Directors approval

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Mayank karia (Querist)
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28 September 2011 If a company have to pass a circular(any), and the Director(s) is not available at that time (say he's abrod), so can company pass circular by getting approval through mail??

RG - A Helping Hand

RG - A Helping Hand (Expert)
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28 September 2011 I think you are talking about internal circular relating to internal working of the company.

Yes it is possible bcoz it is the internal matter of the company.

RG

Mayank karia

Mayank karia (Querist)
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28 September 2011 Sir,
It is the circular regarding approval of Cost Audit Report of 2010, and none of the directors are present.....
so i think it is not the internal matter of company....

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Mayank karia

Mayank karia (Querist)
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29 September 2011 No one There To Reply..........

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 In situations where directors of a company are not physically present to pass resolutions or approve circulars, they may still participate and provide their approval through electronic means such as email. Here’s how this process typically works:

1. **Legal Validity of Electronic Approval:**
- The Companies Act, 2013, and its rules allow directors to pass resolutions by circulating documents, including circulars, through electronic means. This is covered under Section 175 of the Act.
- Directors who are unable to physically attend a meeting may participate and vote on resolutions via electronic communication. Email is commonly used for this purpose.

2. **Procedure for Passing Circulars:**
- The company can circulate the draft circular (in this case, regarding the approval of the Cost Audit Report) to all directors via email.
- Each director should acknowledge receipt of the circular and indicate their approval or disapproval via email. The approval should be clear and unambiguous.
- The circular should specify a reasonable time frame within which directors must respond, ensuring all have adequate opportunity to review and provide their input.

3. **Documentation and Record-Keeping:**
- It’s essential to maintain proper documentation of the circular, including the email communications from each director approving the resolution.
- The approval process should be documented in the minutes of the subsequent board meeting or recorded in the minutes of the meeting where the circular was discussed.

4. **Consideration of Quorum and Majority:**
- For the circular to be valid, it must receive approval from the requisite number of directors as per the company’s articles of association and the provisions of the Companies Act, 2013.
- Ensure that the circular is approved by the majority of directors or the required quorum as specified in the company’s governing documents.

5. **Advisability of Legal Counsel:**
- If unsure about the procedure or the legality of approving a specific circular via email, it’s prudent to seek advice from legal counsel or a company secretary familiar with corporate governance requirements.

In summary, yes, a circular regarding the approval of the Cost Audit Report can be passed by obtaining director approval through email, even if directors are not physically present. However, it’s important to adhere to the procedural requirements under the Companies Act, 2013, and ensure proper documentation and record-keeping of the approval process.