Board Meetings Provisions Notice Period & Draft Sample

Checkout Board Meeting Notice Period, Draft and Sample format. Section 173 deals with the Board Meetings Provisions under the Companies Act 2013. The following article is an detailed Explanation of Board Meetings, Notice of Board Meetings, Requirements and Procedures for Convening and Conducting  Board’s Meetings etc.

A meeting may be generally defined as a gathering or assembly or getting together of a number of persons for transacting any lawful business.  However, every gathering or assembly does not constitute a meeting. A company meeting must be convened and held in perfect compliance with the various provisions of the Act and the rules framed thereunder.

It is essential that the business dealt with at the meetings, should be validly transacted and not liable to be questioned later due to any irregularity. It is the duty of the Company Secretary to study carefully 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.

Introduction – Board Meetings

The way we run  Board Meeting says much about how we run the company. Successful companies use  Board Meeting  to create and improve key business strategies. The board of directors of a company is primarily an oversight board. It oversees the management of the company to ensure that the interest of non-controlling shareholders is protected.

It also functions as advisory board. Independent directors bring diverse knowledge and expertise in the board room and the CEO uses the knowledge pool in addressing issues being faced by the company.

The most important function of a monitoring board is to provide direction to the company Another very important function of a monitoring board is to set the ‘tone at the top’. It is expected to create the right culture within the company.

Board Meetings

Generally, directors act through meetings. Meetings of the directors provide a means to discuss the business and take formal decisions. The directors can only act at a meeting of the Board of directors through resolutions passed at such a meeting.

As a general rule, the Board of Directors should exercise its powers at duly convened Board meeting. However, the Board may take decisions by resolutions passed by circulation, instead of assembling at a Board meeting.

Regulation 67(1) of Table – F provides that the Board of directors may meet for the dispatch of business, adjourn and otherwise regulate its meetings, as it thinks fit. This provision clearly indicates that as a general rule, the directors must exercise their powers collectively as Board.

Meetings of directors provide a means to discuss the business and take formal decisions. The law therefore, specifically enjoins that the Board must formally meet once a quarter. It also provides for the matters which the Board should formally decide at its meetings by resolutions. That apart, the meetings provide a forum for deliberating on matters affecting the business and affairs of the company.

Notice of Board Meetings

A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means. [Section 173].

A meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting. in case of absence of independent directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.

In the notice of Board meeting, the following matters are required to be Specific Notice:

(1) Appointment of Managing Director who is already a Managing Director or Manager of another company [Section 203(3)].

(2) Appointment of Manager who is already a Manager or Managing Director of another company [Section 203(3)].

In case of a listed company, notice of the Board Meeting should also be given to the stock exchange(s), where the securities of the company are listed, in accordance with the various clauses of the listing agreement for the items like, unaudited quarterly results, annual accounts, issue of securities by way of public/ rights/bonus or offer for sale, declaration/recommendation of dividend etc.

Board Meeting – Requirements and Procedures for Convening and Conducting  Board’s Meetings

Directors may participate in the meeting either in person or through video conferencing or other audio visual means.

Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 (hereinafter in this Chapter mentioned as Rule) provides for the requirements and procedures, in addition to the procedures required for Board meetings in person, for convening and conducting Board meeting through video conferencing or other audio visual means:

(1) Every Company shall make necessary arrangements to avoid failure of video or audio visual connection.

(2) The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care:

  1. to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;
  2. to ensure the availability of proper video conferencing or other audio visual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorised participants at the Board Meeting;
  3. to record the proceedings and prepare the minutes of the meeting;
  4. to store for safekeeping and marking the tape recording(s) or other electronic recording mechanism as part of the records of the company at least before the time of completion of audit of that particular year;
  5. to ensure that no person other than the concerned director are attending or have access to the proceedings of the meeting through video conferencing mode or other audio visual means; and
  6. to ensure that participants attending the meeting through audio visual means are able to hear and see the other participants clearly during the course of the meeting, but the differently abled persons, may make request to the Board to allow a person to accompany him.

(3) (a) The notices of the meeting shall be sent to all the directors in accordance with the provisions of sub-section (3) of section 173 of the Act.

(b) The notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio visual means, and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio visual means.

(c) A director intending to participate through video conferencing mode or audio visual means shall communicate his intention to the Chairman or the company secretary of the company.

(d) If the director intends to participate through video conferencing or other audio visual means, he shall give prior intimation to that effect sufficiently in advance so that company is able to make suitable arrangement in this behalf.

(e) The director, who desire, to participate may intimate his intention of participation through the electronic mode at the beginning of the calendar year and such declaration shall be valid for one calendar year.

(f) In the absence of any such intimation from the director, it shall be assumed that the director will attend the meeting in person.

(4) At the commencement of the meeting, a roll call shall be taken by the Chairperson when every director participating through video conferencing or other audio visual means shall state, for the record, the following namely :

  1. name;
  2. the location from where he is participating;
  3. that he can completely and clearly see, hear and communicate with the other participants;
  4. that he has received the agenda and all the relevant material for the meeting; and
  5. that no one other than the concerned director is attending or having access to the proceedings of the meeting at the location mentioned in (b) above.

(5) (a) After the roll call, the Chairperson or the Secretary shall inform the Board about the names of persons other than the directors who are present for the said meeting at the request or with the permission of the Chairman and confirm that the required quorum is complete.

Explanation : It is clarified that a director participating in a meeting through video conferencing or other audio visual means shall be counted for the purpose of quorum, unless he is to be excluded for any items of business under any provisions of the Act or the Rules.

(b) The roll call shall also be made at the conclusion of the meeting and at the re-commencement of the meeting after every break to confirm the presence of a quorum throughout the meeting.

(6) With respect to every meeting conducted through video conferencing or other audio visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place.

(7) The statutory registers which are required to be placed in the Board meeting as per the provisions of the Act shall be placed at the scheduled venue of the meeting and where such registers are required to be signed by the directors, the same shall be deemed to have been signed by the directors participating through electronic mode if they have given their consent to this effect and it is so recorded in the minutes of the meeting.

(8) (a) Every participant shall identify himself for the record before speaking on any item of business on the agenda.

(b) If a statement of a director in the meeting through video conferencing or other audio visual means is interrupted or garbled, the Chairperson or company secretary shall request for a repeat or reiteration by the director.

(9) If a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote.

(10) From the commencement of the meeting until the conclusion of such meeting, no person other than the Chairperson, directors, Secretary and any other person whose presence is required by the Board shall be allowed access to the place where any director is attending the meeting either physically or through video conferencing without the permission of the Board.

(11) (a) At the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decision taken on such item along with names of the directors, if any, dissented from the decision taken by majority.

(b) The minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.

(12) (a) The draft minutes of the meeting shall be circulated among all the directors within fifteen days of the meeting either in writing or in electronic mode as may be decided by the Board.

(b) Every director who attended the meeting, whether personally or through video conferencing or other audio visual means, shall confirm or give his comments, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

(c) After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson.

Explanation – For the purposes of this rule, ‘video conferencing or other audio visual means’ means audio-visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting.

Matters not to be dealt with in a Meeting through Video Conferencing or other Audio Visual Means

Rule 4 prescribe restriction on following matters which shall not be dealt with in any meeting held through video conferencing or other audio visual means:

  1. the approval of the annual financial statements;
  2. the approval of the Board’s report;
  3. the approval of the prospectus;
  4. the Audit Committee Meetings for consideration of accounts; and
  5. the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Penalty

Every officer of the company who is duty bound to give notice under this section if fails to do so shall be liable to a penalty of twenty five thousand rupees.

Compliance with Secretarial Standards relating to Board Meetings

For the first time in the history of Company Law in India, the Companies Act, 2013 has given statutory recognition to the Secretarial Standards issued by the Institute of Company Secretaries of India.

Section 118(10) of the Act reads as under:

Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government

In the context of this provision, observance of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) assumes special relevance and companies will have to ensure that there is compliance with these standards on their part. The ICSI is in process to bring out the Secretarial Standards in line with Companies Act, 2013 and has already issued the exposure draft of Secretarial Standard related to Board and General Meeting.

Conclusion – Board Meetings 

The above article clearly explains about the Board Meetings. Notice for the Board meetings, Board Meeting meaning, Procedure for Conducting the Board Meetings Under the Companies Act 2013.