As per companies act, 2013 all the companies are required to conduct board meeting no matters whether it is a private company or public company. Generally there is little statutory guidance on how a board meeting should be conducted. There is different procedure for conducting the board meeting for different class of companies.
Meaning of board meeting
Board meeting means a meeting of board of directors of a company held for discussing various matters and deciding on various policies of the company.
Requirement for holding the board meeting for different class of companies and frequency:-
One Person Company, Small Company and dormant company are required to hold at least one meeting of board of directors in each half of the calendar year. There should be a minimum gap of 90 days between two meetings.
All the companies other than those specified above shall hold at least four boards meeting in a calendar year and the maximum gap between two meetings must not be more than 120 days.
Calling of meeting:-
A meeting of board of directors can be called by any director by giving 7 days notice to all the directors on their registered address through hand delivery, post or electronic means.
Notice & Agenda of a board meeting:-
The main purpose of a notice of the meeting of board of directors is to inform the directors that when and where the meeting will be. Agenda attached with the notice of meeting inform the directors of what is to be discussed and done at the meeting so that the directors can decide whether or not they want to attend the meeting. Usually agenda is attached with the notice. A notice of the meeting of the board of directors must be sent at least 7 days prior to the meeting. Inadequate notice of meeting may result in a meeting being invalid. All the directors who are entitled to attend the meeting must be well informed by giving a notice.
Meeting at shorter notice:-
A meeting of board of directors can be called by giving a shorter notice. In such case meeting shall be valid if the following conditions are satisfied:-
At least one independent director must attend the board meeting in case company is required to have independent director. In case of absence, decision taken at such meeting must be circulated to all the directors and shall be final only ratification thereof by at least one independent director.
If the company doesn’t require having independent director than the meeting of board of directors can be called at a shorter notice without any conditions to be complied with.
Quorum of the meeting of the board of directors:-
Meaning of quorum:-Quorum is a minimum number of directors who must be present to transact at any of its meeting to validly transact any business.
Requirement:-To validly transact any business the present directors must be at least 1/3rd of the total strength of the directors or 2 directors whichever is higher.
Quorum in case of interested directors:-Whenever the total number of interested directors exceed or equal to 2/3rd of the total strength of the directors the remaining directors being not less than 2 shall form the quorum.
A board meeting is chaired by a chairperson. The chairperson is required to control the meeting procedures and has to following tasks:-
- Checking the minutes of previous meeting;
- Making sure proper notice is given to all the entitle directors;
- Dealing with the order of business;
- Keeping order;
- Ensuring everyone has an opportunity to speak etc.
Motions and resolutions:-
Generally motions and resolutions are considered same but there is a big difference between the two. A motion is a proposal that is put before a meeting for discussion and a decision. If a motion is passed it becomes resolution. Motions are not recorded in the minutes. Motions are not binding. On the other side resolutions are binding and it must be recorded in the minutes books.
There is specific requirement under the law that the company is required to keep the minutes of the board meeting. Minutes are the evidence of all the matters which are discussed and decided in the meeting. Minutes of the meetings are the conclusive evidence.