Quorum Requirements for Board Meeting as per Companies Act

Quorum Requirements for Board Meeting as per Companies Act

A quorum is the minimum number of directors required to be present for a meeting to be legally valid and able to conduct business. According to the Companies Act, all companies are required to establish a quorum for their board meetings to ensure that important decisions are made by a sufficient number of directors. The directors must not be disqualified to participate in the meeting. Section 174 of the Companies Act lays down the provisions governing quorum requirements for board meetings.

Quorum for board meeting as per Companies Act

The quorum for a board meeting is a minimum of one-third of the total strength of the board of directors or two directors whichever is higher. This means that if a company has a board of six directors, the quorum for a board meeting would be at least two directors.

As per the amended provisions of the Companies Act 2013, the directors who participate in the meeting via any audio/visual means shall be considered as part of the quorum, even if they are not physically present.

It is important to consider the following points while determining the quorum:

• Where the number of interested directors ,i.e. directors who have invested in the company, exceeds or is equal to 2/3rd of the board of directors, the number of not interested directors present at the meeting has to be at least 2 for the quorum.
• In the case where when calculating 1/3rd or 2/3rd of the strength of the board of directors, if the final number is in fractions, then it shall be rounded off to one.
• When calculating the strength of the board of directors, one should not take into account directors whose place is vacant.

Adjournment of meeting which could not be held for want of quorum

In the case where the board meeting could not take place due to the lack of the quorum, the board meeting shall be adjourned. This is subject to the Articles of Association of the company.

The meeting will be adjourned to the same time and place as the original meeting on the same day the following week. In the case where the adjourned date is a national holiday, then the board meeting will be held at the same place and time on the following day.

Exemption to One Person Company (OPC)

As per proviso to section 173(5), the provision of section 174 relating to quorum are not applicable to such One Person Company which has only one director on its board..