Decisions Which Require the Decision of a Company's Board

Some decisions taken in Limited and Private Limited Companies require the permission of the company’s board. This article will help you understand the issues which require the attention of the board prior to getting any kind of approval.

As per the Companies Act, the Meeting of the Board of Directors of a particular Company is a crucial aspect of every limited or private limited company in the country of India.

As per the Companies Act, 2013, it is a norm that the first meeting of the Board of Directors has to be held within 30 days of the incorporation of the company and from then onwards at least 4 Board Meetings are to be held each year.

The Board Meetings should be scheduled in such a way that there should not be more than 120 days gap between two consecutive Board Meetings.

In addition to the statutory requirements for holding of the board meetings, a Board Meeting can be called for getting into a final decision on considering certain matters.

Here is a brief on the matters which require a company’s board approval.

Following issues are considered at the Board of the Directors’ meeting of the Company:

  • In approving the financial statements of the concerned Company and also the Board’s Report
  • To make calls on shareholders in respect of the finance unpaid on their shares
  • To diversify the business activities
  • To (or “intending to”) invest funds, that belong to the Company
  • To (or “intending to”) borrow funds from an external organisation
  • Decision on authorising the buy-back of the securities
  • Decision in issuing securities including the debentures as well
  • Decision in granting loans or provide security in respect of loans
  • In approving amalgamation, reconstruction or merger
  • Taking over a company or acquiring a controlling or substantial stake in the concerned company

The above list of the matters is to be delegated by the Board of Directors of the Company to a committee of Director, Officer of the Company or Managing Director of the Company by passing a unanimous resolution.

The below list of matters can only be considered by a Meeting of the Board of Directors of the concerned Company:

  • To make political contributions
  • In the process of appointing or removing the key managerial personnel
  • In approving quarterly, half-yearly and annualfinancial statements or financial results
  • To (or “intending to”) take note of the disclosure of Directors shareholding and interest
  • In the process of appointing internal auditors and also the statutory auditors
  • In purchasing and selling of the investments which are held by the company, constituting 5% or more of the paid-up share capital

The below list of agendas are generally but not mandatorily placed before the Board of Directors of the Company:

  • Allotment of the shares and debentures
  • Issuance of the shares
  • Appointment of Directors
  • Considering  Annual Accounts of the concerned Company
  • Appointing of a Company Secretary
  • Approval of interim dividend and the recommendation of the final dividend

Convening Company Board Meeting

The Board Meeting of a Company can be convened by a Company Secretary or a Director of the company as per the directions of the Managing Director (MD). The overall process of convening the Board Meeting of a particular company is mentioned in the Articles of Association of the Company.

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