Companies Act Section 173 — Meetings of Board
CHAPTER XII MEETINGS OF BOARD AND ITS POWERS
Commercial / Corporate
Summary
Sub-section (1) requires every company to hold its first Board of Directors meeting within thirty days of being incorporated. After that, the company must hold at least four Board meetings every year, with no more than one hundred and twenty days passing between any two consecutive meetings. The Central Government can issue a notification to exempt certain types or classes of companies from this rule, or to apply it with specific exceptions, modifications, or conditions.
Sub-section (2) allows directors to attend Board meetings either in person or through video conferencing or other audio-visual means, as prescribed by rules. These methods must be capable of recording and recognising each director's participation, and of recording and storing the meeting's proceedings along with the date and time. The Central Government can issue a notification to specify certain matters that cannot be dealt with in a meeting held through video conferencing or other audio-visual means. Additionally, if a meeting has a quorum through directors physically present, any other director may join through video conferencing or other audio-visual means to discuss matters that the government has restricted from such remote participation.
Sub-section (3) states that a Board meeting must be called by giving every director at least seven days' written notice at the address registered with the company. This notice can be sent by hand delivery, by post, or by electronic means. A meeting may be called with shorter notice to handle urgent business, but only if at least one independent director, if any, is present at the meeting. If no independent director is present at such a shorter-notice meeting, the decisions taken must be circulated to all directors, and those decisions become final only after at least one independent director, if any, ratifies them.
Sub-section (4) makes any officer of the company whose duty is to give notice under this section liable to a penalty of twenty-five thousand rupees if they fail to do so.
Sub-section (5) provides that a One Person Company, a small company, and a dormant company are considered to have complied with this section if they hold at least one Board meeting in each half of a calendar year, with a gap of not less than ninety days between the two meetings. However, this sub-section and section 174 do not apply to a One Person Company that has only one director on its Board.
Official Text
(1) Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board:
Provided that the Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.
(2) The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time:
Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means. 1[Provided further that where there is quorum in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio visual means in such meeting on any matter specified under the first proviso.]
(3) A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means:
Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting:
Provided further that in case of absence of independent directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.
(4) Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.
(5) A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:
Provided that nothing contained in this sub-section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors.