Elaborating Provisions relating to Meeting of Board and its Power (Part-2)
Introduction: Under companies act there are certain provisions which entity is required to comply by conducting minimum number of board meeting and by ensuring the required legal compliance. It is important to know that what are the number of meetings that entity is required to conducted, what will be the quorum of meeting, what are the power that are vested to board of directors; in this article we will cover all the provisions relating to meeting of board and its power.
In this part we will discuss requirement of notice and question that may arise in relation to conduct of meeting and powers of board of directors.
Whether directors are required to attend all the board meeting held during the financial year?
As such there is no requirement that director of company attends all the meeting of board held during the financial year, however as guardian of company it is expected from him that he attends maximum number of meeting held during the financial year. Also, here provision stated under section 167 of companies act is worth noting that if director absents himself from all the meetings of the Board of Directors held during a period of 12 months with or without seeking leave of absence of the Board than he will be required to vacant the office.
What are the provisions relating to notice of meeting?
It has been prescribed under law that company is required to serve notice of at least 7 days before the meeting in writing to every director of company to its registered address. The notice can be served either by hand delivery or by post or by electronic means.
In case company is giving shorter notice to transact any urgent business to be conducted at said meeting, than at least one director is required to be present at said meeting. In absence of such 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 company does not have independent director on board than in that case there is no such requirement of ratification of decision but decision taken at such meeting is required to be circulated to all the directors.
In case if company is allowing directors to participate through audio-visual means or through video conferencing than in that case notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio-visual means, and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio-visual means.
Further, if any director is of the view that he will be attending such meeting through video conferencing mode or other audio-visual means than director intending to participate through video conferencing or other audio-visual means shall communicate his intention to the Chairperson or the company secretary of the company in advance to the company. If no such intimation is received from director than in that case it will be assumed that director will attend the said meeting through physical mode.
Whether director who once communicated that he will be attending meeting through video conferencing mode or other audio-visual means can attend the meeting through physical mode?
It shall be noted that if director once communicated that he will be attending meeting through video conferencing mode or other audio-visual means, than in such case he is also allowed to attend the meeting through physical mode there is no such restrictions which has been provided in law.
Illustration: MJD & Co. is decided to hold board meeting on 7th May, 2021; one of the directors intimated the company after receiving notice of meeting that he will be attending such meeting through video conferencing mode or other audio-visual means. On meeting day director decided that he will attend the meeting through physical presence, however company objected the same by stating once communication is done, he is required to attend the meeting through video conferencing mode or other audio-visual means only. Whether the restriction imposed by company is valid?
No, restriction imposed by company that director is not allowed to attend the meeting physical mode if he has communicated that he will be attending such meeting through video conferencing mode or other audio-visual means. Therefore, director is allowed to attend meeting through physical mode.
What if company fails to give notice in timely manner?
In case if company fails to give notice in timely manner to than penalty of Rs. 25,000/- will be imposed on every officer of the company whose was under duty to give notice of meeting and failed to do so.
Is it necessary that notice of meeting specify the nature of business which is to be conducted at meeting?
There is no specific provision which states content that is to be prescribe in notice for meeting of board of directors. It is well settled position of law that meeting of notice may or may not include agenda of meeting. It the matter of good secretarial practice, that notice of meeting provides agenda of meeting stating details of business to be conducted at meeting.