A board meeting is a formal gathering of a company’s top executives/Board of Directors that meets at regular intervals to make policy decisions and address company-wide concerns. Ordinarily, board meetings bring together an organization’s directors. The board of directors meets to examine the organization’s previous performance, engage in planned discussions, and certify plans of action to provide continued support to the organisation as it grows through its many stages.
What is a Quorum?
The quorum refers to the minimal number of members required to hold a meeting or make decisions at a company meeting. A board meeting must have a quorum of 1/3rd of the entire number of directors, whichever is higher. As a result, even if there are only three directors in a corporation, at least two must be present, even though 1/3rd of the population believes that just one director is required. Even if the directors are not physically present, they will be considered part of the quorum if they participate in the meeting via audio/visual means.
What is the quorum for a board meeting?
A quorum for a board meeting is 1/3rd of the total number of directors or two directors, whichever is higher, according to Section 174 of the Companies Act 2013. The continuing directors may act regardless of whether or not there is a vacancy on the board; however, if and for as long as their number falls below the quorum set by the Act for a board meeting, the continuing directors may act only for the purpose of increasing the number of directors to the quorum set by the Act, or mobilising a general meeting of the company.
When shall the first board meeting of a Company be held?
Section 173(1) of the Act mandates that every corporation convene its first board meeting within 30 days after its incorporation. Various transactions occur at the company’s first board meeting, and the items are noted in the board meeting minutes.
What is the minimum number of board meetings required to be held in a year?
According to Section 173(1) of the Act, after the first Board meeting, board meetings must be convened in such a way that no more than 120 days pass between two consecutive sessions, and a minimum of four board meetings must be held each year. A one-person firm, tiny company, or dormant company must have at least one board of directors meeting in each half of a calendar year, and the delay between the two meetings must not be more than six months.
Provided, however, that none of the minimum numbers of board meetings or quorum requirements apply to a one-person firm with only one director on its Board of Directors.
Can participation in board meetings be through electronic mode?
According to Section 173(2) of the Act, directors may participate in a board meeting in person or via video conferencing or other audiovisual methods, as may be prescribed, that can record and recognise their participation.
It stated that the Central Government may identify the subjects that are not to be allocated during a meeting via video conferencing or other audiovisual means by issuing a notification.
What is the minimum amount of notice required for a Board meeting?
A Board meeting may not be called by giving a notice of less than seven days in writing to each director at his address, either by hand delivery, post, or electronic means, as required by Section 173(4) of the Companies Act 2013.
Provided, however, that urgent business may be transacted with less notice if at least one Independent Director is present; in the event that an Independent Director is not present, decisions made at the meeting will be communicated to all directors and will become effective only after ratification by at least one Independent Director.
Is there any penalty for not giving requisite notice?
Section 173(4) of The Act holds that every officer of the company who was liable to give notice under this section and who fails to do so shall be liable to a penalty of 25000 rupees.
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