Meetings of the Board and its Committees

In one line

A Board must meet within thirty days of incorporation and four times a year with no more than a hundred and twenty days between meetings, on seven days' notice, with a third of its strength or two directors present, and it may pass a resolution without meeting only by circulating it to everybody.

In exam wording: section 173 requires the first Board meeting within thirty days of incorporation and a minimum of four meetings every year, with not more than one hundred and twenty days between consecutive meetings, on not less than seven days' notice in writing; section 174 fixes the quorum at one-third of total strength or two directors, whichever is higher; and section 175 governs a resolution by circulation.

Why the law has this at all

The members meet once a year. The Board is what actually runs the company, and a Board that never meets is a company run by whoever happens to be in the office.

So the Act insists on a rhythm: four times a year, and never more than four months apart. That is not arbitrary. A company that met twice, in January and December, would satisfy a bare "twice a year" rule while leaving eleven months unsupervised. The one hundred and twenty day cap is what makes the frequency real.

Notice matters for a different reason. A meeting called at two hours' notice is a meeting of whoever is nearby, which in practice means the executive directors. Seven days' notice in writing to every director at his registered address is what gives the non-executive and independent directors a chance to attend, and the provisos to section 173(3) are carefully drawn so that urgency cannot be used to exclude them.

And section 175 exists because business does not wait. A resolution can be passed without a meeting, but only if every director gets the draft, and any one-third of them can insist on a proper meeting instead.

Some words this chapter uses

Total strength in section 174 means the total number of directors, excluding vacancies. An interested director is one concerned or interested in a contract or arrangement, as section 184(2) describes. Resolution by circulation is a resolution approved in writing without a meeting. A chairperson is the director who presides. Video conferencing or other audio visual means must be capable of recording and recognising participation and of storing the proceedings.

Frequency: section 173(1)

Every company shall hold:

• the first meeting of the Board within thirty days of the date of its incorporation; and
• thereafter a minimum number of four meetings of its Board every year, in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings.