Matters Requiring Company Board Approval

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Reading Time: 3 minutes| (Last Updated On: April 26, 2019)

Matters Requiring Company Board Approval

One of the major aspects of running a limited company or private limited company in India is Meeting of Board of Directors of the company. Within 30 days of its incorporation, every company is required to hold its first Board of Directors meeting as prescribed in Companies Act, 2013. Furthermore, it has to ensure that minimum of 4 board meetings is held in the company annually. Also, the Board Meetings should be properly scheduled ensuring that the gap between two consecutive Board Meetings is not exceeding the time limit of 120 days. Matters Requiring Company Board Approval

Matters Requiring Company Board Approval

However, apart from the statutory requirement for holding board meetings, there are certain matters that can be considered for calling and holding the board meeting. Hence, we have identified some of the matters that require company board approval and mentioned them on the following list: Matters Requiring Company Board Approval

Matters that SHOULD be considered at the meeting of the Board of the Directors of the Company:

  1. To approve financial statements of the Company and the Board’s Report.
  2. To make calls on shareholders in respect of money unpaid on their shares.
  3. To invest the funds of the Company.
  4. To diversify the business activities.
  5. To borrow money.
  6. To authorize buy-back of securities.
  7. To issue securities, including debentures.
  8. To approve amalgamation, merger or reconstruction.
  9. To grant loans or give a guarantee or provide security in respect of loans.
  10. To take over a company or acquire a controlling or substantial stake in another company.

The above matters can also be delegated to a committee of Directors, the Managing Director, or Officer of the Company by a resolution passed by the Board of Directors of the Company.

The matters that can ONLY be considered by a Meeting of the Board of Directors of the Company are:

  1. To make political contributions.
  2. To appoint or remove key managerial personnel.
  3. To approve quarterly, half-yearly and annual financial statements or financial results.
  4. To take note of the disclosure of Director’s interest and shareholding.
  5. To appoint internal auditors and statutory auditors.
  6. To buy or sell investments held by the company, constituting 5% or more of the paid-up share capital and free reserves of the investee company.

The matters that are generally placed before the Board of Directors of the Company are:

  1. Allotment of shares and debentures.
  2. Issuance of shares.
  3. Appointment of Directors.
  4. Consideration of Annual Accounts of the Company.
  5. Appointment of Company Secretary.
  6. Approval of interim dividend and recommendation of final dividend.

Convening Company Board Meeting
On the directions of the Managing Director of the Company, the Board Meeting of a Company can be convened by a Company Secretary or a Director. The Articles of Association of the Company has the procedure for convening the Board Meeting mentioned in it. Matters Requiring Company Board Approval

A written notice for convening the Board Meeting should be provided to all the Directors of the company by giving at least a seven-day notice. A quorum of the Board, usually containing two directors or one-third of the total strength of the Director who is in office, whichever is higher, commences and conducts a board meeting. Matters Requiring Company Board Approval

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