24 May 2013
Normally, 'Resolution' is passed in a meeting, either of the Board of Directors or the members of the company, duly convened within the framework of the provisions of the Companies Act and/or the Articles of Association of the company. There is, however, one exception for which reference may be made to the provisions of section 188 and section 289 and Regulation 81 of Table A. Being useful, section 289 and Regulation 81 are reproduced below.
Section 289. -A resolution by the Board of Directors may be passed by circulation if the same has been circulated in draft, together with the necessary papers, if any, to all the Directors, or to all the members of the committee, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be), and all other Directors or members at their usual address in India, and has been approved by such of the Directors as are then in India, or by a majority of such of them, as are entitled to vote on the resolution.
Regulation 81 of Table A. -Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the Board or of a Committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at a meeting of the Board or committee, duly convened and held.
Resolution by circulation should cover only those items which could be passed through circulation as certain powers are to be exercised by the Board only at meetings.
Paragraph 6 of Secretarial Standard 1 provides the following on the subject matter of passing of Board Resolution by circulation:
(i) A resolution proposed to be passed by circulation should be sent in draft, together with the necessary papers,
individually to all the directors or in the case of a Committee Meeting to all the members of the committee; [6.1]
(ii) The draft resolution to be passed by circulation and the necessary papers should be circulated by hand or by post or by facsimile, or by e-mail or by any other electronic mode; [6.2]
(iii) The resolution should be deemed to have been passed on the date on which it is signed and dated as approved by all the directors then in India being not less than the quorum or on the date on which it is approved by the majority of the Directors entitled to vote on the Resolution, whichever is earlier. [6.3]
(iv) Resolutions sent for passing by circulation should be noted along with the decision thereof ' at the next meeting of the Board or the committee, as the case may be and recorded in the Minutes of such meeting. (6.4]
A resolution as above is called resolution passed by circulation. To ensure its authenticity, such a resolution should be recorded in the minutes of the next Board Meeting.
The circulation of resolution, however, is limited in scope. Circular resolutions cannot be passed where the articles of the Company or the provisions of the Companies Act, 1956, stipulate that a particular act (adoption of a resolution there for) has to be performed at a meeting.
Resolution passed by Postal Ballot (S. 192A)
A listed company in the case of resolutions relating to certain businesses as prescribed by the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001, should be passed only by means of postal ballot instead of transacting the business in general meeting of the company. The list of businesses in which the resolutions are to be passed through postal ballot are the following
(i) alteration in the objects clause of memorandum of association;
(ii) alteration of articles of association in relation to insertion of provisions defining a private company;
(iii) buy-back of own shares by a company under section 77A;
(iv) issue of shares with differential voting rights under section 86(a)(ii);
(v) change in place of registered office out side local limits of any city, town or village;
(vi) sale of whole or substantially the whole of undertaking of a company under section 293(l)(a);
(vii) giving loans or extending guarantee or providing security in excess of the limit prescribed under section 372A(l);
(viii) election of small shareholders' director under section 252(l) proviso;
(ix) variation in the rights attached to a class of shares or debentures or other securities as specified under section 106
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