Introduction
As per the Companies Act 2013, conducting regular board meetings is mandatory for every company. The purpose of these meetings is to discuss and make decisions on various matters related to the company’s growth and development. To ensure transparency and accountability, the Companies Act 2013 provides a detailed framework for conducting board meetings, including the procedure, frequency, and quorum required.
In this blog, we will provide a step-by-step guide on how to conduct board meetings under Section 173 of the Companies Act 2013. We will cover everything from the pre-meeting preparations to the post-meeting follow-up, including FAQs and practical tips.
Pre-Meeting Preparation
Before conducting a board meeting, there are several things you need to do to prepare yourself and your team. Here’s a step-by-step guide on what to do:
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Set the Agenda: The first step is to set the agenda for the meeting. This should be done well in advance of the meeting and should include all the items that need to be discussed. The agenda should be circulated among all the board members to give them sufficient time to prepare.
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Select the Date and Venue: Once the agenda is set, the next step is to select the date and venue for the meeting. The date should be convenient for all the board members, and the venue should be easily accessible and have all the necessary facilities.
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Send the Meeting Notice: Once the date and venue are finalized, the meeting notice should be sent to all the board members. The notice should include the date, time, and venue of the meeting, along with the agenda.
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Ensure Quorum: It is mandatory to have a quorum of at least two directors or one-third of the total strength of the board members, whichever is higher. Therefore, before the meeting, make sure that there are enough members present to constitute a quorum.
Conducting the Meeting
Once the pre-meeting preparations are done, it’s time to conduct the meeting. Here’s a step-by-step guide on how to do it:
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Start with Welcome and Introductions: Begin the meeting by welcoming everyone and introducing any new members. This helps in setting a positive tone for the meeting and creating a conducive environment for discussion.
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Follow the Agenda: Stick to the agenda and discuss each item in detail. Ensure that all the members get an opportunity to express their views and opinions.
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Record the Minutes: It is mandatory to record the minutes of the meeting. The minutes should include the names of the members present, the agenda items discussed, the decisions taken, and the action points. Make sure to circulate the minutes among all the members after the meeting.
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Vote on Resolutions: If there are any resolutions to be passed, ensure that they are put to vote in accordance with the Companies Act 2013. The votes should be recorded in the minutes, along with the names of the members who voted for or against the resolution.
Post-Meeting Follow-Up
After the meeting is over, there are a few things that you need to do to wrap up the proceedings. Here’s a step-by-step guide on what to do:
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Circulate the Minutes: As mentioned earlier, the minutes should be circulated among all the members after the meeting. This ensures that everyone is aware of the decisions taken and the action points.
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Follow-up on Action Points: Follow up on the action points and ensure that they are completed within the stipulated timeframe. It is also a good practice to periodically check on the progress of the action points until they are completed.
- File the Minutes: Once the minutes have been circulated and approved, they should be filed with the Registrar of Companies. This is a legal requirement under the Companies Act 2013.
FAQs
Q. Is it mandatory to conduct board meetings under Section 173 of the Companies Act 2013? A. Yes, it is mandatory for every company to conduct board meetings under Section 173 of the Companies Act 2013.
Q. What is the minimum quorum required for board meetings? A. The minimum quorum required for board meetings is two directors or one-third of the total strength of the board members, whichever is higher.
Q. Can board meetings be conducted online? A. Yes, board meetings can be conducted online through video conferencing or other audio-visual means.
Conclusion
Conducting board meetings under Section 173 of the Companies Act 2013 is a crucial aspect of corporate governance. By following the step-by-step guide provided in this blog, you can ensure that your meetings are conducted smoothly and effectively. Remember to prepare well in advance, follow the agenda, and record the minutes accurately. With these best practices in place, you can master the art of conducting board meetings and help your company achieve its growth and development objectives.
Section 173 of Companies Act 2013
(1) Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board:
Provided that the Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.]
(2) The participation of Directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the Directors and of recording and storing the proceedings of such meetings along with date and time:
Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means.
5[Provided further that where there is quorum in a meeting through physical presence of Directors, any other director may participate through video conferencing or other audio visual means in such meeting on any matter specified under the first proviso.]
(3) 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:
Provided that 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:
Provided further that 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.
(4) Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.
4[(5) A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:
Provided that nothing contained in this sub-section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors.]
Exceptions/ Modifications/ Adaptations
1. In case of section 8 company – section 173 (1) shall apply only to the extent that the Board of Directors, of such Companies shall hold at least one meeting within every six calendar months. – Notification dated 5th june, 2015.
2. In case of Specified IFSC Public Company – In sub-section (1) of section 173, after the proviso, the following proviso shall be inserted, namely:-
“Provided further that a Specified IFSC public company shall hold the first meeting of the Board of Directors within sixty days of its incorporation and thereafter hold atleast one meeting of the Board of Directors in each half of a calendar year.”. Notification Dated 4th January 2017.
3. In case of Specified IFSC Private Company – In sub-section (1) of section 173 after the proviso, the following proviso shall be inserted, namely:-
“Provided further that a Specified IFSC private company shall hold the first meeting of the Board of Directors within sixty days of its incorporation and thereafter hold atleast one meeting of the Board of Directors in each half of a calendar year.”. Notification Dated 4th January 2017.
4. In case of Private Company – For Sub-section(5) of section 173 the following sub-section shall be substituted, namely:-
(5) A One Person Company, small company, dormant company and a private company (if such private company is a start-up) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days: – Notification Dated 13th June, 2017
Note :
1.Special Measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak.
Amendment
5. Inserted by The Companies (Amendment)Act,2017 :- Amendment Effective from 7th May 2018