QUESTION
Mr. Sumit, an officer of the Corporate Secretarial Department of the Executive Limited has called the meeting of the members of the board of the director on 25th April, 2019, and served the notice on 17th April, 2019 on email as well as through Registered post, later on Mr. Ashok, one of the directors of the company has challenged the validity of the meeting on the following grounds.
(a) Mr. Sumit was not authorised person to call the meeting.
(b) The Notice was not sent on the letter head of the company.
(c) The Notice is not served as per the statutory requirements.
(d) The notice does not to inform about the facility of the video conferencing being provided by the company.
In this back drop answer the following:
i. Whether Mr. Sumit was authorised person to call the meeting? If so give reasons.
ii. Whether it is mandatory to send Notice of the meeting on the letter head of the company?
iii. What are the statutory requirements for serving of notice of board meeting through emails and registered post?
iv. Whether the facility of the video conferencing is mandatorily required to be provided by the company?
LET'S CONSIDER APPLICABLE PROVISIONS
Who can call a Board Meeting
Generally the Secretary or a director on the direction of the Chairman/Managing Director shall call a Board meeting. The Articles describe the procedure in that matter.
- Any director can requisition a Board Meeting;
- On requisition of a Board Meeting by a director, the Manager/Secretary/any Director can summon Board Meeting;
- Notice of Board Meeting shall be sent under the authority of the company;
- A secretary has no authority to call Board Meeting on his own;
- If notice given by secretary without any authority, it will be improper notice;
- Improper notice may be ratified by Board of Directors;
- If there is no company secretary or in the absence of company secretary any person authorized by the Board in this regard.
Where a director wants to convene a Board meeting for some urgent issues, he ought to request the managing director of the company to do so. If he convenes the Board meeting for the same issues on the same date at the registered office of the company, where the Board meetings of the company are usually held, there is no reason why the petitioner director should not attend that meeting and to convene a parallel meeting at a different station. Such a step cannot be justified, and the Board meeting convened by the petitioner director is illegal and declared to be null and void. [Sanjiv Kothari v Vasant Kumar Chordia].
Notice for Board Meeting
a) Every board meeting shall be held by giving at least seven days notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
b) In order to transact urgent business, board meeting can be called by giving shorter notice subject to the condition that at least one independent director should be present at the meeting.
c) In the absence of independent directors from such meeting of the Board, decisions taken at the meeting shall be circulated to all the directors and shall be final only on ratification thereof by atleast one independent director, if any.
Manner of Participation :As per sub-section (2) of section 173 of the Companies Act 2013, it says that "the participation of directors in a meeting of the board may be either in person or through video conferencing or other audiovisual means, as may be prescribed, which are capable of recording and recognizing the participation of the directors and recording and storing the proceedings of such meetings along with date and time:
Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audiovisual means."
ANSWER
i) Mr. Sumit was authorised person to call the meeting.
As a best practice and a measure of good governance, the Director desirous of summoning a Meeting for any purpose should send his requisition in writing to convene such Meeting, along with the agenda proposed by him for discussion at the Meeting, either to –
the Chairman or in his absence, to the Managing Director or in his absence, to the Whole-time Director, or
the Company Secretary or in his absence, to any other person authorised by the Board in this regard.
"any person authorised by the Board", whether an officer of the company or any person other than the officer of the company, should be clearly identifiable.
It is advised to check whether Mr. Sumit fits under the criteria of the any person authorised by the board.
ii) The Notice was not sent on the letter head of the company.
As per the secretarial standard on the meeting of the Board of Director (SS-1) and guidance note issued Theron, The Notice should preferably be sent on the letter-head of the company. Where it is not sent on the letter-head or where it is sent by e-mail or any other electronic means, there should be specified, whether as a header or footer, the name of the company and complete address of its registered office together with all its particulars such as Corporate Identity Number (CIN) as required under Section 12 of the Act, date of Notice, authority and name and designation of the person who is issuing the Notice, and preferably the phone number of the Company Secretary or any other designated officer of the company who could be contacted by the Directors for any clarifications or arrangements.
iii) The Notice is not served as per the statutory requirements.
In case the company sends the Notice by speed post or by registered post, an additional two days shall be added for the service of Notice. Addition of two days in case the company sends the Notice by speed post or by registered post is in line with Rule 35(6) of the Companies (Incorporation) Rules, 2014 which provides that in case of delivery of Notice of a Meeting by post, the service shall be deemed to have been effected at the expiration of forty eight hours after the letter containing the same is posted.
However, the requirement of adding two days is applicable only if the Notice is sent to any of the Directors solely by speed post or by registered post and not by facsimile or by e-mail or any other electronic means.
In case the Notice is sent by facsimile or by e-mail or by any other electronic means to the Directors,and it is additionally sent by speed post or by registered post to all or any of the Directors, whether pursuant to their request or otherwise, the additional two days need not be added.
iv) The notice does not inform about the facility of video conferencing being provided by the company.
The Director who desires to participate through Electronic Mode may intimate his intention of such participation at the beginning of the Calendar Year and such declaration shall be valid for one Calendar Year [Clause 3(e) read with Clause 3(d) of Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014].
The Notice shall also contain the contact number or e-mail address (es) of the Chairman or the Company Secretary or any other person authorised by the Board, to whom the Director shall confirm in this regard. In the absence of an advance communication or confirmation from the Director as above, it shall be assumed that he will attend the Meeting physically.
DISCLAIMER: The case law presented here is only for sharing knowledge and information with readers. The views are personal. In case of necessity do consult with professionals for better understanding and clarity on subject matter.
CAclubindia
