The Companies Act, 2013 has added more responsibilities and accountability on the Board of Directors of every Company. One such change for functioning of the company is for Directors to meet regularly, to take business decisions through Board Meetings.
We discuss below some of the critical changes with regard to Board Meetings. The provisions of this discussion are applicable on every company whether Private, Public or Subsidiary of Public Company.
| Broad Areas | Companies Act, 2013 | Companies Act, 1956 |
| Periodicity of Board Meeting | · Section 173(1) requires the Board to meet at least four times in a year.
· At least four Board Meetings have to be held each year with a gap not more than 120 days between two consecutive Board Meetings. · First Board Meeting shall be required to be held within 30 days from the date of incorporation |
· As per Section 285, Board was to meet at least once in every Quarter.
· No specific provision regarding periodicity of Board Meeting was earlier defined |
| Service of Notice of Board Meeting
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· Section 173(3) requires notice of Board Meeting shall be sent to all Directors at their usual address.
· It is mandatory to serve prior notice of 7 days before each Board Meeting · Notice shall be served to all Directors to their respective usual address whether in India or outside India · Shorter notice will be allowed to transact urgent business subject to decision being ratified by at least one Independent Director · Revised Penalty for non compliance stands increased to Rs. 25,000. |
· As per Section 286, notice was required to be served to all Indian and Foreign Directors at their Indian addresses
· No specific time period had been defined for serving notice. · No specific provision for holding meeting at shorter notice was defined. · Penalty for non-compliance was Rs. 1,000. |
| Mode of sending Notice | · The Act now specifies the means by which notice can be served to all Directors:
o By Hand Delivery o Though Post o Electronic means |
· No specific provision for manner of serving notice was defined |
| Quorum of Board Meeting | · As per Section 174, there is no specific change in recognizing the requisite quorum of the Board Meeting
· In case of any transaction, if number of interested Directors are more than 2/3rd of total strength of the Board, then remaining non interested Directors not less than two shall be considered as requisite quorum · If any Director absents himself from all meetings of the Board held during the period of 12 months in a financial year, with or without seeking leave of absence, office of such Director will be vacated under Section 167 |
· Section 286 required the quorum of the Board Meeting is 1/3rd of the total number of Directors, or at least two Directors, whichever is higher
· Earlier Directors were allowed to mark their absence in all Board Meetings by simply submitting leave of absence to the Board
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| Meeting through Video Conferencing | · Section 173(3) now recognises holding of Board Meeting by using audio visual means, thus medium of video conferencing can be used for conducting a Board Meeting by satisfying the provisions of the Act.
· Chairman shall ensure that proper equipments for the meeting are available to each participant at respective place of Board Meeting. · All Board Meetings being conducted through this medium have to be recorded and such recordings shall be preserved permanently by the Company. · Chairman shall ensure that no person other than concerned Director attends or has access to the proceedings of the meeting · Draft minutes of the meeting shall be circulated to all Directors within 15 days of closure of the meeting, for their comments · Directors shall be required to confirm with their comments about the accuracy of draft minutes within 7 days of circulation |
· There was no specific provision regarding video conferencing in the Companies Act, 1956.
· MCA had only issued a circular regarding green initiative as a part of corporate governance guidelines |
| Minutes of Board Meeting | · As per Section 118, every Company shall record the minutes of the Board Meeting in the prescribed manner.
· As per draft Secretarial Standards as issued by Institute of Company Secretaries of India, draft minutes of every Board Meeting shall be required to be circulated to the Directors within 15 days of Board Meeting for their comments. · Every company shall be required to get the minutes of Board Meetings signed within 30 days from the closure of Board Meeting. · Any sort of tampering with minutes shall be punishable with imprisonment up to 2 years and fine up to INR 1 Lac. |
· As per Section 193, every company was required to prepare minutes of proceedings of meetings within 30 days of conclusion of every such meeting |
You may get back to us for any more details on above provisions or any other matter related to Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | <malavika.bhatia@bluelotusstrategy.com> | M +91 98733 18440
Monika Bhardwaj | <monika.bhardwaj@bluelotusstrategy.com> |M +91 98915 60525
We will do our best to assist you with the compliances and removal of doubts / queries. However, please note that since the Act is new, certain clarifications are needed as there are lot many areas where operational issues are to be sorted out.
In case of queries that require clarification from Ministry of Corporate Affairs, we will come back to you after seeking necessary clarifications from the Ministry.
