A Board Meeting is a formal meeting of the Board of Directors (BODs) of the company which is held to make decisions and solve issues with regards to the affairs of the company.
The Board of Directors (BODs), also referred to as the ‘board’, is a group of officers appointed to look over the functioning of a company. Only individuals can be appointed as Board of Directors and hence no artificial person can be a part of the board. The board includes executive directors, non-executive directors, independent directors, women directors depending upon the number of directors the company is required to maintain by the law.
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What is Board Meetings?
A board meeting being an important event, it is to be conducted by adhering to certain standards and rules, since a good board is a key sign of the success and growth of the company, it is imperative that Board Meetings be held in accordance with the provisions laid down by the Companies Act, 2013, and the rules stipulated along with it.
Board Meetings are to be held in accordance with Section 173, Companies Act 2013.
Importance of a Board Meeting
A board meeting being an important event, it is to be conducted by adhering to certain standards and rules, since a good board is a key sign of the success and growth of the company, it is imperative that Board Meetings be held in accordance with the provisions laid down by the Companies Act, 2013, and the rules stipulated along with it.
Board Meetings are to be held in accordance with Section 173, Companies Act 2013.
First Board Meeting
As per the provisions of Section 173(1), every company that is incorporated under the Companies Act 2013, must conduct its first board meeting within 30 days of the date of incorporation of the company.
How Many Board Meetings Are to Be Conducted in a Year?
Every company registered under the Companies Act 2013, is required to conduct at least four board meetings every year. Also, the gap between two board meetings should not be more than 120 days.
Prerequisites for Conducting a Board Meeting
Since Board Meetings are to be held as per the law, there are certain requirements that need to be followed before conducting a Board Meeting. These requirements are detailed below –
Notice of the Board Meeting
As per the Companies Act, 2013, a notice of meeting should be sent to all the directors to their registered address through post or hand delivery or by electronic means at least seven days in advance.
In the case where the Board Meeting needs to be called on a shorter notice, it is required that at least one independent director be present at such meeting. If the independent director is not available, then the decision taken at the meeting should be passed on to all the directors, and the decision can be finalised only once it is approved by at least one independent director.
Penalty for Failure to give the Notice of Board Meeting
If the persons responsible for sending the notice of the meeting as required above fail to do so, then every person in charge to do so will be liable to a penalty of INR 25000.
Quorum for a Board Meeting
Quorum means the minimum number of members required to attend the meeting. In the case of Board Meetings, at least two directors or one-third of the total number of directors, whichever is more, is required.
If any situation arises where the number of directors of the company falls below the quorum as required, then the continuing directors may –
- Act upon for the purpose of increasing the number of directors to that required for the quorum.
Or
- They are summoned for a general meeting of the company.
Kindly note that the directors can act so only for the above situation and for no other purpose. Also, for the purpose of fulfilling the quorum requirement, a director who participates in the meeting through video conference or any other kind of audio-visual mode can also be considered.
A board meeting ‘can’ be cancelled if the quorum requirement is not met. The meeting postponed will be scheduled to be held on the same day at the same time and place in the next week or if the day is National Holiday, the next working day at the same time and place.
Requirements for Conducting a Board Meeting
There are certain things to be taken care of while conducting a board meeting, the detailed list of which is specified below –
1. Directors can participate in the meeting in person or through any audio-visual means when any director is participating in the meeting through a video conference or any such mode.
- The company should make the arrangements required to conduct the meeting through audio-video mode, and it must see to it that proper arrangements are made so as to avoid connection failures.
2. The Chairperson and the Company Secretary, if any, should take care of that and ensure that,
- Arrangements are made to provide sufficient security, and identification procedures are followed.
- Arrangements to record the proceedings of the meeting and to prepare the minutes are made.
- Arrangements are made for storing safely, the tape recordings of the meeting or other electronic recording mechanism as part of the records of the company.
- It should be ensured that no person other than the concerned director is attending the meeting through the audio-video mode and that no person other than the director attending has access to the proceedings of the meetings.
- It should be ensured that participants attending the meeting through audio-visual means are able to hear and see the other participants clearly during the meeting. Also, differently-abled persons can request the Board to allow a person to accompany them.
- A director who wants to join the meeting through video conferencing or any other audio-visual mode must inform the company in advance so the company can make the necessary arrangements. The director should give this intimation at the beginning of the calendar year, and it would be valid for that calendar year.
- The director should also inform the Chairperson or the Company Secretary that he is going to attend the meeting through the audio-visual mode or video conference.
3. When the meeting starts, the Chairperson must take the roll call and all the directors who are present in the meeting through audio-video means or through video conferencing should disclose their name, their location, and they should also confirm whether they are being able to see, hear and communicate clearly in the meeting.
The directors should also state if or not they have received the agenda and all the other information or material that he needs for the meeting.
Matters that cannot be discussed through Audio-Visual Mode or through Video Conference
Even though Board Meetings through virtual modes are allowed, a Board Meeting cannot be held through audio-visual mode or through a video conference for discussion of the following matters –
- To approve the annual financial statements
- For the approval of the Board’s report
- When the prospectus needs to be approved
- Meetings of the Audit Committee which are held for the consideration of accounts
- Meetings held for approval of matters relating to amalgamation, merger, demerger, acquisition and takeover.
Agenda of a Board Meeting
Agenda refers to the purpose for which the meeting is called. It is always important to have a clear agenda for any meeting. It is advisable to stick to the agenda and no other topics except for the agenda be discussed in a board meeting.
Minutes of the Board Meeting
Minutes regarding meetings of a company refer to the summary of the discussions that took place during the meeting. As per the provisions of the Companies Act,2013 it is mandatory to have a minutes book and record the minutes of all the meetings.
