What are the cases when a resolution is required to be passed by circulation?

    Posted By : Ekta / Published on : 13-Sep-2017 09:51 AM / View : 679 / Comment : 1
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    Please tell me the procedure of resolution passed by circulation and the businesses for which it is required.
    Read more on : circulation passed required resolution cases

    • Provisions in respect of passing of resolution by CIRCULATION are provided u/s 175 of the Companies Act 2013. This section provides that in order to pass a resolution by circulation, a draft of such resolution along with the necessary papers ,if any, should be circulated to all the directors, or members of the committee ,as the case may be, at their registered address. Such draft can be circulated though post or by courier or through email or fax. Such resolution is required to be approved by majority of directors or members who are entitled to vote on such resolution. After approval of the resolution by majority of directors or member’s, such resolutions shall be noted at the subsequent meeting of board or the committee thereof, as the case may be, and made part of minutes of such meeting.


      However this section provides that the directors may require that any resolution under circulation must be decided at the meeting and in that case the Chairperson shall put the resolution to be decided at the meeting of the board. However such objection is required to be made by at least 1/3 of the total number of directors.

      In case of urgency, it may not be possible to wait for the approval or implementation of an item or proposal till the next meeting of Board or its Committee. In such case, it is permissible to pass a Resolution by Circulation under Section 175 of Companies Act, 2013.

      S. No Particulars Provisions

      1.

       

      Circulation Resolution to be circulated in draft with all the necessary papers, if any.

      2.

       

      Whom to send? To all the Directors or members of the committee, as the case may be.

      3.

       

      Where to send? At their addresses registered with the Company in India.

      4.

       

      Mode By hand delivery or by post or by courier or through other E-means [E-mail or fax].

      5.

       

      Approval Has to be approved by a majority of the directors or members, who are entitled to vote on the resolution.

      6.

       

      When Resolution is required to be passed at Meeting? Where not less than 1/3rd of the total number of Directors require that RBC must be decided at a Meeting.*

      7.

       

      Noting at Board Meeting To be noted at the subsequent Meeting of the Board or the committee thereof, and made part of the minutes of such meeting.


      *At a Meeting includes meeting through Video Conferencing

      Further, kindly note that as per my knowledge there is no such list as to where we can pass the resolution by circulation. In fact, there is negative list of the items which prohibit passing of resolution by circulation.

      Matters not to be passed through Circular Resolution: –

      Since the Act requires certain matters to be approved only at the Meeting of the Board.

       [Section 179(3) and Rule 8 of Companies (Meeting of Board and its Powers) Rules, 2014] Section 179(3) of Companies Act, 2013

       

      •   To make calls on shareholders in respect of money unpaid on their shares;
      •   To authorize buy-back of securities under section 68;
      •   To issue securities, including debentures, whether in or outside India;
      •   To borrow monies;
      •   To invest the funds of the company;
      •   To grant loans or give guarantee or provide security in respect of loans;
      •   To approve financial statement and the Board Report;
      •   To diversify the business of the company;
      •   To approve amalgamation, merger or reconstruction;
      •   To take over a company or acquire a controlling or substantial stake in another company;
      •   Any other matter as may be prescribed.

      Rule 8 of Companies (Meeting of Board and its Powers) Rules, 2014

      •   To make political contribution;
      •   To appoint or remove KMP;
      •   To appoint internal auditors and secretarial auditor.
      13-09-2017 / 06:51:30 AM
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