimum gap can be 90 days

Maximum gap cannot be more than 120 days

 


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