NOTICE TO BOARD MEETING

[Mr. M. GOVINDARAJAN]

In this article the procedure in relation to issue of notice to the Directors of the Board for the conduct of Board meeting.  Section 173 of the Companies Act, 2013, Rule 3(3)(a) of the Companies (Meetings of Board and its Powers) Rules, 2014 (came into effect from 01.04.2014) and 1.3 of Secretarial Standard -1 (meetings of the Board of Directors) issued by the Institute of Company Secretaries of India (came into effect from 01.07.2015) deal with the issue, duration, contents of notice for the purpose of conduct of board meeting.

Rule 3(3) (a) of the Companies (Meetings Of Board and its Powers) Rules, 2014 provides that the notice of the meeting shall be sent to all directors in accordance with the provisions of Section173 (3) of the Act.

Duration of notice

Section 173(3) requires that a meeting of the Board shall be called by giving not less than seven days.   Clause 1.3.6 of Secretarial Standard - 1 provides that notice for convening a meeting shall be given at least seven days before the date of meeting, unless the Articles prescribe a longer period.  In case the company sends notice by speed post or by registered post or by courier an additional two days shall be added for the service of notice.   The notice shall also to be issued to the alternate director.

Who is to issue notice?

Clause 1.3.2 of Secretarial Standard – 1 provides that notice shall be issued by the Company Secretary.   If there is no Company Secretary appointed in that company any Director or any other person, who is authorized by the Board for this purpose, may issue the notice for the convening the Board meeting.

Mode of delivery

Section 173(3) of the Act provides that the notice is to be addressed to every director at his address registered with the company.  The notice shall be sent by hand delivery or by post or by electronic means.  Clause 1.3.1 of Secretarial Standard – 1 provides that the notice shall be sent to the postal address or email address registered by the Director with the company.   If such address has not been registered by the Director or if there is any change of address but not communicated, the notice shall be sent to any of the address appearing in the Director Identification Number registration of the Director.

When a Director specifies a particular means of delivery of notice the notice shall be given to him by such mode.  The Secretarial Standard makes it mandatory to keep the proof of sending the notice and delivery of the same with the company.

Contents of the notice

The notice shall be in writing.   There is no prescribed format for the notice to be issued for convening the board meeting.  The Secretarial Standard provides for furnishing the following in the notice:

• The notice shall specify the serial number, day, date, time and full address of the venue of the meeting;
• In case the facility of participation through electronic mode is being available, the notice shall inform the Directors about the availability of such facility and provide the necessary information to avail such facility;
• The notice shall contain the contact number or email addresses of the Chairman, Company Secretary or any other person authorized by the Board, to whom the Director shall confirm in this regard;
• The agenda and notes on agenda shall be sent to the original directors even the same  have been sent to alternate director;

Notice of the adjourned meeting

The notice of the adjourned meeting shall be given to all Directors including those who did not attend the meeting on the originally convened date and unless the adjourned meeting is decided at the meeting, notice shall be given not less than seven days  before the meeting.

Short notice

The first proviso to Section173 (3) provides that a meeting of the Board may be called at shorter notice to transact urgent businesses subject to the condition that at least one independent director, if any, shall be present at the meeting.

The second proviso to Section 173 (3) provides that in case of absence of independent directors from such a meeting of the Board, decision taken at such a meeting shall be circulated to all the directors and shall be final only on ratification by at least one independent director, if any.

The fact that the meeting is being held at a shorter notice  shall be stated in the notice.

Penalty

Section 173(4) of the Act provides that every officer of the company whose duty is to give notice under this Section and fails to do shall be liable to a penalty of ₹ 25,000/-

Deemed compliance

Section 173 (5) provides that a One Person Company, small company and dormant company shall be deemed to comply with the provisions of Section 173, including the issue of notice, if at least one meeting of Board of Directors has been conducted in each half of a calendar year and the gap between the two meeting is not less than 90 days.