Board Meeting | Notice, Agenda, Quorum in Companies Act 2013

Introduction

A company being a legal entity, cannot act independently by itself. Therefore decisions are made through resolutions passed during properly conducted meetings. Identifying what qualifies as a meeting is significant. A meeting is described as the gathering of two or more individuals in each other’s presence.

The directors of a company are required to exercise most of their powers and duties at periodic meetings of the board. Therefore, the Companies Act, 2013, and the rules thereunder contain detailed provisions regarding the frequency, convening, and conduct of these meetings.

The Act mandates a company to hold a minimum number of board meetings for proper functioning. These board meetings play a crucial role in the company’s development, as they are formal gatherings where policies are made, management is directed, strategies are planned, and stakeholder opinions are considered.

Requirements for effective board meeting

The meeting should have a clear purpose.
Board members need to be informed in advance and provided with the necessary materials.
Effective chairing of the meeting is essential.
Proper meeting procedures should be followed, and board members’ time should be respected.
Clear supporting documents like agendas, detailed notes, minutes, and reports are necessary.
The agenda should include sections for tracking progress on ongoing matters and reporting actions taken from previous meetings.
Minutes should be documented to record what happens during the meeting.

First Board Meeting

According to Section 173 of the Companies Act, 2013 and Secretarial Standards 1, every company must conduct its first Board meeting within 30 days of its incorporation. Additionally, companies are required to adhere to Secretarial Standard-1 for holding Board meetings.

This standard applies to all companies incorporated under the Companies Act 2013 except One Person Company and Section 8 Company subject to it has not defaulted in filing their Financial Statements or Annual Return with the Registrar of Companies.

For the first board meeting, the notice should also mention that it’s the company’s initial meeting of the Board.

Original certificate of Incorporation.
Copy of Memorandum and Articles of Association.
Disclosure of interest from all the directors.
Designs for common seal, share certificate, signboard, name plate, statutory registers, and letterhead.
Statement of preliminary expenses incurred.
Certificate of eligibility from the proposed Auditor
Account opening form for the company’s bank account.
Cheques/drafts from members for share payments.
Original/copies of pre-incorporation agreements between promoters.
Attendance Register for director signatures.
Supplies like pads, pencils, a copy of the Companies Act, 2013, and statutory registers.
Seating, lighting, and refreshments/lunch arrangements.
Projector for presenting the company’s project or plans.

List of Matters Transacted at First Board Meeting

Secretarial Standard 1 specifies an illustrative list of items for the agenda for the first meeting of the Board of a company:

To appoint the Chairman of the Meeting.
To note the Certificate of Incorporation issued by the Registrar of Companies.
To review and note the Memorandum and Articles of Association as registered.
To note the situation of the Registered Office and ratify related documents.
To introduce and note the first Directors of the company.
To read and record Notices of disclosure of interest by Directors.
To consider the appointment of Additional Directors.
To discuss and consider the appointment of the Chairman of the Board.
To consider the appointment of the first Auditors.
To adopt the Common Seal, if applicable.
To appoint Bankers and open bank accounts for the company.
To authorize the printing of share certificates and correspondence with depositories, if applicable.
To authorize the issuance of share certificates to subscribers.
To approve and ratify preliminary expenses and agreements.
To approve the appointment of Key Managerial Personnel and other senior officers, if applicable.

Important Concepts with respect to Board Meetings as per Companies Act,2013 and Secretarial Standards

Time Period of Board Meetings:

As per Section 173 of the Companies Act, 2013 there shall be a minimum of four Board meetings of the Company every year, with not more than one hundred and twenty days intervening between two consecutive Board meetings.
Further, In this context, the Secretarial Standards 1 on Board Meetings issued by ICSI provide clarification that the Company shall hold at least four Board Meetings in each Calendar Year with a maximum interval of one hundred and twenty days between any two consecutive Meetings.
As per Section 173 of the Companies Act, 2013 and Secretarial Standards 1, For one-person companies (OPCs), small companies, dormant companies, and private companies classified as startups, at least one board meeting must be conducted in each half of the calendar year. Additionally, there should be a minimum gap of ninety days between two consecutive meetings. However, this requirement does not apply to one person companies where there is only one director on its board.
Any director of a company has the authority to summon a meeting of the board at any time and the Company Secretary or in the absence of a company secretary, any person authorized by the board for this purpose shall convene a board meeting upon the requisition of a director. This shall be done in consultation with the Chairman, or in their absence, the Managing Director, or in their absence, the Whole-time Director, if any, unless otherwise specified in the Articles of the company.

Notice of Board Meeting:

As per Section 173 of the Companies Act, 2013 and Secretarial Standard 1,A Board meeting shall be called by giving not less than seven days’ written notice to each director at his address registered with the company. This notice must be delivered either by hand, post, or electronically.
If urgent business needs to be addressed, a Board meeting can be called with shorter notice, contingent upon the presence of at least one independent director, if available.
However, if independent directors are absent from such a meeting, decisions made must be circulated to all directors. These decisions will only be deemed final upon ratification by at least one independent director, if present.
Further if a meeting is adjourned, notice of the adjourned meeting must be given to all directors, including those who did not attend the originally convened meeting. If the date of the adjourned meeting is not decided at the original meeting, notice of the adjourned meeting must also be given at least seven days before the meeting date.
Written notice of every meeting must be provided to every director through various means such as hand delivery, speed post, registered post, facsimile, email, or any other electronic means. However, it should not be given through ordinary post.If the company sends the notice by speed post or registered post, an extra two days are added for the service of the notice.
The notice shall be sent to the postal address or email address registered by the Director with the company. In the absence of such details or any changes thereto, the notice shall be sent to any of the addresses appearing in the Director’s Identification Number (DIN) registration. If a director specifies a particular means of delivery of the notice, it shall be given to them through that specified means.
The company is required to maintain proof of sending the notice and its delivery for a duration determined by the Board, which should not be less than three years from the date of the meeting.
The notice shall be issued by the Company Secretary. In cases where there is no Company Secretary, any Director, or any other person authorized by the Board for this purpose, can issue the notice.
The notice must include the serial number, day, date, time, and full address of the venue of the meeting.
The Notice shall inform the directors about the option available to them to participate through electronic mode and provide all the necessary information regarding electronic participation.
Even if meetings are scheduled on predetermined dates or at predetermined intervals, the notice of a meeting must still be provided.

Agenda of the Meeting:

As per Secretarial Standards 1, the agenda, which outlines the business to be transacted at the meeting, along with the notes on the agenda, must be provided to the directors at least seven days before the date of the meeting, unless the articles prescribe a longer period.
The agenda, which lists the items of business to be transacted at a meeting, draws attention to the relevant matters requiring deliberation. The notes on the agenda aim to explain each item of the agenda, providing an understanding of the points for discussion by the Board.
The agenda and notes on the agenda must be sent to all directors by hand, speed post, registered post, email, or any other electronic means.
These documents should be sent to the postal address, email address, or any other electronic address registered by the director with the company. In the absence of such details or any changes, they should be sent to any of the addresses appearing in the Director Identification Number (DIN) registration of the directors.
If the company sends the agenda and notes on the agenda by speed post or registered post, an additional two days shall be added for the service. If a director specifies a particular means of delivery, the documents shall be sent accordingly. However, in the case of a meeting conducted at shorter notice, the company may choose an expedient mode of sending the agenda and notes on the agenda.
Every item of business to be discussed at the meeting shall have a serial number.
Any item not listed in the agenda may be discussed with the permission of the Chairman and with the consent of a majority of the Directors present in the meeting.
Urgent business can be discussed at a meeting with shorter notice if at least one Independent Director, if any, is present. If no Independent Director is present, decisions made at the meeting must be circulated to all Directors and will only be considered final upon ratification by at least one Independent Director, if any. If the company has no Independent Director, decisions will be deemed final only upon ratification by a majority of the Directors, unless such decisions were approved by a majority of Directors at the meeting itself.
For each item of business requiring approval at the meeting, there must be a supporting note. This note should outline the details of the proposal, and relevant material facts that help the Directors understand the meaning, scope, and implications of the proposal. Additionally, it should mention any concerns or interests of any Director in the proposal that they had previously disclosed.
Office copies of notices, agendas, notes on agenda, and other related papers must be maintained in good order, either physically or electronically, for as long as they are relevant or for eight financial years, whichever is later. After this period, they may be destroyed with the approval of the Board.

Quorum of Board Meeting:

As per Section 174 of the Companies Act, 2013,the quorum for a meeting of the Board of Directors of a company shall consist of either one-third of its total strength or two Directors, whichever is higher. The term “total strength” shall exclude Directors whose positions are vacant.
The participation of Directors via video conferencing or other audiovisual means shall also be counted towards fulfilling the quorum requirement under this provision.
For a section 8 company, the quorum shall be either eight members or twenty-five percent of its total strength, whichever is less.
Due to removal or resignation or some other reason, the number of directors is reduced below the quorum, then the continuing Directors or director may act for the purpose of increasing the number of Directors to that fixed for the quorum, or of summoning a general meeting of the company and for no other purpose.
If a Board meeting cannot be held due to insufficient quorum, unless the company’s articles specify otherwise, the meeting will automatically be adjourned to the same day, time, and place in the following week. If that day happens to be a national holiday, the meeting will be adjourned to the next succeeding day, which is not a national holiday, at the same time and place.
As per Secretarial Standards 1, Quorum must be maintained throughout the entirety of the meeting, not just at the beginning.
If the number of Interested Directors exceeds or is equal to two-thirds of the total strength, the remaining Directors present at the meeting, provided they are not less than two, shall constitute the quorum for that particular item of business.
A Director cannot be counted towards quorum or participate in discussions regarding any business item in which they have a personal interest. However, in a private company, a Director can be counted for quorum and participate in discussions after disclosing their interest in the matter.

Attendance Register:

Maintaining an attendance register serves as formal evidence of the presence of individuals who sign it. This practice is valuable for secretarial purposes, ensuring clarity and accountability. The register includes signatures of attending Directors and other invitees, safeguarding their interests.
SS-1 provides that Every company shall maintain an attendance register for the Meetings of the Board. The pages of the attendance register shall be serially numbered.
The attendance register must include the following details: the serial number and date of the Meeting; he location of the Meeting; the time of the Meeting; the names and signatures of the Directors, the Company Secretary, and any persons attending the Meeting by invitation, along with their mode of presence, if participating through Electronic Mode.
The attendance register should be kept at the Registered Office of the company or any other location approved by the Board. It can be brought to any location where a Meeting of the Board takes place.
The attendance register must be retained for a minimum of eight financial years from the date of the last entry, and thereafter, it may be disposed of with the approval of the Board. It should be kept under the custody of the Company Secretary. If there is no Company Secretary, any other person authorized by the Board will be responsible for its custody.

Leave of Absence:

A Director can be granted leave of absence only upon requesting it through communication to the Company Secretary, the Chairman, or any other person authorized by the Board to issue Meeting Notices. If a Director is absent from all Board Meetings for twelve consecutive months, with or without seeking leave of absence, their office shall be deemed vacant.

Chairman of Board Meeting:

The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may appoint one of themselves to be the Chairman of the Board.The Chairman of the Board shall conduct the Meetings of the Board.
If no such Chairman is appointed or if the Chairman is not able to attend the Meeting, the Directors present at the Meeting shall elect one of themselves to chair and conduct the Meeting, unless otherwise provided in the Articles.
The Chairman, with assistance from the Company Secretary, must ensure that the Meeting adheres to all legal requirements outlined in the Act and any other applicable guidelines, rules, and regulations. This includes confirming that the Meeting is properly convened and constituted before proceeding with business. The Chairman’s role is important in overseeing the Meeting, fostering discussion, and ensuring compliance with legal procedures throughout the proceedings.
The Chairman holds the responsibility of ensuring that the necessary quorum is maintained throughout the Meeting. Additionally, at the conclusion of discussions on each agenda item, the Chairman is tasked with summarizing the decisions made.

Maintenance of Minutes:

In accordance with Section 118 of the Companies Act 2013 and Secretarial Standard 1, the process for handling board meeting minutes is outlined as follows:

Every company shall maintain Minutes of all Board in a Minutes Book.
Minutes may be maintained in electronic form in such manner as prescribed under the Act and as may be decided by the Board. Minutes in electronic form shall be maintained with Timestamp.
The pages of the Minutes Books shall be consecutively numbered.
Minutes shall not be pasted or attached to the Minutes Book, or tampered with in any manner.
Minutes Books, if maintained in loose-leaf form, shall be bound periodically depending on the size and volume and coinciding with one or more financial years of the company.
Minutes Books shall be kept at the Registered Office of the company or at such other place as may be approved by the Board.
Minutes shall state, at the beginning the serial number and type of the Meeting, name of the company, day, date, venue and time of commencement of the Meeting.
Minutes shall contain a fair and correct summary of the proceedings of the Meeting.
Within 15 days from the conclusion of a board meeting, a draft of the minutes should be prepared and circulated to all directors for their review and comments.
Directors are required to provide their comments, if any, within 7 days from the date of circulation of the draft minutes.If any director submit comments after the 7-day period, the chairman, if authorized by the board, may choose to consider these comments.If a director does not submit any comments within the stipulated time frame, it shall be presumed that they have approved the draft minutes.
The finalised minutes must be entered into the minutes book of Board meeting within 30 days from the date of the conclusion of the meetings.
The Chairman of the meeting or the chairman of the subsequent meeting shall sign and date the minutes.
The Chairman shall initial each page of the Minutes, sign the last page and append to such signature the date on which and the place where he has signed the Minutes.
The signed minutes, certified by the company secretary or any director (in cases where there is no company secretary), should be circulated to all directors within 15 days of signing, except those directors who have waived their right to receive the signed minutes.
Furthermore, a director who is no longer serving on the board, regardless of whether they attended the meeting or not, is entitled to receive the draft minutes of that specific meeting and may provide comments on them.

Powers to be exercised only at Board Meetings

As per Section 179 (3) of the Companies Act, 2013 The Board of Directors of a company shall exercise the following powers on behalf of the company through resolutions passed at board meetings. These powers include:

(a) Making calls on shareholders for unpaid money on their shares.

(b) Authorizing buy-back of securities under section 68.

(d) Borrowing funds.

(e) Investing company funds.

(f) Granting loans, providing guarantees, or offering security for loans.

(g) Approving financial statements and the Board’s report.

(h) Diversifying the company’s business.

(i) Approving amalgamation, merger, or reconstruction.

(j) Taking over another company or acquiring a controlling stake in another company.

(k) Any other matters prescribed by law.

to make political contributions;
to appoint or remove key managerial personnel (KMP);
to appoint internal auditors and secretarial auditor;

However, the Board has the discretion to delegate some of these powers to committees of Directors, the managing director, the manager, or any other principal officer of the company,or in the case of a branch office of the company, the principal officer of the branch office, subject to specified conditions.

As per 5th June Notification, 2015 In the case of a section 8 company, decisions concerning matters outlined in clauses (d), (e), and (f) of section 179(3) can be made by the Board through circulation instead of convening a physical meeting.

Conclusion

Board meetings are vital for making important decisions. Directors usually make decisions by passing resolutions during these meetings. The law requires the board to meet at least once every quarter to discuss key matters and make formal decisions.

These meetings provide a platform to discuss important issues affecting the company. It is important to carefully consider the provisions of the Companies Act, 2013 (the Act) relating to meetings and to ensure that the business at meetings is conducted in conformity with the provisions of the Act.

Ready to streamline your board meetings? Let’s ensure efficiency and compliance. Reach out to us at Registration Arena.

Understanding Board Meetings: Key Provisions under the Companies Act, 2013

Introduction

Requirements for effective board meeting

First Board Meeting

List of Matters Transacted at First Board Meeting