Procedures under Companies Act, 2013

Holding first Meeting of Board of Directors of a Company

Section 173(1) of the Companies Act, 2013 prescribes that every company shall hold the first meeting of the Board of Directors within 30 days of the date of its incorporation.

Key Considerations:

Conduct first Board meeting within 30 days of Incorporation of Company

Directors can participate in Board Meeting either in Person or through Video Conferencing or other audio visual means.

Participation of the director by video conferencing or by other audio visual means shall be counted in quorum.

Notice of Board meeting can be given by electronic means.

Notice, agenda and notes on agenda must be given at least 7 days before the Meeting or less than 7 days i.e. shorter period notice and agenda.

The following procedure is to be followed for holding first board meeting of the company [Section 173 & 174 and Rule No. 3 of the Companies (Meetings of Board and its Powers) Rules, 2014] read with SS1 (Secretarial Standard on meetings of the board of directors) issued by ICSI:-

I. Calling of Board Meeting;

1. Ensure that the first meeting of the Board of Directors is held within 30 days from the date of incorporation of the company. [Section 173(1)]

2. Any director of the company may issue a notice for convening first board meeting of the company. (Clause 1.1.1 and Clause 1.3.2 of Secretarial Standard on meetings of Board of Directors) .

3. Issue not less than 7 days or shorter period notice in writing to every director at his address registered with the company, unless the Articles prescribes a longer period and such notice shall be sent by hand or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means. Additional two days shall be added if notice is sent by speed post/courier/registered post. [Section 173(3) and clause 1.3.1and Clause 1.3.6 of Secretarial Standard on meetings of Board of Directors]

4. The notice should specify the serial number, day, date, time and full address of the venue of the meeting. If Meeting is being held at a shorter Notice, this fact shall be stated in the Notice. (Clause 1.3.3 and Clause 1.3.11 of Secretarial Standard on meetings of Board of Directors)

5. The notice of meeting shall inform the directors regarding option available to them to participate through Video conferencing or other audio visual means, provide them necessary information to avail such facility and seek advance confirmation from the Directors as to whether they will participate through Electronic Mode in the Meeting. Notice shall also contain the contact number or e-mail address (es) of the Chairman to whom the Director shall confirm in this regard. Notice shall also clearly mention a venue, whether registered office or otherwise, to be the venue of the Meeting and it shall be the place where all the recordings of the proceedings at the Meeting. would be made. [Rule 3 (3) of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 1.2.2, Clause 1.3.4 of Secretarial Standard on meetings of Board of Directors]

6. Directors intending to participate through video conferencing shall give prior intimation of his intention to the Chairperson or Company Secretary of the Company. [Rule 3(3) of the Companies (Meetings of Board and its Powers) Rules, 2014]

7. Directors intending to participate through video conferencing may intimate his intention of participation through the electronic mode at the beginning of the calendar year and such declaration shall be valid for one calendar year. [Rule 3(3) of the Companies (Meetings of Board and its Powers) Rules, 2014].

8. Maintain the proof of sending notice and its delivery.[Clause 1.3.1 of Secretarial Standard on meetings of Board of Directors)]

9. Send the agenda setting out the business to be transacted at the Board Meeting and also notes on agenda at least 7 days before the date of the meeting unless the Articles prescribes a longer period, in writing to every director at his address registered with the company and such agenda and notes shall be sent by hand or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means. Additional two days shall be added if agenda and notes is sent by speed post/courier/registered post.[Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)]

10. Each item of business requiring approval at the Meeting shall be supported 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 and the nature of concern or interest, if any, of any Director in the proposal, which the Director had earlier disclosed. Where approval by means of a Resolution is required, the draft of such Resolution shall be either set out in the note or placed at the Meeting [Clause 1.3.8 of Secretarial Standard on meetings of Board of Directors)]

.

11. Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any. .[Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)]

12. Each item of business to be taken up at the Meeting shall be serially numbered. Numbering shall be in a manner which would enable ease of reference or cross-reference. .[Clause 1.3.9 of Secretarial Standard on meetings of Board of Directors)]

13. Maintain the proof of sending agenda and notes on agenda and its delivery.[Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)]

14. See that the following transactions take place in the first board meeting and the agenda accompanying the notice contains reference of all these transactions:-

  • To appoint the Chairman of the Meeting.
  • To take note of the Certificate of Incorporation of the company, issued by the Registrar of Companies.
  • To take note of the Memorandum and Articles of Association of the company, as registered.
  • To confirm/take note the situation of the Registered Office of the company and ratify the registered document of the title of the premises of the registered office in the name of the company or a Notarised copy of lease / rent agreement in the name of the company.
  • To confirm/note the appointment of the first Directors of the company.
  • To read and record the notices of disclosure of interest given by the Directors.
  • To consider the appointment of Additional Directors, if any.
  • To consider the appointment of the Chairman of the Board, if required.
  • To fix the financial year of the company.
  • To consider the appointment of the first Auditors of the Company
  • To adopt the Common Seal of the company., if required.
  • To appoint Bankers and to open bank accounts of the company.
  • To authorise printing of share certificates.
  • To authorise the issue of share certificates to the subscribers to theMemorandum and Articles of Association of the company.
  • To approve preliminary expenses and preliminary contracts.
  • To consider the appointment of the Key Managerial Personnel, if applicable and other senior officers. (Annexure-B of Secretarial Standard on meetings of Board of Directors

15. Before the date of meeting, Keep ready-

  • Original Certificate of incorporation
  • Copy of Memorandum and Articles of association
  • Copies of Incorporation related Forms
  • Design etc. of Share Certificate, sign board, name plate, letter head etc.
  • Statement of preliminary Expenses incurred
  • Certificate in writing about eligibility to appointment from the proposed auditor
  • Account opening form of the bank
  • Cheques/drafts from subscribers to the memorandum towards payment for the shares agreed by them
  • Arrange for sitting, proper lighting, refreshments etc.

16. See that the Directors attendance register containing the names of the directors, Register of contracts or arrangements in which directors are interested [Section 189] and Register of directors and key managerial personnel and their shareholding [Section170] are ready there before the meeting of the Board.

17. If any of the directors give their confirmation to attend meeting through video conferencing ensures the availability of proper equipments/facilities for providing transmission of the communication for effective participation of Directors.

II. Convening of Board Meeting;

18. Every Director, Company Secretary who is in attendance and every Invitee who attends a Meeting of the Board shall sign the attendance register at that Meeting. The attendance register shall contain the serial number, date of the Meeting, place of the Meeting; time of the Meeting, names and signatures of all the attendees.[Clause 4.1.3 of Secretarial Standard on meetings of Board of Directors]

19. In case of Directors participating through Electronic Mode, the Chairman shall confirm the attendance of such Directors. For this purpose, at the commencement of the Meeting, the Chairman shall take a roll call. The Chairman shall request the Director participating through Electronic Mode to state his full name and location from where he is participating and shall record the same in the Minutes. The proceedings of such Meetings shall be recorded through any electronic recording mechanism and the details of the venue, date and time shall be mentioned. The attendance register shall be deemed to have been signed by the Directors participating through Electronic Mode, if their attendance is recorded by the Chairman in the Attendance Register and the Minutes of the Meeting. (Clause 4.1.3 of Secretarial Standard on meetings of Board of Directors)

20. Entries in the attendance register shall be authenticated by the Chairman by appending his signature to each page (Clause 4.1.6 of Secretarial Standard on meetings of Board of Directors)

21. The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board. [5.1.1 of Secretarial Standard on meetings of Board of Directors]

22. The Chairman of the Board shall conduct the Meetings of the Board. If no Chairman is elected or if the Chairman is unable to attend the Meeting, the Directors present at the Meeting shall elect one of themselves to chair and conduct the Meeting, unless otherwise provided in the Articles. [Clause 5.1.2 of Secretarial Standard on meetings of Board of Directors]

23. Request the selected director to take the chair, conduct the meeting and ascertain whether quorum of one-third of the total strength of directors or two directors or the number prescribed by Articles of the Company, whichever is higher, is present and participation of the directors by video conferencing or by other audio visual means shall be counted in the quorum. [Section 174 (1) and explanation to Rule 3(5) of the Companies (Meetings of Board and its Powers) Rules, 2014]

24. Ensure that the quorum is present throughout the board meeting and not transact any business when the quorum is not so present.[Clause 3.1 of Secretarial Standard on meetings of Board of Directors]

25. Interested Directors shall not be counted in the quorum and if at any time number of interested directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time. [Section 174(3)]

26. See that a leave of absence is granted to a director only when a request for such leave has been communicated to the Chairman and inform the names of directors who sought leave of absence.[Clause 4.2 of Secretarial Standard on meetings of Board of Directors]

27. Chairman shall then proceed for discussing the business in the meeting as per items of the agenda. The Chairman shall encourage deliberations and debate and assess the sense of the Meeting. [Clause 5.1.2 of Secretarial Standard on meetings of Board of Directors]

28. If the Chairman is interested in any item of business, he shall, with the consent of the members present, entrust the conduct of the proceedings in respect of such item to any Dis-interested Director and resume the Chair after that item of business has been transacted. The Chairman shall also not be present at the Meeting during discussions on such items. .[Clause 5.1.2 of Secretarial Standard on meetings of Board of Directors]

29. Unless otherwise provided in the Articles, in case of an equality of votes, the Chairman shall have a second or casting vote.[Clause 5.1.2 of Secretarial Standard on meetings of Board of Directors]

30.Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any. In case of absence of Independent Directors, if any, at such Meeting, the Minutes shall be final only after at least one Independent Director, if any, ratifies the decision taken in respect of such item. In case the company does not have an Independent Director, the Minutes shall be final only on ratification of the decision taken in respect of such item by a majority of the Directors of the company, unless such item was approved at the Meeting itself by a majority of Directors of the company. [Clause 1.3.10 of Secretarial Standard on meetings of Board of Directors]

31. Ensures that every director of the company who is in any way concerned or interested in a contract or arrangement of the company discloses the nature of his concern or interest in the meeting.

32. Ensures that interested directors do not take part in the discussion or vote on any contract or arrangement. [Section 184]

33. See that vote of thanks is given to the Chair at the conclusion of the board meeting.

III. Preparation of Minutes;

34. Any person duly authorized by the Board or by the Chairman in this behalf shall record the proceedings of the meeting. The Chairman shall ensure that the proceedings of the Meeting are correctly recorded. [Clause 7.3.1 of Secretarial Standard on meetings of Board of Directors]

35. Ensure that the Minutes shall state, at the beginning the serial number and type of the Meeting, name of the company, day, date, venue and time of commencement and conclusion of the Meeting. (Clause 7.2.1.1 of Secretarial Standard on meetings of Board of Directors)

36.Minutes shall record the names of the Directors present physically or through Electronic Mode, the Company Secretary who is in attendance at the Meeting and Invitees, if any, including Invitees for specific items.(Clause 7.2.1.1 of Secretarial Standard on meetings of Board of Directors)

37.Minutes shall contain a record of all appointments made at the Meeting (Clause 7.2.1.3 of Secretarial Standard on meetings of Board of Directors)

38. Minutes shall specifically mention the following contents;

(a) Record of election, if any, of the Chairman of the Meeting

(b) Record of presence of Quorum.

(c) The names of Directors who sought and were granted leave of absence.

(d) The mode of attendance of every Director whether physically or through Electronic Mode.

(e) In case of a Director participating through Electronic Mode, his particulars, the location from where and the Agenda items in which he participated.

(f) The name of Company Secretary who is in attendance and Invitees, if any, for specific items and mode of their attendance if through Electronic Mode.

(g) Noting of the Minutes of the preceding Meeting.

(h) Noting the Minutes of the Meetings of the Committees.

(i) The text of the Resolution(s) passed by circulation since the last Meeting, including

dissent or abstention, if any.

(j) The fact that an Interested Director was not present during the discussion and did not vote.

(k) The views of the Directors particularly the Independent Director, if specifically insisted upon by such Directors, provided these, in the opinion of the Chairman, are not defamatory of any person, not irrelevant or immaterial to the proceedings or not detrimental to the interests of the company.

(l) If any Director has participated only for a part of the Meeting, the Agenda items in which he did not participate.

(m) The fact of the dissent and the name of the Director who dissented from the Resolution or abstained from voting thereon.

(n) Ratification by Independent Director or majority of Directors, as the case may be, in case of Meetings held at a shorter Notice and the transacting of any item other than those included in the Agenda.

(o) The time of commencement and conclusion of the Meeting.(Clause 7.2.2.1 of Secretarial Standard on meetings of Board of Directors)

39.Minutes shall mention the brief background of all proposals and summarise the deliberations thereof. In case of major decisions, the rationale thereof shall also be mentioned.The decisions shall be recorded in the form of Resolutions, where it is statutorily or otherwise required. In other cases, the decisions can be recorded in a narrative form.(Clause 7.2.2.2 of Secretarial Standard on meetings of Board of Directors)

40. Where a Resolution was passed pursuant to the Chairman of the Meeting exercising his second or casting vote, the Minutes shall record such fact. (Clause 7.2.2.2 of Secretarial Standard on meetings of Board of Directors)

41. Minutes shall be written in third person and past tense. Resolutions shall however be written in present tense. (Clause 7.3.2 of Secretarial Standard on meetings of Board of Directors)

42. Where any earlier Resolution (s) or decision is superseded or modified, Minutes shall contain a reference to such earlier Resolution (s) or decision. (Clause 7.3.4 of Secretarial Standard on meetings of Board of Directors)

43. Within fifteen days from the date of the conclusion of the Meeting of the Board the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any other recognised electronic means to all the members of the Board for their comments. Additional two days shall be added if draft minutes is sent by speed post/courier/registered post. [Clause 7.4 of Secretarial Standard on meetings of Board of Directors]

44. Maintain the proof of sending draft minutes and its delivery. (Clause 7.4 of Secretarial Standard on meetings of Board of Directors)

45. The Directors, whether present at the Meeting or not, shall communicate their comments, if any, in writing on the draft Minutes within seven days from the date of circulation. If any Director communicates his comments after the expiry of the said period of seven days, the Chairman shall have the discretion to consider such comments. In the event a Director does not comment on the draft Minutes, the draft Minutes shall be deemed to have been approved by such Director. (Clause 7.4 of Secretarial Standard on meetings of Board of Directors)

46. Enter Minutes of proceedings of Board Meeting in the Minutes Book within thirty days from the conclusion of the Meeting. Date of entry of the Minutes in the Minutes Book shall be recorded byperson duly authorised by the Board or by the Chairman. [Section 118 and Clause 7.5.2 of Secretarial Standard on meetings of Board of Directors]

47. Each page of the Minutes are to be initialed or signed and the last page of the minutes is to be signed and dated by the chairman of the said meeting or by the chairman of the next succeeding meeting. Chairman shall append to such signature the date on which and the place where he has signed the Minutes [Rule 25 of the Companies (Management and Administration) Rules, 2014 and Clause 7.6.2 of Secretarial Standard on meetings of Board of Directors ]

48. A copy of the signed Minutes certified by any Director authorised by the Board shall be circulated to all Directors within fifteen days after these are signed. [Clause 7.6.4 of Secretarial Standard on meetings of Board of Directors]

Notes:

1. The Notice and agenda shall be sent to 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 such addresses appearing in the Director Identification Number (DIN) registration of the Director. [Clause 1.3.1 and Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors]

2. Where a Director specifies a particular means of delivery of Notice and agenda , the Notice and agenda shall be given to him by such means. (Clause 1.3.1 and clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)

3. The meeting may be held at any time, on any day, excluding a national holiday, and at any place. A Meeting adjourned for want of Quorum shall also not be held on a National Holiday. (Clause 1.2.2 of Secretarial Standard on meetings of Board of Directors)

4. The Chairman may, unless dissented to or objected by the majority of Directors present at a Meeting at which a Quorum is present, adjourn the Meeting for any reason, at any stage of the Meeting. (Clause 1.1.2 of Secretarial Standard on meetings of Board of Directors)

5. The Notice of a Meeting shall be given even if Meetings are held on pre-determined dates or at pre-determined intervals. (Clause 1.3.5 of Secretarial Standard on meetings of Board of Directors)

6. Notice of an adjourned Meeting shall be given to all Directors including those who did not attend the Meeting on the originally convened date and unless the date of adjourned Meeting is decided at the Meeting, Notice thereof shall also be given not less than seven days before the Meeting. (Clause 1.3.6 of Secretarial Standard on meetings of Board of Directors)

7. General consent for giving Notes on items of Agenda which are in the nature of Unpublished Price Sensitive Information at a shorter Notice may be taken in the first Meeting of the Board held in each financial year and also whenever there is any change in Directors. (Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)

8. Where general consent as above has not been taken, the requisite consent shall be taken before the concerned items are taken up for consideration at the Meeting. The fact of consent having been taken shall be recorded in the Minutes. (Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)

9. Supplementary Notes on any of the Agenda Items may be circulated at or prior to the Meeting but shall be taken up with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any. (Clause 1.3.7 of Secretarial Standard on meetings of Board of Directors)

10. The pages of the respective attendance registers shall be serially numbered. If an attendance register is maintained in loose-leaf form, it shall be bound periodically depending on the size and volume. (Clause 4.1.1 of Secretarial Standard on meetings of Board of Directors)

11. If a meeting of the Board could not be held for want of quorum, then, unless the articles of the company otherwise provide,the meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place. If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled. [Section 174(4) and Clause 3.4.1 of Secretarial Standard on meetings of Board of Directors]

12. For the purpose of Board Meeting, a Director shall be treated as interested in a contract or arrangement entered into or proposed to be entered into by the company:

(a) with the Director himself or his relative; or

(b) with any body corporate, if such Director, along with other Directors holds more than two percent of the paid-up share capital of that body corporate, or he is a promoter, or manager or chief executive officer of that body corporate; or

(c) with a firm or other entity, if such Director or his relative is a partner, owner or Member, as the case may be, of that firm or other entity. (Clause 3.2 of Secretarial Standard on meetings of Board of Directors)

13. In case some of the Directors participate through Electronic Mode, the Chairman shall safeguard the integrity of the Meeting by ensuring sufficient security and identification procedures. No person other than the Director concerned shall be allowed access to the proceedings of the Meeting where Director (s) participate through Electronic Mode, except a Director who is differently abled, provided such Director requests the Board to allow a person to accompany him and ensures that such person maintains confidentiality of the matters discussed at the Meeting. (Clause 5.1.2 of Secretarial Standard on meetings of Board of Directors)

14. Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above, if at least one Independent Director, if any, shall be present at such Meeting. If no Independent Director is present, 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. In case the company does not have an Independent Director, the decisions shall be final only on ratification thereof by a majority of the Directors of the company, unless such decisions were approved at the Meeting itself by a majority of Directors of the company.(Clause 1.3.11 of Secretarial Standard on meetings of Board of Directors)

15. The Chairman shall ensure that the proceedings of the Meeting are correctly recorded. The Chairman has absolute discretion to exclude from the Minutes, matters which in his opinion are or could reasonably be regarded as defamatory of any person, irrelevant or immaterial to the proceedings or which are detrimental to the interests of the company. (Clause 7.3.1 of Secretarial Standard on meetings of Board of Directors)

16. Minutes shall be written in clear, concise and plain language. (Clause 7.3.2 of Secretarial Standard on meetings of Board of Directors)

17. Any document, report or notes placed before the Board and referred to in the Minutes shall be identified by initialling of such document, report or notes by the Chairman. (Clause 7.3.3 of Secretarial Standard on meetings of Board of Directors)

18. Minutes of the preceding Meeting shall be noted at a Meeting of the Board held immediately following the date of entry of such Minutes in the Minutes Book. (Clause 7.3.5 of Secretarial Standard on meetings of Board of Directors)

19. A Director, who ceases to be a Director after a Meeting of the Board is entitled to receive the draft Minutes of that particular Meeting and to offer comments thereon, irrespective of whether he attended such Meeting or not. (Clause 7.4 of Secretarial Standard on meetings of Board of Directors)

20. Minutes, once entered in the Minutes Book, shall not be altered. Any alteration in the Minutes as entered shall be made only by way of express approval of the Board at its subsequent Meeting in which such Minutes are sought to be altered. (Clause 7.5.3 of Secretarial Standard on meetings of Board of Directors).

21. A company may maintain its Minutes in physical or in electronic form with Timestamp. Every company shall however follow a uniform and consistent form of maintaining the Minutes. Any deviation in such form of maintenance shall be authorised by the Board. (Clause 7.1.3 of Secretarial Standard on meetings of Board of Directors)

22. The pages of the Minutes Books shall be consecutively numbered (Clause 7.1.4 of Secretarial Standard on meetings of Board of Directors)

23. In the event any page or part thereof in the Minutes Book is left blank, it shall be scored out and initialled by the Chairman who signs the Minutes.(Clause 7.1.4 of Secretarial Standard on meetings of Board of Directors)

24. Minutes of the Board Meetings, if maintained in loose-leaf form, shall be bound periodically depending on the size and volume and coinciding with one or more financial years of the company.(Clause 7.1.6 of Secretarial Standard on meetings of Board of Directors).

25. Minute books of the Board meetings shall be kept at the registered Office or at such other place as may be approved by the Board. [Rule 25 of the Companies (Management and Administration) Rules, 2014 and Clause 7.1.7 of Secretarial Standard on meetings of Board of Directors]

26. Minutes books shall be preserved permanently and kept in the custody of the company secretary of the company or any director duly authorized by the Board for the purpose. [Rule 25 of the Companies (Management and Administration) Rules, 2014]

Procedure Authors

ACS Divya Jain
ACS Palak Jain
ACS Ankita Jain
ACS Sugandh Jain
ACS Mansi Kapor
ACS Bhawna Sharma


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