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.
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Draft
Resolution
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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.
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Annexure
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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.
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Majority
of Acceptance
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Date
of Board or Committee Meeting
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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.
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Signed
Communication
|
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Rejection
by
Directors
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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.
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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
|
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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.
|
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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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