About sec174(3)

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Arpit choudhary

Arpit choudhary (Querist)
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11 August 2015 Can anyone explain about sec 174(3).

Pratik Shah

Pratik Shah (Expert)
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12 August 2015 Suppose, there are 12 Directors in a company. To consitute a quorum, atleast 1/3 directors should be present in the meeting. That means atleast 4 should be present in the meeting.

But in this particular board meeting, out of 12 directors, 10 directors are interested directors for a particular resolution. Then how will 2 directors will pass resolution even though quorum required is 4???

In such type of case, Section 174(3) gives relief that in above case, the non-interested directors (in above case, it is 2), can pass resolution for the purpose (even though quorum should be 4 directors).

I hope this clarifies.