Passing a Board Resolution by Circulation: A Comprehensive Guide

1. Introduction to Board Resolution Circulation

Passing a board resolution by circulation is an essential process for companies when convening a regular board meeting is not feasible. This method involves circulating the draft of the resolution along with necessary documents to all directors for their approval.

Procedure for Passing a Board Resolution by Circulation

According to Rule 5 of the Companies (Meetings of Board and Other Statutory Commissions), Rules, 2014, a resolution in draft form can be circulated to directors for their approval through electronic means such as email or fax. This practice is especially useful for urgent decisions.

Scenario Requiring a Board Meeting

If not less than one-third (or more) of the total number of directors of a company objects to passing a resolution by circulation and insists that it be decided at a board meeting, the chairman must put the matter to a vote at the next board meeting.

Passing a Resolution by Circulation

1. Circulating the Draft Resolution

Circulate the draft of the resolution and all necessary papers to all directors. Ensure that the draft is delivered through hand delivery, post, courier, or electronic means (e.g., email or fax) to the addresses registered with the company.

2. Approval Process

If all or the majority of the directors entitled to vote on the resolution approve it, the resolution is deemed passed by the board.

3. Recording the Resolution

Record the resolution in the minutes of the next board meeting.

4. Agendas and Notes

Enclose a copy of the circulating resolution in the agenda of the next board meeting. Note the number of directors who approved and dissented (if any) in the meeting minutes. Mention that the resolution was passed by a certain majority.

Related Keywords

- Board Resolution

- Passing Resolution by Circulation

- Companies Act

Conclusion

Passing a board resolution by circulation is a crucial process for decision-making in a company. Proper adherence to the steps and guidelines ensures that the resolution is valid and documented appropriately.