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Query regarding circular resolution

Avneesh Mishra (CS Trainee) (502 Points)

14 May 2014

Dear All,

Requesting you to please clarify, wrt the Companies Act 2013, can an approval in regard to change in authorized signatory with Bank be obtained by a circular resolution??? Please refer to the relevent section/ standard for clarity...

Anticipating thanks in advance.

Regards,

Avneesh Mishra

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 14 May 2014

Yes, it is possible. It is not covered in items to be transacted in Board meetings only.

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CA Nimesh Maheshwari (Commercial Manager) (334 Points)
Replied 14 May 2014

Dear Avneesh,

Chapter XII of the Companies Act, 2013 ("the Act") deals with MEETINGS OF BOARD AND ITS POWERS.

According to sub section 1 of section 175 of the Act "No resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the case may be, at their addresses registered with the company in India by hand delivery or by post or by courier, or through such electronic means as may be prescribed and has been approved by a majority of the directors or members, who are entitled to vote on the resolution.

Provided that, where not less than one-third of the total number of directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board."

According to sub section 2 of section 175 of the Act "A resolution under sub-section (1) shall be noted at a subsequent meeting of the Board or the committee thereof, as the case may be, and made part of the minutes of such meeting."

According to sub section 1 of section 179 of the Act "The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do.

Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting."

On perusal of sub section 3 of section 179 of the Act and Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 it can be construed that change in authorised signatories at Bank are not to be approved by a resolution passed at the meeting of Board.

Thus, on combined reading of above sections; it can be construed that the board may change the authorised signatories in the Bank through a circular resolution subject to any restriction in articles of association of the Company. It should be noted that a draft resolution be circulated along with necessary papers and such resolution to be taken note in the subsequent board meeting too.

Hope it should solves your query.

Thanks.

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