Board Meeting – A guide to provisions relating to a Private Limited Company

To keep it simple, a board meeting is referred to as a formal gathering of all the directors of the company to discuss various matters.

All the directors of the company are collectively referred to as the board who are responsible for setting the organisational objective, strategic decision making and all others matters relating to the operation of the company or the conduct of business.

• The chairman of the company shall be the chairman of the board, If the company does not have a chairman, the directors may elect one among themselves to be the chairman.
• It is the duty of the chairman with the assistance of the company secretary to check if the meeting is duly convened and is constituted in accordance with the provisions of the Companies Act, 2013.
• In case of an equality of votes, the chairman shall have a second or casting vote (if authorised by the articles of the association).
• If the Chairman is interested in a business, he shall entrust the proceedings to any Non-interested director with the consent of the majority of directors present. (In case of a private limited company – he shall continue to chair the meeting after disclosing his interest)

• The Board meeting should be attended by,
  • All the directors of the company
  • Chairman of the company – he shall be the chairman of the board, If the company does not have a chairman, the directors may elect one among themselves to be the chairman of the meeting
  • Company Secretary of the company

• Notice should be in writing.
• Notice should be delivered to every director via hand or by speed post or registered office or fax or email.
• Notice should specify the serial number, day, date, time and full address of the venue of the meeting.
• Notice should inform that the directors have an option to take part in the meeting virtually.
• In case the company sends the notice by speed post/registered post, an additional 2 days shall be added for the service of notice.

• The Quorum for a meeting is the minimum number of Directors whose presence is required to constitute a valid Meeting.
• Any business transacted in the absence of Quorum is considered void (NOT VALID).
• Quorum for a valid board meeting – 1/3^rd of total strength (or) Two directors, whichever is higher.
• Total Strength = Total strength of Board of Directors as determined by the Act, after deducting there from the number of directors whose places may be vacant at the time.

• A director is said to be interested in a contract or arrangement entered or proposed to be entered into by the company,
  • with any body corporate, if such Director, along with other Directors holds more than two percent of the paid-up share capital of that body corporate, or he is a promoter, or manager or CEO of that body corporate; or
  • with a firm or other entity, if such Director is a partner, owner or Member of that firm or other entity.
• An interested director cannot be counted for establishing quorum at the time of discussion of the matter in which he is interested.
• An interested director cannot participate in any vote relating to the matter in which he is interested.
• However, the interested director can be present in the meeting during discussions of such items.
• In case of a private company – The interested director shall be counted for quorum and is entitled to participate in the meeting after disclosing his interest.

1. Who are exempted from attending Board Meetings?

• Except the Board of Directors and persons required by the Board, no other members are allowed to attend the Board Meetings.
• A Director cannot appoint another person as his proxy to attend a Board Meeting.

2. Who Is it mandatory to enclose an agenda for the meetings?

No, it is not obligatory to enclose an agenda for the meetings in the notice but, it is a good secretarial practice to do so.

3. Can a Board Meeting be held on a public holiday?

No, the Board Meeting should not be held on a public holiday unless, unless the AOA states otherwise.

4. Can the directors attend the board meeting through video conferencing?

• Yes, directors can attend the meeting through electronic modes (Video conferencing and other audio visual modes).
• If any director wishes to participate virtually, he should give sufficient prior intimation to the chairman or company secretary to enable them to make the suitable arrangements.
• The director can also intimate his intention to participate virtually at the beginning of the calendar year which shall be valid for the entire calendar year.

5. Is there any timeframe for the Secretary to issue notice to the directors regarding the Board Meeting?

The Secretary should issue a notice in writing to every director of the company atleast 7 days before the meeting.

6. What is the penalty for failing to give Notice?

According to sub-section (4) of section 173, an officer of the company whose duty is to give the notice of the Board meetings is liable to pay Rs. 25,000 in case of failure.

7. What is known as Minutes of a Meeting?

• ‘Minutes’ are the official recording of the proceedings and the business transacted at the Meeting. It must be prepared and kept within 30 days of the conclusion of the meeting.
• A company may maintain its minutes in physical or electronic form.

8. Validity of passing a resolution by circulation

Passing of Resolution by circulation shall be considered valid as if it had been passed at a duly convened Meeting of the Board.

9. What are required to be mentioned in the minutes of a Board Meeting?

• The name of the company
• The type of Meeting
• The serial number, day, date and venue of the Meeting
• The time of commencement of the Meeting
• The Directors present, physically or through electronic mode, the Company Secretary, (if any in attendance)
• Confirmation of minutes of the previous meeting and committee meetings (if any)
• The name of the Director who took the Chair
• The precise nature of actual business transacted and what was formally proposed and ultimately decided upon
• Vote of thanks
• Chairman signature with date.

10. What are the subject matters that cannot be discussed via meetings conducted through audio visual means (video conferencing)?

• Approval of annual financial statements
• Approval of board reports
• Approval of prospectus
• Matters relating to amalgamation, merger, demerger, acquisition, and takeover

11. What are the points to be remembered whilst preparing the minutes of a Board Meeting?

• It should contain fair and correct summary of the proceeding that took place
• Confirmation of the minutes of last meeting is mandatory.
• The Chairman may decide regarding the exclusions and inclusions of any matter in the minutes.
• The minutes once prepared and signed by the Chairman cannot be altered or corrected and it must be prepared in accordance with the provisions.
• The minute book shall be kept at the registered office and be opened to inspection by any member without charge.
• Members shall be entitled to receive a copy of minutes within 7 days of request made in the prescribed manner and by paying a prescribed fee. 

12. What will happen if the number of directors is less than the number specified in the AOA?

Where the number of directors is reduced below the minimum fixed by the articles, no business shall be transacted unless the number is first made up by the remaining directors or through a general meeting.

13. What is a small company?

A small company means a company, other a public company,

1. Paid up share capital of which does not exceed 2 crores and
2. Turnover for the immediately preceding financial year does not exceed 20 crores.

14. What is a one-person company?

One-person company is a company which has only one person as a member (shareholder).

15. What is a dormant company?

A dormant company means a company declared inactive under Section 455 of the Companies Act, 2013.