Passing of Resolution by Circulation during the CoVID Times

Section 173 of the Company Act 2013 states that companies must hold four meetings of the Board each year at a gap of no more than 120 days between these two board meetings. In such board meetings, companies typically make decisions and usually have one board meeting every quarter to fulfill the statutory requirement.

However, in the event of an urgent decision by the Company and the event, it is impossible to conduct a board meeting; under section 175 of the Companies Act 2013, a provision is provided, allowing the Company to pass the resolution by circulation.

• According to Section 175 of the Companies Act 2013, the resolution shall, to pass a resolution by circulation, be circulated using drft papers, to all the directors or members of the committee, if any, at their addresses which are registered in the Company in India by hand delivery, by post, courier, by electronic means, or by e-mail or fax.

• However, suppose at a Meeting any resolution under circulation is to be determined by the President at least 1/3 of the Organization’s total number of Directors. In that case, the President shall place the resolution to be determined at the board’s meeting.

Passing of Resolution by Circulation 

175. (1) No resolution shall, unless the draft law, together with the necessary documents, has been circulated to the Board of directors or members of the committee, by circulation, at their addresses registered with the Company in India by hand delivery, post or courier, or through such electricity, unless it has been transmitted by circulation or circulation.

Where, for the time being, at a meeting, at least one-third of the total number of directors of the Company determines that a resolution under circulation must be determined, the Chairman shall send a resolution to be decided at a Board meeting including key issues like increase in authorized share capital.

175. (2) A resolution referred to in Subsection (1) shall, as the case may be, be recorded at the following meeting of the Board and shall form part of the minutes of the meeting.

Applicable Rules

Companies (Meetings of Board and its Powers) Rules, 2014

[Effective from April 1, 2014]

172. (5) Passing of Resolution by Circulation

A drafted resolution can be circulated to the managers by electronic means, including e-mail or fax, and the requisite documents for their approval.

Agendas not be passed by resolution by circulation

Chapter 12, rule 8 of the companies (meeting of Board and its powers) rules, 2014

In addition to the powers specified in section 179(3) of the Act, the Board of directors shall exercise the following powers only through the resolutions adopted at Board meetings.

(1) to participate politically;

(2) select or remove central management staff (KMP);

(3) nominate internal auditors and auditors;

Chapter 12, rule 4 of the companies (meeting of Board and its Powers)Rules, 2014 states not to be Dealt With in a Meeting Through Video Conferencing or Other Audiovisual Means:

4[(*) 1(1) [These] problems shall not be discussed in any meeting held by video or other audiovisual means.-

(i) annual financial statements approval;

(ii) acceptance of the report of the Board;

(iii) the prospectus approval;

(iv) audit committee sessions, if any, to be authorized by the Board under Subsection (1 ) of section 134 of the Act to * consider financial reporting including consolidated financial statements; and

(v) acceptance of the issue of amalgamation, merger, de-merger, purchase, and acquisition.

[As long as a directors’ attendance at a meeting is a quorum, any other director can participate in conferences with a video or other audiovisual forms. (Modification Rules 2020, adopted by the Businesses (Council Meetings and their Powers). March 19, 2020).]

For the period starting with the start of the Companies (the Board of Directors and their authorities) amending the Rules of Procedure 2020, and ending June 30, 2020, meetings can take place by Article 3 on issues referred to in sub-Rule (1) by way of video conferencing or other audiovisual means.

Resolutions mentioned under Section 179(3) of Companies Act, 2013:

The Board of Directors of a company shall exercise on behalf of the Company the following powers using resolutions adopted at board meetings:

(a) Making overdue calls to shareholders for cash on their shares;

(b) Allow securities to be acquired in compliance with section 68;

(c) Issue securities in or outside India, like debentures;

(d) Borrowing money;

(e) To spend the Company’s funds;

(f) Granting or guaranteeing loans or offering insurance for loans;

(g) Approving the financial statement and the recommendation of the Board;

(h) To diversify the Company’s business;

(i) Acceptance of amalgamation, merger or rebuilding;

(j) Take over an undertaking or gain a managed or significant stake in another task;

(k) Any other subjects that may be prescribed