As per the provisions of The Companies Act 2013 & Secretarial Standards-I issued by ICSI a
company should conduct at least 1 (One) meeting in a quarter i.e. 4 (four) meetings a year
(Except One Person Company). Where the company holds only 1 meeting (just complying with
the mandatory requirement) in a quarter, the items/proposal which may require urgent approval &
implementation would have to wait till nextboard meeting & this may adversely affect profitability.
In some urgent matters, it may not be possible to wait till the next meeting of
Board or its Committee. In such case, it is permissible to pass a resolution by
circulation- Section 175.
The Act requires certain business to be approved only at Meetings of the Board. However, other
business that requires urgent decisions can be approved by means of Resolutions passed by
circulation. Resolutions passed by circulation are deemed to be passed at a duly convened
Meeting of the Board and have equal authority.
LIST OF RESOLUTION CAN’T BE PASSED BY CIRCULATION:
Particular Section Description
1. If power restricted to
179(4) Restrictions and conditions that may be
specified in general meeting by
2. Matters related to
73 Rule 8(7)
To invite, accept and renew public
deposit and related matters and to
change terms. And conditions of public
3. Making Calls 179(3)(a) Make calls on shareholders in respect
of money unpaid on their shares.(No
restriction in passing resolution by
video conferencing )
4. Authorizing buy back 68(2)(b)(ii) Authorizing buyback upto 10% of paid
up equity capital and free reserves.
5. Issue securities
179(3)(c) Issue securities or debentures whether
outside or in India.
6. Borrow Money 179(3)(d) Borrowing of Money from any person.
7. Invest funds 179(3)(e) Investment of fund anywhere.
8. Granting loans,
179(3) To grant, Loan, security or guarantee.
9. Approve financial
statement and board
179(3) Approval of Financial Statement and
Director Report is mandatory in meeting
of Board of Directors.(This
resolution can’t be passed by meeting
though video conference)
10. Diversify business 179(3)(h) No restriction on passing resolution by
11. Approve merger,
179(3) This resolution can’t be passed by
12. Takeovers 179(3) Takeover a company or acquire
controlling or substantial stake in
another company.(Resolution can be
passed through video conferencing.)
13. Political Contribution 182(1) Approve contribution to political party or
for political purpose.
14. Noting disclosure of
interest of directors
184(1) Acceptance of Disclosure of Interest of
15. Approval of related
188(1) 7 categories TRANSACTION as given
under Section 188.
16. Appointing person as
MD in two companies
203(3) Special notice is to be given to all
17. Appointment or
removal of KMP and
one level below KMP
203 (Resolution can be passed through
18. Appointment of
Rule 8(4) (Resolution can be passed through
19. Making investment,
loans or giving
186(5) Consent of all directors and approval of
PFI is required.(Resolution can be
passed through video conferencing.)
20. Buy or sell
investment more than
5% even within
Rule 8(6) 5% or more investee company.
21. Declaration of
solvency in voluntary
305(1) Declaration of solvency in case of
members voluntary winding up.
22. Approving quarterly
Clause 41 Such resolution can be passed by
meeting of committee of BOD.
23. Approving variation
and audited results
In case variation is more than 20%
reasons shall file to stock exchange.
24. Declaration of
SS-3 Dividend /declaration of interim
dividend should be done at board
25. Provisions in
SS-7 It provides illustrative list on resolutions
should not be passed by circular
26. Filling of board
resolutions with ROC
required to be
passed at meeting
179(3) All resolutions of Board which are
required to be passed at meeting under
Important Provisions relating to Circular Resolution:
No Company can use Circular Resolution to escape the holding of
Minimum Number of Board Meetings.
Resolutions and items of business should not be passed through
circular resolution, where the Act and applicable rules expressly
provide that such items of business should be transacted only at duly
convened Board Meeting.
Circular Resolution can be passed by the Board or Committee
Resolution shall be considered as approval only after acceptance of
Resolution by Majority of Director and resolution passed by circulation
are deemed to be passed at a duly convened Meeting of the Board and
have equal authority.
The draft resolution, together with necessary papers should be sent to
all the directors of Board/ members of committee, even if some of them
are not entitled to vote
It is good practice to give Serial No. to Circular Resolution
If at least 1/3rd of Directors required that such resolution must be decided at a Meeting
not by circulation, the Chairperson shall put the resolution to be decided in the Meeting.
PROVISIONS UNDER SECRETARIAL STANDARD:
A draft resolution circulate to All Directors including Interested Directors in
duplicate, along withnecessary papers, at their address registered with
company in India
Address of Director:
The draft of the Resolution and the necessary papers shall be sent by the
Postal address or
e-mail address registered by the Director with the company or
in the absence of such details or any change thereto
any of the addresses appearing in the Director Identification Number (DIN) registration of the
Each business proposed to be passed by way of Resolution by circulation shall be explained by
a note setting out the:
details of the proposal
relevant material facts that enable the Directors to understand the meaning, scope and
implications of the proposal
the nature of concern or interest, if any, of any Director in the proposal
The note shall also indicate how a Director shall signify assent or dissent to the Resolution
proposed and the date by which the Director shall respond
Ways of Sending of Circular Resolution:
(Only to address in India)By Hand Delivery, By Post, By courier, By Electronic
(Can be at address outside India): Through Electronic Mode: Email, Fax
Time Period for Respond:
Not more than seven days from the date of circulation of the draft of the Resolution shall be given
to the Directors to respond and the last date shall be computed accordingly
The resolution should be considered as ‘Sanctioned/ Passed’. When it has been approved by
majority of Board of Directorsor Committee members, who are entitled to vote on the Resolution.
POWER OF DIRECTORS TO DEMAND FOR MEETING:
The directors have power to demand to the chairman for calling of meeting instead of approval of
circular resolution. Such a demand shall be made by 1/3rd of total number of director of the
Interested Directors shall not be excluded for the purpose of determining the above 1/3rd of the
total number of Directors
DATE OF PASSING OF RESOLUTION:
The Resolution, if passed, shall be deemed to have been passed on the
Last date specified for signifying assent or dissent by the Directors
The date on which assent from more than two-third of the Directors has been
received, whichever is earlier, and shall be effective from that date, if no other effective date is
specified in such Resolution.
PROCESS FOR SIGNING BY DIRECTORS:
Directors shall signify their assent or dissent by signing the Resolution to be passed by
circulation or by e-mail or any other electronic means.
Directors shall Append The Date on which they have signed the Resolution.
In case a Director does not append a date, the date of receipt by the company of the signed
Resolution shall be taken as the date of signing.
In case the Director does not respond on or before the last date specified for signifying assent
or dissent, it shall be presumed that the Director has abstained from voting.
If the approval of the majority of Directors entitled to vote is not received by the last date
specified for receipt of such approval, the Resolution shall be considered as not passed
NOTING OF RESOLUTION & VALIDITY:
Resolutions passed by circulation should be noted at the next meeting of the Board or
Committee as the case may be and the minutes should record the text of the resolution
passed, and dissent, if any.
Minutes should also record the fact that an interested director did not vote on the resolution.
Passing of resolution by circulation will be treated as if it had been passed at a duly convened
meeting of the Board or Committee but that does not dispense with the requirement for the
Board to meet for the Board Meeting which is to be held at least once in a quarter.
It can be noticed that not much has changed in this regard.
CONDITIONS TO BE FULFILLED FOR PASSING BY CIRCULAR RESOLUTION:
A resolution by circulation is valid and passed, if the following conditions are fulfilled:
v Every such director shall carry a serial number.
v The resolution has been circulated in draft, together with the necessary
papers, if any, to all the directors including interested director.
v It has been duly *sent to their addresses registered with the company in India.
v It has been approved by a majority of the directors or members, who are
entitled to vote on the resolution.
v Proof of sending and delivery of the draft of the Resolution and the necessary
papers shall be maintained by the company
v The note shall also indicate how a Director shall signify assent or dissent to
the Resolution proposed and the date by which the Director shall respond.
v Each Resolution shall be separately explained.
v The decision of the Directors shall be sought for each Resolution separately.
v If any special majority or the affirmative vote of any particular Director or
Directors is specified in the Articles, the Resolution shall be passed only with
the assent of such special majority or such affirmative vote.
v An Interested Director shall not be entitled to vote.
v In cases where the interest of a Director is yet to be communicated to the
company, the concerned Director shall disclose his interest before the last
date specified for the response and abstain from voting.
A. If a Director is not entitled to vote on a resolution, (for exp.
Because of Interested in such resolution). Whether such director
is entitled to receive copy of Draft circular Resolution?
The draft resolution should be sent to all the directors of Board/ members of
committee, even if some of them are not entitled to vote
B. Whether Interested Director will include in counting of 1/3rd or
Interested Director will include in counting of /3rd Director for Calling Board
Meeting for passing of resolution.
C. When Resolution by circulation will be considered as Approved?
Acceptance of Resolution by Majority of Director.
D. Whether resolution passed by Circulation required to be Note in
Minutes Book or Not?
The resolution passed by circulation should be take note in the
next Board/ Committee meeting and recorded in the minutes of
E. If any director give dissent on circular resolution. Whether noting
of same is mandatory in Minutes.
The minutes should also record dissent of any director (if any).
F. If a Company passes a resolution by Circular, whether it will fulfill
the condition of one Meeting in a Quarter?
Company can’t use Circular Resolution to escape the holding of
Minimum Number of Board Meetings.
G. Whether there are any resolutions which can’t be passed by
There are many resolutions which can’t be passed by Circular Resolution. List of
Such resolution given above.
H. Whether a prospectus can be approved in Board meeting through
A prospectus can’t be approved in Board Meeting through video conference.
I. Whether delegation of power to Borrow money and invest fund is
Delegation of powers to borrow money, invest funds is
permissible but on unanimous resolution by board.
J. What will be the effective date of passing of Resolution?
Resolution shall be deemed to have been passed on the last date specified for
signifyingassent or dissent by the Directors OR
the date on which assent from more than two-third of the Directors has been
received, whichever is earlier shall be effective from that date, if no other effective
date is specified in such Resolution
K. Details required to be mentioned in the Note of Circular
Each business proposed to be passed by way of Resolution by circulation shall
be explained by a note setting out the:- details of the proposal
– relevant material facts that enable the Directors to understand the
meaning, scope and implications of the proposal
– the nature of concern or interest, if any, of any Director in the proposal
– The note shall also indicate how a Director shall signify assent or dissent
to the Resolution proposed and the date by which the Director shall respond