Quorum for Board Meetings of Listed, Public & Private Company

What is a quorum for a board meeting? Meaning

It means the minimum number of directors whose presence is required for a meeting of the board of directors of a company to be considered as a valid meeting in the eyes of the law.

Notes:

• The board meeting quorum requirements for both public and private companies are the same.

• The quorum needs to be present throughout the meeting for each item of business.

• The Chairperson shall ensure that the required quorum is present throughout the meeting.

Quorum for Board Meetings (Companies Act 2013 - Section 174)

• Quorum for board meeting = 1/3rd of the total number of directors or 2 directors, whichever is higher;

• In the above calculation result, any fraction of a number shall be rounded off as one;

• A director participating through video conferencing or audio visual modes will also be counted for quorum.

Exception:

• In case of section 8 companies, the quorum required for board meetings is either 8 members or 25% of total members, whichever is less. Quorum shall not be less than 2 members. Refer: MCA notification G.S.R. 466(E) dated 5th June, 2015.

Interested Directors

• In case for any item of business being dealt with at the board meeting, the number of interested directors is equal to or more than 2/3rd of the total number of directors of the company.

• Then all the directors present during such time at the meeting, excluding the interested directors, will be considered as quorum for the board meeting.

• Such number of directors present shall not be less than 2.

Refer: Section 184(2) for the meaning of "Interested director".

Exceptions:

• In case of a Private company, an interested director may also be counted towards quorum for a board meeting after making disclosure of his interest as per section 184. Refer: MCA notification G.S.R. 583(E) dated 13th June, 2017.

• In case of Specified IFSC Public Company and Specified IFSC Private Company, an interested director may participate in a board meeting provided he has made prior to the meeting or makes at the meeting - the disclosure of his interest. Refer: MCA notifications G.S.R. 08(E) and G.S.R. 9(E) dated 4th January, 2017.

Quorum Not Present

• In case the quorum is not present for the board meeting;

• the board meeting will be adjourned (unless the articles provide otherwise);

• the meeting will be adjourned to the same day at the same time and same place next week; or

• if the adjourned meeting date falls on a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.

Examples

If a company has a total of:

• Four Directors — Quorum will be 2. [Calculation: 4 x 1/3 = 1.33 (rounded off 2)]

• Six Directors — Quorum will be 2. [Calculation: 6 x 1/3 = 2]

• Eleven Directors — Quorum will be 4. [Calculation: 11 x 1/3= 3.67 (rounded off to 4)]

In case of Interested Directors:

• If a company has a total of 10 Directors;

• So quorum required for a board meeting is 4; [Calculation: 10 x 1/3 = 3.33 (rounded off to 4)]

• In a board meeting, there are 9 directors present;

• For a particular item of business, there are 7 Interested Directors present;

• 2/3rd of the total number of directors is 6.67 (10 x 2/3);

• Hence, no. of Interested Directors present exceeds 2/3rd of total strength;

• Then the quorum required will be the number of directors who are not interested directors and present at the meeting, i.e. 9 - 7 = 2.

Quorum for Board and Committee Meetings of Listed Company

Board Meeting Quorum

Ref: Regulation 17(2A) of SEBI (LODR) Regulations, 2015

• The quorum for board meetings of the top 1000 listed entities w.e.f. 1st April, 2019 & of the top 2000 listed entities w.e.f. 1st April, 2020 shall be 1/3rd of the total no. of directors or 3 directors, whichever is higher, including at least 1 independent director.

List of top 1000 & 2000 entities is determined on the basis of market capitalisation as at the end of the immediately preceding financial year.

• The quorum for board meetings of the rest of the listed entities is the same as mentioned at the top as per Section 174 of the Companies Act 2013.

Audit Committee Meeting Quorum

1/3rd of the total no. of members of the audit committee or 2 members, whichever is higher, with at least 2 independent directors in attendance.

Ref: Regulation 18(2)(b) of SEBI (LODR) Regulations, 2015.

Nomination and Remuneration Committee Meeting Quorum

1/3rd of the total no. of members of the nomination and remuneration committee or 2 members, whichever is higher, including at least 1 independent director in attendance.

Ref: Regulation 19(2A) of SEBI (LODR) Regulations, 2015.