Quorum - General Meeting, Board meeting & Audit committee - An analysis

Section relating to Quorum which is already effective... 

30 members required as Quorum for a General Meeting... 

Can a single Director constitute Quorum for a Board meeting?

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Quorum– General Meeting, Board meeting & Audit committee - An analysis

Mrs. Uma Madhu, AGM Finance, Red FM

Quorum is the minimum number of people who must be present to pass a law, make a judgment, or conduct business.

Normally, presence of members in person only will be counted for the purpose of determining quorum, unless otherwise provided in law.  

In this article let us look at the Quorum related to General Meeting, Board meeting & Audit Committee.

QUORUM IN GENERAL MEETING

Sec 103  of Companies Act 2013 deal with “Quorum for General Meetings”. This Section is already effective from 12^th Sep 2013.

Sec 174 of Companies Act 2013 as against Sec 287 of Companies Act 1956 deal with “Quorum for Board Meetings”. But this section is yet to be notified

Secretarial Standard No : 2 issued by ICSI deals with  “Quorum”

QUORUM FOR GENERAL MEETINGS- A COMPARISON

Particulars	Companies Act 1956		Companies Act 2013
Sections	174		103
Chapter	PART VI - CHAPTER 1		VII
Requirement for a Public Company	5 members personally present shall be the Quorum		Now it depends on the total number of shareholders unless the Articles of the company provide for a large numbers	If 1) Number of shareholders are not more than 1000 as on the date of the meeting 5 members personally present will constitute the quorum. 2) If the Number of shareholders are more than 1000 but upto 5000 then 15 members personally presentand 3) incase of members more than 5000 then 30 members personally present will constitute the quorum
Requirement for a Private Company	2 members personally present shall be the Quorum		2 members personally present shall be the Quorum	NO CHANGE
Adjournment of Meeting	If the quorum is not present within half an hour from the time appointed for holding a meeting of the company, then the meeting shall be adjourned to the next week on the same at the same time and place or to such other date, at such place and time as the board may fix		If the quorum is not present within half an hour from the time appointed or holding a meeting of the company, then the meeting shall be adjourned to the next week on the same day, at the same time and place or to such other date, place and time as the board may fix	Under 1956 Act, Adjournment of meeting will be done unless Articles provide otherwise.  Under 2013 Act, it is regardless of what articles provide.

QUORUM FOR GENERAL MEETINGS – CANACELLATION OR ADJOURNED MEETING

Particulars	Companies Act 1956		Companies Act 2013
Cancellation of Meeting (Sec 100 of CA 2013 ; Sec 169 of CA 1956) called by requisitionists	In the General Meeting called by requisitionists ,if the quorum is not present within half an hour of the appointed time, the meeting will stand cancelled		In case of General Meeting called by requisitionists if the quorum is not present within half an hour of the appointed time, the meeting will stand cancelled	NO CHANGE
Notice for the Adjourned Meeting	No Provision regarding 3 days Notice		Notice of the adjourned meeting or of a change of day, time or place of adjourned meeting due to lack of quorum to be sent to members individually atleast 3 days before the meeting or Notice by way of an advertisement may be published in two newspapers one in English and one in vernacular language of the place where the registered office is situated	NEW
Proper Quorum for adjourned meeting	Even in the adjourned meeting also, if the quorum is not present within half an hour from the time appointed for holding the meeting, the quorum present will constitute the proper quorum for the meeting		Even in the adjourned meeting also the quorum is not present within half an hour from the time appointed for holding the meeting, the quorum present will constitute the proper quorum for the meeting	NO CHANGE

 POINTS TO REMEMBER

1. QUORUM SHOULD BE PRESENT THROUGHOUT THE MEETING

2. SINCE THE ACT PROVIDES THAT MEMBERS SHOULD PERSONALLY PRESENT, PROXIES ARE EXCLUDED FOR COUNTING THE QUORUM

QUORUM FOR BOARD MEETINGS

Sec 174 of Companies Act 2013 deal with “Quorum for Board Meetings” as against Sec 287 and Sec 288 of Companies Act 1956

The new Act retained the provisions of Companies Act 1956 but a new feature is introduced

-The quorum for a meeting of Board Of Directors of a company is the maximum of one third of its total strength or two directors. Total strength shall not include directors whose places are vacant-Sec 174(1)

-If the number of continuing directors is below the quorum fixed by the Act for a meeting of the Board, then the continuing Directors or Director may act for the purpose of increasing the number of directors to that fixed for the quorum or of summoning a general meeting of the company and not for any other purpose than to increase the number of directors –Sec 174(2)

-If at any point of time, the number of continuing 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 and present at the meeting, being not less than two , shall be the quorum during such time-Sec 174(3). Thus, a minimum of 2 Directors are required for Quorum.

-Where the meeting of the Board could not be held for want of quorum, then, unlessthe articles of the company otherwise provide, the meeting shall 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 public holiday, at the same time and place-Sec 174(4)

What is new In 2013 Act

Participation of directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum – Sec 174 (1).  No such provision was there under Companies Act 1956.

For determining the Quorum under this section ANY FRACTION OF A NUMBER SHALL BE ROUNDED OFF AS ONE

Listing Agreement Compliance

Audit Committee Meeting

The Audit Committee should meet at least four times a year and not more than four months shall elapse between two meetings. The Quorum should be either two members or one third of the members of the Audit Committee whichever is greater. But there should be a minimum of two independent members present in any Audit committee meeting.

The Chairman of the Audit Committee shall be present at the General Meeting to answer the shareholders queries

The invitees for the Audit Committee Meeting may include the Finance Director, Head of Internal Audit and a representative of Statutory Auditor.

Practical point for General Meeting

In order to comply with the Quorum requirement of 30 members personally present in the General Meeting, Companies having more than 5000 members have to choose the venue of the General Meeting in such a way so as to enable the members to be present and attend the meeting throughout the end . More members will come and go for a specific purpose without attending the meeting. But the members personally present matters more.

                                   

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