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Annual Accounts

Khushboo Maheshwari (Company Secretary) (548 Points)

27 August 2010

Can the annual accounts of a company be approved by the Board of Directors through a resolution passed by circulation

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Govind Rathore (CA Final) (543 Points)
Replied 27 August 2010

Dear khusboo,

annual accounts of a company cannot be be approved by the Board of Directors through a resolution passed by circulation, it can only be passed at a duly convened Board Meeting..

please refer Secretarial Standard-7 (SS-7) issued by the Council of the Institute of Company Secretaries of India, on “Passing of Resolutions by Circulation”.

which states matters to be passed at a duly convened Board Meeting and which cannot be passed by circulation, ex

• To make calls on shares in respect of unpaid share capital of the company

• To issue debentures.

• To borrow money otherwise than on debentures.

• To invest the funds of the company

• To give loans.

• To buy-back its own securities

• To make political contributions

• To fill casual vacancy in the Board.

• To sanction contracts in which a director is interested

• To make investment in shares of other companies.

• To make declaration of solvency with respect to voluntary winding up.

• To enter into joint venture and collaboration agreement.

• To commence a new business activity

• To approve mergers and acquisitions

• To shift the location of plant or factory or a registered office.

• To appoint or remove senior management personnel one level below the Board

• To appoint internal auditors and cost auditors.

• Adoption of Common Seal

• Forfeiture of shares.

• Granting loans to directors.

• Noting of directors’ interest.

• Noting of directors’ shareholdings.

• Appointment or resignation of Managing Director or whole-time director or Manager.

• Appointment of a Managing Director /Manager as a Managing Director/Manager in more than one company

• Appointment and removal of the Chief Financial Officer and the Company Secretary.

• Appointment of sole-selling agents.

• To approve quarterly, half-yearly and annual accounts and cost accounts.

• Annual operating plans and budgets.

• Any material default in financial obligations.

• Noting of statutory compliance reports, show cause notices, prosecutions and penalty notices of material nature.

• Sale of investments, subsidiaries or assets which is not in the normal course of business.

• Any issue which involves possible public or product liability claims.

• Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.

• Foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movements.

• To accept fixed deposits and related matters.

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vivek (CS) (751 Points)
Replied 27 August 2010

Whether i don't find any restriction but it is a annual matter and it should be dealt in properly convened Board Meeting (it's the practice) so that a discussion amongst the director's took plac on the annual financials. But still upto my understanding it can be done.

Regards,

Khushboo Maheshwari (Company Secretary) (548 Points)
Replied 27 August 2010

Hi Vivek thanks for SS 7, but the same is not mandatory right now....I know its an annual matter but due to government directorships, we have not been able to convene BM since last 5 months, so just trying to find out a way so that we dont default in AGM