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Company Formation in Gurgaon Delhi India - BOARD MEETINGS PROCEDURES

1. Overview

It is an undisputed fact that a meeting of the Board of Directors is important. Company Formation in Gurgaon delhi India under Companies Act, 1956 specifies some guidelines that make sure that the Board decisions are in accordance with the interests of the company, and that they also convey a fiduciary nature of director duties.

2. Periodicity of the Board Meetings

According to the Section 285 of the Act all public and private companies need to have at least one Board meeting every quarter. There need to be four meetings in a year. However, if a company is registered under section 25 of the Companies Act, it has the choice of having a meeting of the Board or the Governing Body at least once in six months.

3. Interval between two Board Meetings

The term ‘every three months’ present in section 285, implies that three months are taken together. According to the terms of section 285, the Board of directors needs to meet on the first of January, or the 31st March or on any day in between. The period from April to June is the next three months. The Board of directors can meet on any date during this time. In the same way, they can meet on any day during July to September. One can’t make a backward calculation according to section 285.

4. Notice of Board Meeting

A meeting of the Board of directors should be held after giving notice, according to the Section 286 of the Companies Act. A proper corporate practice is to send the notice to all directors within and outside India. It has to be given in writing to all directors residing in India at their regular address. IT has to be sent well in advance to allow scheduling. It can be around seven days before the meeting. It is not mandatory to send the notices to foreign directors, staying abroad, but it is advisable to do. .

Day, Date, Time and Place for Holding Board Meetings

5. Day of holding meeting

Board meetings are normally held during business hours and on a day, which is not a public holiday. However, a Board meeting may validly be held on public holiday. Department has clarified vide Letter No. 8/11(285)/63-PR, dated 2-5-1963 that it would not raise any objection if an original Board meeting is not held on a working day for the convenience of the directors although it states that an original Board Meeting should be held on a working day.

6. Time of holding Board meetings

Board meetings can be held during non-business hours also. There is no restriction that only business hours have to be used.

7. Place for holding Board Meeting

A company’s registered office or head office or any other campus can be used to have the meeting, irrespective of the fact whether or not it is within the same city, town, village or state which houses the registered office. Meetings can also take place in another country.

8. Quorum of the Board Meeting

According to the Section 287 of the Companies Act, 1956, the quorum for a board meeting needs to be either two directors, or one-third of the total number of directors who are in office at that point, the higher of the two numbers. If the value of one-third obtained is a fraction, then it has to be rounded off to one. If a Company’s Board has 7 Directors, there will be three directors needed. If the number of interested directors is more than or equal to two-thirds of total number of directors, the disinterested directors present in the board, provided that the number is not less than two, deemed the quorum. Private companies also fall under this stipulation. According to Section 287 (2) for the minimum number required to form a quorum, the company can specify a higher number if required.

9. Time, day and place for holding adjourned Board Meetings

According to the section 288 (1), if a Board meeting has to be adjourned due to insufficient quorum, then the adjourned meeting should be re-held at the same venue on the same day in the next week . If the day is a public holiday, then on the next succeeding working day, the meeting has to be held at the same venue. Only a working day can be used to hold an adjourned meeting.

10. Directors cannot appoint a Proxy for Board Meetings

The Companies Act necessitates the directors to attend the Board meetings in person every 3 months. They are not allowed to appoint any representatives on their behalf to cast a vote or attend the meetings.

11. Payment of observer for the Board Meetings

Each director can receive a sitting fee for each Board meeting or a committee meeting which he attends. The sitting fees that is to be paid to their directors for attending the Board meeting or committee meetings , by public companies and private companies which come under public companies, has been revised w.e.f 24th July, 2003. A maximum of Rs 20,000 shall be paid to the directors of companies which have a paid-up share capital and free reserves of Rs. 10 crore and above or have a turnover of Rs. 50 crore and above. A maximum of Rs 10,000 can be paid to the directors of other companies.

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