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Passing of Board Resolution by circulation under Section 289

In the absence of any provision in the Act or the Companys Articles of Association requiring that the exercise of a particular power of the directors should be only at a Board Meeting, a circular resolution can be passed. The passing of resolution by circulation does not, however, dispense with the need for holding a meeting atleast once in three months, as required by section 285.

Pasting of resolution passed by circulation in minutes book


Where a resolution is passed by circulation, the proper course will be to paste the resolution in the minutes book and place at the next Board Meeting recording the fact of the resolution having been passed by circulation. Alternatively, a separate book can be maintained for resolutions passed by circulation. In any case, it should be recorded in the minutes of the next Board Meeting in order to ensure its authenticity.

Matters which require sanction at Board Meetings, and not by circulation


As per the Act, certain matters require a resolution at an actual meeting of the Board and not one by circulation. 1 2 Section 262 Section 292 Filling a casual vacancy in the Board The power to: i. make calls on shareholders, ii. issue debentures, iii. borrow moneys otherwise than on debentures, iv. invest the companys funds v. make loans Section 297 Boards sanction for certain contracts in which particular directors are interested Section 299 Disclosure to the Board of a directors interest in a transaction of the company Section 308 Disclosure to the Board of a directors shareholding Section 316/ Approval to the appointment of a person as Managing 386 Director or Manager in more than one company Section 372A Sanction for inter-corporate loan, investment or giving of guarantees or providing security

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Regulation 81 or Table A is the Model Regulation pertaining to this section in the Articles of Association.

Text of Regulation 81 of Table A


Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the Board or a committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at a meeting of the Board or committee, duly convened and held.

Confirmation of Meeting

circular resolution in the next Board

There is no specific provision in the Act which requires that circular resolution should be confirmed by the Board in a subsequent meeting. However as a good secretarial practice, the resolutions of directors passed by circulation should be recorded at the next Board Meeting to ensure their authenticity. Also the Secretarial Standard on Board Meetings (SS-1) issued by ICSI states that circular resolution should be placed before the next Board Meeting for noting and should be reproduced as part of the minutes of that meeting. While recording the minutes of the Board Meeting, it must be ensured that the whole of the resolution passed by circulation finds place in the minutes of the Board Meeting.

Circular Resolution (to be circulated to all directors)


Board Resolution

Date:

To Mr._______ (Address in India only)

Dear sir,

It is proposed to <mention the purpose>. This subject cannot wait till the next meeting of the Board of Directors. Hence we are sending herewith the following resolution, which is intended to be passed as a resolution by circulation as provided in section 289 of the Companies Act, 1956 for your kind consideration. RESOLVED <set out the resolution intended to be passed> You are requested to return to us the duplicate copy of this letter attached herewith after indicating your assent or dissent to the proposal under your signature, at your earliest convenience. Thanking you, Yours faithfully, for _________________ Limited ______________ Signature
Please tick

FOR

AGAINST

__________________
<Name and Designation>