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Friday 5 December 2014

Circular Resolution Under CA, 2013 - Quick Reference

Resolution by Circulation – Section 175 of CA, 2013
                                                                                By
               CS K Vinoth And CS D Hem Senthil Raj      
Passing of resolution by circulation can be taken by the company whenever the company is unable to conduct its board or committee meeting physically.

Procedures and Instructions to be followed while passing the resolution by circulation


To circulate the draft resolutions to be passed by the Directors or Committee Members as the case may, present in India.


Draft
Resolution


Mode

Of

Circulation

Draft Resolutions can be circulated by any one or more of the following means:

ü  By hand Delivery or
ü  By Post or
ü  By Courier or
ü  By Electronic means (e-mail, Fax etc.)
ü   
   to their registered address with the Company in India.


Resolutions should be circulated in draft with an option to pass the resolution with or without modification both for board or committee as the case may be along with the necessary papers as an annexure, if any.



Annexure


Covering

Letter

Resolutions shall be circulated along with the covering letter specifying the nature of business to be circulated to the Directors or Members of the Committee, as the case may for their approval, which shall be signed by the Chairperson or Managing Director or KMP as the case may be.


Circular resolution shall be said to be passed when it is approved by the Majority of Directors or Members, as the case may be.


Majority
of Acceptance

Date
of Board or Committee Meeting

Date of board meeting or Committee meeting shall be the date on which the company has received the majority of assent to the resolutions given by the Directors or Committee Members as the case may be.


Circular Resolution shall be taken into consideration only when the company has received the properly signed resolutions from its directors or committee members who gave their assent or dissent as the case may be. The initial of a director or committee members shall not be considered as the signature for this purpose and it shall not be taken into consideration.




Signed

Communication

Rejection

by

Directors

Whenever one third of the total number of directors of the company requires the resolutions to be taken up in the Board Meeting, in such a case the chairperson shall recommend resolutions to be decided at a meeting of the Board. However, this provision is not applicable for committee meeting.


For the purpose of passing the circular resolution, the Chairperson shall be the director who is appointed by the board as the chairperson of the Company.



Chairperson

Noting
of
Resolutions

Circular resolution passed shall be noted in the ensuing Board Meeting or Committee meeting, as the case may be and the same shall form part of the minutes of the same meeting.


FAQ’s
Whether Passing of Resolution by circulation is required, where the company is already provided with an option to conduct the meeting through Video Conferencing under CA, 2013?
Video Conferencing under CA, 2013 is applicable only to Board Meetings and not for the Committee meetings.
In case of Company having only one Resident Director and all are Foreign Director, whether resolution can be passed through circulation?
As per the provisions of section 175 of the CA, 2013 circular resolution shall be circulated only to the registered address of the Directors in India and it requires the approval from the majority of the directors, who are entitled to vote on the resolution. In this stand a circular resolution shall not be exercised if only one Director is available in India.
The following are the combination or probability of the assent or dissent shall be given by the Directors or Committee members.
If all the two Directors or Members are given Assent or Dissent:
In this case circular resolution can be passed if it gets assent from both the Directors or Members, as the case may be and circular resolutions cannot be passed if get dissent from both the Directors or Members, as the case may be.
 If assent from one Director or Member or Dissent from other Director or Member:
In this case circular resolution cannot be passed and the same shall be taken up in the ensuing board meeting or committee only, as the case may be.
In this purview, we can conclude that at least two directors or members to be present in India for exercising the option of passing the resolution through circulation.
Note:
The company can appoint an alternate director in the place of foreign directors for the purpose of exercising the option of passing the resolution by circulation, in case of company having only one resident Director.
Can a Circular Resolution which was rejected by the Directors or Members, as the case may be shall be again re- circulated for their approval?
No, the resolution should be taken up only in the ensuing Board Meeting or committee meeting as the case may be.
What type of resolutions can be taken up for passing through circulation?
All the resolutions can be taken up for passing through circulation except where the Act has expressly provided that such item/ business should be passed/considered only at board meetings.
Whether companies can use the option of Circular Resolution for complying with the provisions of conducting at least four (4) board meeting in a year?
No, passing of resolution through circulation can be considered as it is approved by the board of directors and the same cannot be considered as the date of board meeting. The date of board meeting shall be the date on which the circular resolutions was noted by the board in the ensuing board meeting.

By
CS D Hem Senthil Raj
CS K Vinoth


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