Background 

• Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board. [Section 173 (1) of the Companies Act, 2013]. 

• A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days. Provided that this point as well as section 174 shall not apply to One Person Company in which there is only one director on its Board of Directors.  [Section 173 (5) of the Companies Act, 2013] 

Sections/Rules/Regulations 

• Section 173 of the Companies Act, 2013 
• Rule 3 and Rule 5 of the Companies (Meting of the Board & Its Power) Rules, 2014

• Clauses of Secretarial Standard-1 

• Regulation 29, 30 ,46 & 50 of the SEBI (LODR) Regulations, 2015 

Mandatory Requirement & Important Points 

• The quorum for a meeting of the Board of Directors of a company shall be one third of its total strength or two Directors, whichever is higher, and the participation of the Directors by video conferencing or by other audio-visual means shall also be counted for the purposes of quorum under this sub-section. [Section 174 (1) of the Companies Act, 2013] 

• Notice in writing of every Meeting shall be given to every Director by hand or by speed post or by registered post or by facsimile or by e-mail or by any other electronic means. [Section 173 (3) of the Companies Act, 2013] 

• To transact urgent business, the Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above, if at least one Independent Director, if any, shall be present at such Meeting. Provided further that in case of absence of independent Directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one independent director, if any. [Proviso of Section 173 (3) of the Companies Act, 2013] 

• The participation of Directors in a meeting of the Board may be either in person or through video conferencing or other audio-visual means, as may be prescribed, which are capable of recording and recognizing the participation of the Directors and of recording and storing the proceedings of such meetings along with date and time.  [ Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio-visual means.] Also, where there is quorum in a meeting through physical presence of Directors, any other director may participate through video conferencing or other audio-visual means in such meeting on any matter specified under the first proviso. [Section 173 (2) of the Companies Act, 2013] {For more details, please refer to the Procedure for Conducting Board Meeting Through video conferencing or other audio-visual means}

• Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business. [Para 3.1 of SS-1]
• A Director shall neither be reckoned for Quorum nor shall be entitled to participate in respect of an item of business in which he is interested. However, in case of a private company, a Director shall be reckoned for Quorum and entitled to participate in respect of such item after disclosure of his interest. [Para 3.2 of SS-1]
• The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board.[Para 5.1.1 of SS-1]
• The Chairman of the Board shall conduct the Meetings of the Board. If no such Chairman is elected or if the Chairman is unable to attend the Meeting, the Directors present at the Meeting shall elect one of themselves to chair and conduct the Meeting, unless otherwise provided in the Articles. [Para 5.1.2 of SS-1]

While referring to the procedure for conducting Board Meeting, a short briefing on passing of resolution by circulation is also required so that one can understand which matters can be passed by circulation and which can be taken up only at a Board Meeting. For that, reference to be made to Section 175 of the Companies Act, 2013 & Rule 5 of the Companies (Meeting of the Board & Its Power) Rules, 2014

• The Act requires certain business to be approved only at Meetings of the Board. However, other business that requires urgent decisions can be approved by means of Resolutions passed by circulation. Resolutions passed by circulation are deemed to be passed at a duly convened Meeting of the Board and have equal authority.
• Resolutions passed by circulation shall be noted at a subsequent Meeting of the Board and the text thereof with dissent or abstention, if any, shall be recorded in the Minutes of such Meeting.
• A resolution in draft form may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means which may include E-mail or fax.
• Annexure ‘A’ of SS- 1 lists items of businesses which shall not be passed by circulation and shall be placed before the Board at its Meeting [SS-1_1_2024.pdf]
• Passing of Resolution by circulation shall be considered valid as if it had been passed at a duly convened Meeting of the Board. [Refer the Procedure for Passing Board Resolution Through Circulation]

As per Regulation 29 of the SEBI (LODR) Regulations, 2015

• The listed entity shall give prior intimation of at least two working days in advance, excluding the date of the intimation and date of the meeting, to stock exchange about the meeting of the board of directors in which any of the following proposals is due to be considered:

(a) financial results viz. quarterly, half yearly, or annual, as the case may be;

(b)proposal for buyback of securities;

(c) proposal for voluntary delisting by the listed entity from the stock exchange(s);

(d)fund raising by way of [issue of securities (excluding security receipts, securitized debt instruments or money market instruments regulated by the Reserve Bank of India), through further public offer, rights issue, American Depository Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds, qualified institutions placement, debt issue, preferential issue or any other method and for determination of issue price

Provided further that intimation for determination of issue price in a qualified institutions placement is not required if such placement is done accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

(d)declaration/ recommendation of dividend, issue of convertible securities including convertible debentures or of debentures carrying a right to subscribe to equity shares or the passing over of dividend.

(f)the proposal for declaration of bonus securities

(g)any alteration in the form or nature of any of its securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;

(h)any alteration in the date on which, the interest on debentures or bonds, or the redemption amount of redeemable shares or of debentures or bonds, shall be payable.

• The intimation required under sub-regulation (1) shall mention the date of such meeting of board of directors

In case of Non-Convertible Securities [Regulation 50 of the SEBI (LODR) Regulation, 2015]

• The listed entity shall give prior intimation to the stock exchange of at least two working days in advance, excluding the date of the intimation and the date of the meeting of the board of directors, about the Board meeting in which any of the following proposals is to be considered:

(a) An alteration in the form or nature of non-convertible securities that are listed on the stock exchange or in the rights or privileges of the holders thereof;

(b) An alteration in the date of the interest/ dividend/ redemption payment of non-convertible securities;

(c) Financial results viz. quarterly or annual, as the case may be;

(d) Fund raising by way of issuance of non-convertible securities; or

(e) Any matter affecting the rights or interests of holders of non-convertible securities

Note: The disclosures to the stock exchanges shall be made by a listed entity in XBRL format in accordance with the guidelines specified by the stock exchanges from time to time.

Procedure for conducting a Board Meeting [SS-1]: 

• Notice of the Board Meeting shall be issued to all Directors at their registered addresses by post or hand delivery or by electronic means at least 7 days before the date of the board meeting unless the Articles prescribe a longer period, with provision for shorter notice in case of urgent business.
• The notice shall include Agenda, Notes to Agenda, and Draft Resolution. It shall be issued by Company Secretary and where there is none, by any Director of person authorized by the Board.
• The Notice shall specify the serial number, day, date, time and full address of the venue of the Meeting. Each item of business to be taken up at the Meeting shall be serially numbered.
• The notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio-visual means, and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio-visual means. [Rule 3 (b) of the Companies (Meting of the Board & Its Power) Rules, 2014]
• If the director intends to participate through video conferencing or other audio-visual means, he shall give prior intimation to that effect sufficiently in advance so that company is able to make suitable arrangements in this behalf. . [Rule 3 (d) of the Companies (Meting of the Board & Its Power) Rules, 2014]
• Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any
• Each item of business to be taken up at the Meeting shall be serially numbered.
• Quorum shall be checked for conducting the board meeting.
• Leave of absence shall be granted to a Director only when a request for such leave has been communicated to the Company Secretary or to the Chairman or to any other person authorized by the Board to issue Notice of the Meeting.
• The Chairman of the company shall be the Chairman of the Board. Where the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board to conduct the meeting.
• Every company shall maintain attendance register for the Meetings of the Board and Meetings of the Committee. For this purpose, at the commencement of the Meeting, the Chairman shall take a roll call. The Chairman or Company Secretary shall request the Director participating through Electronic Mode to state his full name and location from where he is participating and shall record the same in the Minutes. The proceedings of such Meetings shall be recorded through any electronic recording mechanism and the details of the venue, date and time shall be mentioned.
• Register of contracts or arrangements in which Directors are interested shall be placed before the meeting of board.
• If the Chairman is interested in an item of business, he shall entrust the conduct of the proceedings in respect of such item to any Non- Interested Director, with the consent of majority of Directors present, and resume the chair after that item of business has been transacted. However, in case of a private company, the Chairman may continue to chair and participate in meeting after disclosure of his interest.
• The chairman shall have a casting vote in case of equal votes.
• Any other item not included in Agenda can be taken up with the permission of Chairman and with the consent of majority of Directors present at the meeting. Decision taken with respect to any such item shall be final only on ratification by majority of Directors of the company unless it has been approved by majority of Directors at the meeting itself.

Post Meeting Requirements 

• Listed companies shall disclose the outcome of the Board Meeting to the Stock Exchange within 30 minutes of Board Meeting/ 3 hours as applicable*[Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] and on website of the Company within 2 working days from the date of passing of resolution. [Regulation 46 (3) of LODR 2015]. The listed entity may provide the exact link to the webpage of each of the recognized stock exchanges where such information has already been made available by the listed entity. 

*If the Board meeting is concluded after normal trading hours but more than 3 hours before the beginning of the normal trading hours the outcome to be disclosed within 3 hours from the closure of the board meeting. 

[It is pertinent to note that SEBI has provided timeline for disclosing events given in Part A of Schedule III of LODR as 12/24 hours, however in a small note appended at the end of the said document, it’s stated that where the event emanates from a decision taken in Board Meeting, the same shall be disclosed within 30 min/3 hours as applicable as per Regulation 30(6), from the closure of the meeting as against the timeline of 12/24 hours]

• Draft Minutes shall be prepared and circulated within 15 days of the conclusion of the Board Meeting. 

Punishments & Penalties 

1. As per Companies Act, 2013 

Section 173(5): Every officer of the company whose duty is to give notice of Board Meeting under Section 173 and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.

       2. As per SEBI (LODR) Regulations, 2015 

• Regulation 29: 10,000/- per instance of non-compliance per item.
• Regulation 30:

General penalty: 

Listed entity/any other person who contravenes any provision of the regulations shall be liable for one or more of the following penalties/actions as deemed fit by the regulator:  

a) Action as per Securities Law, 

b) Fine, 

c) Suspension of trading, 

d) Freezing of promoter/promoter group holding of designated securities, as may be applicable, in coordination with depositories, 

e) Any other action specified by Board

• Regulation 46(3): Advisory/warning letter per instance of non-compliance per item ₹10,000 per instance for every additional advisory/warning letter exceeding the four advisory/ warning letters in a financial year .
• Regulation 50: 5000/- per instance of non-compliance per item

Note: Provisions of Secretarial Standard on Meetings of Board of Directors [SS-1] issued under Section 118(10) of the Companies Act 2013 to be adhered to at all times.