Item: Resolutions Which cannot be Passed by Circular
Author: Muhammed Fasil K

Resolutions Which cannot be Passed by Circular

As per the provisions of Section 179(3) of the Companies Act, 2013 the Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board’s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

The Act has also prescribed certain other items of business which can be transacted by the Board only at Meetings and not by circular :

(a) Buy back through Board Resolution [Section 68(2)];

(b) Filling causal vacanties on the Board [Section 161(4)];

(d) Making contribution for a political party or for a political purpose [182(1)];

(e) Disclosure of interest by a director {Section 184(1)];

(f) Loan, investment and guarantee by a company [Section 186(5)];

(g) Related Party Transaction [188(1)];

(h) Signature on register of Contracts and Arrangements [189(1)]

(i) Appointment of a managing director; whole – time director or manager [Section 196(4) and 203(3)],

(j) Casual vacancy of a whole time key managerial personnel [203(4)]

(k) Declaration of Solvency [Section 305(1)];

Additionally, in respect of listed companies, there are certain items which should also be approved at Meetings of the Board or, where permissible, by Committees thereof but which cannot be passed by circular. An illustrative list of such items is given below:

(i) to take note of the quarterly & half-yearly financial result

(ii) to declare dividend/issue bonus shares;

(iii) to consider annual accounts;
(iv) to issue securities;

(v) to re-issue forfeited shares; and

(vi) to note the report of the company secretary (compliance officer) with regard to the share transfer process.

E-book on draft resolutions and procedures

Resolutions Which cannot be Passed by Circular

Resolutions Which cannot be Passed by Circular

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