A company is a separate legal entity and acts through its agents i.e. the Board of Directors. The Companies Act and Articles of Association of the company empowers the board to exercise all such powers, except the powers exercisable only in general meeting and to do all such acts and things as the company is authorised to do so. The decisions related to company affairs are taken collectively by the Board in their meetings i.e. Board Meetings. The Companies Act provides fundamental principles with respect to convening proper Board Meetings.
In this article, we will understand the primary step in convening Board Meeting, i.e. Issue of proper Notice of Board Meeting to Board Members and rules and regulations prescribed in the Act and Secretarial Standard (SS-1) related to issue of notice.
Section 173 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, prescribes provisions related to Board Meetings and related matters. The Secretarial Standard-1 provides a detailed analysis of the issue of proper notice.
What is the Notice of Board Meeting?
Notice of Board Meeting refers to a formal document, that informs Board Members regarding venue, time, date and agenda of the meeting. The decisions must be taken collectively and in an informed manner, therefore serving proper notice is a must.
Time frame for the issue of Notice of Board Meeting
As per Section 173(3) of the Companies Act, 2013 “A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every Director of the Company.”
That means notice convening the meeting shall be given at least 7 days before the date of the meeting. Here it is important to note that, the Articles of Association of the company may provide for a longer period than seven days. In such circumstances, the notice period specified in the Articles should be complied with. The statutory notice period of seven days cannot be reduced by the company in its Articles.
Notice of Board Meeting shall be given to every Director by proper means
As per the provisions of Section 173(3) and Secretarial Standard -1, the notice of every Board Meeting shall be given to every director. The Notice can be given either
- By hand or
- By speed post or
- By registered post or
- Via email or any other electronic mode.
- by facsimile
The company shall maintain proper records related to the registered address, facsimile number and email address of every director, where notice of Board Meetings shall be sent. In case of non-availability of details, the Notice shall be sent to the address available on MCA portal against Director Identification Number (DIN) of the Director.
If the Director has provided with any particular post address or facsimile number or email id or has prescribed a particular means for sending notices of Board Meeting, then notices must be sent to such postal address or number or email id and via such means.
Maintenance of proof of sending and delivery of the notice
The Secretarial Standard -1 mandate companies to maintain the proof of sending and delivering the notice for a period of at least three years from the date of Board Meeting. The Board may determine a longer period than 3 years.
In view to ensure a proper and robust system of compliance and as an aid in mitigating the disputes arising out of non-receipt of notices, it is important to maintain the proof of sending and delivery of the board meeting notices.
What should be considered as proof/acknowledgement of sending and delivery of the Board Meeting Notice in the following cases:
- Notice is given by hand: Signature of the director or recipient at the address of delivery
- Notice sent via email: it should have been sent via a proper system, whereby proof of sending and delivery of the notice can be received or retrieved. It is also important to verify the registered email id and email id to which notice is sent.
- Notice sent via registered post or speed post: receipt issued by post office shall be maintained as an acknowledgement.
- Notice sent via courier: the courier receipt can serve as a proof of sending the notice, and via tracking number issued by the courier company, tracking and delivery status can be maintained as proof of delivery.
Maintaining proof of sending and delivery of the notice is mandatory, therefore it is important to note that, if notice is sent via a normal post, then the acknowledgement/receipt is not issued by the post office.
Semblance/form of Notice of Board Meeting
The Notice is a formal document, therefore it is preferable to be on the letterhead of the company. Whether the Notice of Board Meeting is sent via email (as attachment or text) or physical letter, apart from Date, time, venue and agenda of the meeting, the following details must be available in the notice:
- Name of the company
- CIN Number of the company
- Complete Registered Office Address of the company
- Email id, telephone number of the company
- Authority and name & designation of the person issuing notice
- Date of the notice
In case the notice is sent via email or any other electronic means, as text, then details can be mentioned either in header or footer of the email.
Consequences of irregular/improper Notice of Board Meeting
The Secretarial Standard-1 (SS-1) provides a manner in which the notice of Board Meeting must be issued. Meeting should be called and held after issuing notice in proper manner. Any material irregularities in the notice, may affect the validity of the meeting and the decisions taken thereat.
Notice of Board Meeting must be sent to all the directors, failing which, the decisions taken at the meeting shall stand invalid.
For meeting to be valid, the notice calling Board Meeting must be issued by a person duly authorised to do so.
Person authorised to issue and sign the Notice of Board Meeting
The notice of Board meeting shall be issued and signed by the Company Secretary, if there is no Company Secretary, then any Director authorised by the Board or any other person authorised by the Board in this behalf.
Day, date, time, serial number and venue of the meeting
While determining the day, date, time and venue of the meeting, the following shall be considered:
- Day/Date - Unless Articles of the company specifically provide, a meeting may be held on any day as per Gregorian calendar including public holidays. Section 174(4) of the Companies Act, 2013, restricts companies to hold Board Meetings adjourned for want of quorum on National Holidays. Therefore as a good practice, the companies shall avoid holding meetings on National Holidays.
- Time - The meetings must be scheduled at a convenient time preferably during working hours. The meeting may continue beyond working hours. If Articles provide any specific timing, then Board Meetings must be held at or during that time.
- Serial number - the notice of Board Meeting must specify the serial number of Board Meeting.
- Venue - Unless Articles otherwise provide for any specific Place/city where meetings should be held, the Board Meeting can be held at the registered office or any other place, including a remote place, in India or abroad. The notice of the meeting should clearly mention the venue where the meeting is scheduled to be held.
Notice of Board Meeting shall provide information about the option to participate through electronic mode
The notice of Board Meeting shall clearly specify
- regarding the availability of the option to participate in the meeting through electronic mode,
- the time period within which a director need to send a confirmation regarding his participation through electronic mode,
- details of hardware and software requirements,
- mode of participation,
- link to participate
- such other information as may be necessary.
Board Meeting at Shorter Notice
The exception to the requirement of not less than seven days notice period is available in respect of urgent business decisions by the board. In such a case, the board may choose the most expedient mode of sending notice of a board meeting.
Penalty imposed under Companies Act 2013 for non-compliance
As per Section 173(4), every officer of the company whose duty is to give notice under Section 173(3) and who fails to do so shall be liable to a penalty of Rs. 25,000 (twenty-five thousand rupees)
FAQs on Board Meeting Notice
Can Articles of Association provide rules related to Notice of Board Meeting?
Yes, Articles of Association of the Company may provide stricter provisions than those applicable under law. Therefore the Articles may provide for a specific mode of sending the notice, the day/date and time for convening the meeting, place/city for holding a meeting, means of issuing notice to board members, a longer notice period, frequency of holding meetings etc. If Articles so provide the provisions, then the same shall be complied with.
How to send notice to director residing outside India?
If a director is residing outside India, then Notice of Board Meetings shall be sent to him via email or facsimile or any other electronic mode. If he has instructed to send the notice via speed or registered post, then the notice shall be sent to him via such means as well.
However, in case of a Meeting conducted at a shorter Notice, the Company may choose an expedient mode of sending Notice.
Whether new notice is required in case of an adjourned board meeting?
If the board meeting is adjourned due to want of quorum:
if the Board Meeting is adjourned due to want of quorum, then notice of such adjourned board meeting must be given to every director irrespective whether he attended the original board meeting or not.
The notice shall be given not less than seven days before the date of the meeting.
If the board meeting was adjourned for any reason other than want of quorum:
In this scenario, if the date of the adjourned board meeting is decided at the meeting, then notice of the adjourned board meeting should be given immediately.
If the date of the adjourned board meeting is not decided, then such board meeting will stand adjourned on the same day, same time and same place next week. In this scenario, the company is required to send notice of the adjourned board meeting not less than seven days before the date of such adjourned board meeting, to every director whether present at the original meeting or not.
Where an alternate director is appointed, is it mandatory to send notice to the original director as well?
Yes, unlike other directors, he must be informed about the decisions and discussions regarding company affairs. Therefore where an alternate director is appointed, the notice of board meeting shall be sent to the alternate director and at the same time to the original director as well.
Is it mandatory to send a notice for every board meeting?
For meeting to be valid, it should be called by proper notice by a person duly authorised to do so. if notice is not sent, the meeting stands invalid, and business transacted at such meeting is bad.
Can board meeting be held on a national holiday?
“National Holiday” is defined under the Act, means Republic Day i.e. 26th January, Independence Day i.e. 15th August, Gandhi Jayanti i.e. 2nd October and such other day as may be declared as National Holiday by the Central Government.
Section 174 of the Companies Act, 2013 prohibits holding board meetings adjourned due to want of quorum on National Holiday. Therefore one can determine that the law specifically does not prohibit holding original board meeting on National holiday. But as a good practice, the companies should avoid holding board meetings on a national holiday, as the presence of employees is needed for smooth conduct of the meeting.
What should be the place of meeting in case the meeting is to be held via video conferencing?
In case the board meeting is to be held via electronic mode or audiovisual mode, the company shall determine the place where it can provide an infrastructure for recording the proceedings of the board meeting as required under the law, enable participation by members though electronic mode, maintain the recordings securely and can undertake such measures that safeguard the integrity of the Meeting. Such a place can be either the registered office or otherwise.
Therefore in case, the meeting is held though electronic mode, venue of the meeting shall be deemed to be the place where all the recordings of the proceedings of the Meeting take place and notice of meeting should necessarily mention such place as a place of meeting.
What are the consequences of holding a board meeting at a place other than the city/place provided in the Articles?
If Articles of Association of the company specifically provides for any city/place where board meetings should be held, then meetings must be held st such place/city. If the meeting is held somewhere else, in contrary to the requirements of the Articles, then none of the decisions taken by the Board at such Meeting can be put into operation in any manner. The same are liable to be set aside.
Does the mere coincidental physical presence of all directors at one place constitute a meeting?
NO, for a meeting to be valid, proper notice convening the meeting should be sent to every director not less than seven days before the date fixed for the meeting. Therefore, a mere gathering of all directors at one place cannot constitute a valid Board Meeting.
How seven days should be computed in case of sending notice of the board meeting?
The notice of a board meeting should be sent not less than seven days before the date of the meeting. Therefore while computing seven days period, the date of the meeting shall be excluded but the date of notice can be considered in seven days.
For example: suppose the board meeting is scheduled to be held on May 11, 2020, then the date of issue of notice shall be May 04, 2020, and not later than this date.
How to compute 7 days, if the notice of the board meeting is to be sent via speed post?
If the company intends to send the notice of board meeting via registered post or speed post, an additional 2 days shall be added to the service of notice. This additional 2 days time is applicable if the notice is sent solely to the director via speed post or registered post and not in addition to sending a notice by facsimile or email.
For example: the date of the proposed board meeting is May 11, 2020. Then notice of board meeting shall be sent
- In case the notice is sent via email as well as via speed post: the notice shall be sent at least by 4th May, 2020.
- In case notice is sent solely via speed post or registered post: the notice of board meeting shall be sent at least by 2nd May, 2020.
Format of Notice of Board Meeting
(preferably printed on the letterhead of the company)
NOTICE OF ______ (serial number of board meeting) BOARD MEETING
Mr./Ms./Mrs./Smt _____ (name of the director)
______ ______ (address of the director)
The notice is hereby given that the ______(serial number of the meeting) Meeting of Board of Directors of ______ (name of the company) will be held on _______ (day, date and month) at _______ (the venue of the meeting) at ________ (time of the meeting) to transact the business(es) as set out in the Agenda of the meeting, as enclosed herewith.
You may attend the Meeting through Electronic Mode, the details of which are enclosed. In case you desire to participate through such mode, please send a confirmation in this regard to …………………….. (Name of Company Secretary/Chairman/other Authorised Person), email …………………., Tel No. …………………. within …………………. days (time frame) to enable making necessary arrangements.
Kindly make it convenient to attend the Meeting.
For ____________ (Name of the company)
(Email, phone No.)
Date: __________ (date of issue of notice)
Agenda for the ………………….. (Number) Meeting of the Board of Directors of ………………….. (Company Name), to be held on …………… (Day), ………………….. (Date, Month and Year) at ………………….. (Time) at ………………….. (Venue)
The agenda of the meeting should be well-drafted, providing with background and proposal with a recommendation. Drafting a good agenda and notes thereon is an art. In our next article, we will understand the basics of the agenda of board meetings, why notice should follow an agenda and how to draft an agenda effectively.
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