Thursday, May 07, 2009

Companies Act_Practical Problems_78

In a public company the total number of directors are 12 and 2 office of the directors have fallen vacant. Referring to the relevant provisions of the Companies Act, 1956.
(a) What would be the quorum for the Board meeting?
(b) Can the articles of a company fix the quorum (higher or lower) for the Board meeting?
(c) Assuming if there are 15 directors in the company and of which 13 happen to be interested directors, what would be the quorum?
(d) How do you resolve the situation if all the directors are interested in a particular transaction?


Where total number of directors are 12 and 2 offices of the directors have fallen vacant, we find: 1/3 of (12-2) = 1/3 of 10 = 3 1/3 directors. If the fraction of 3rd were to be rounded off as one then 4, i.e. 3+1 directors would constitute the quorum for the Board meetings. If at any time the number of the remaining directors exceeds or is equal to two thirds of the total strength, the number of the remaining directors who are non-interested but present at the meeting, not being less than two shall constitute the quorum. For example, there are in all 15 directors and the Board meeting commences with all the 15 directors. During the currency of the meeting, an item comes up for discussion in respect of which 13 happen to be “interested” directors. In this case, in spite of the excess of the interested directors being more than two-thirds, the prescribed minimum number of noninterested directors constituting the quorum, namely, 2 present at the meeting are to transact the particular item of business.

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