Companies Act
The provisions regarding the meeting of the board of directors of a company is prescribed in section 173 of the Companies Act, 2013 (Chapter XII) read with the Companies (Meetings of Board and its Powers) Rules, 2014.
The provisions mainly specify the requirement on the minimum number of board meetings to be held in a year, maximum time gap between two consecutive board meetings, minimum days' notice to be served on directors, penalty, etc.
However, there is no clear mention of the authority to convene the board meeting as to who can call a board meeting of the company.
Secretarial Standard
As per Para 1.1.1 of Secretarial Standard-1 (SS-1) on “Meetings of the Board of Directors” issued by ICSI —
“Any Director of a company may, at any time, summon a Meeting of the Board, and the Company Secretary or where there is no Company Secretary, any person authorised by the Board in this behalf, on the requisition of a Director, shall convene a Meeting of the Board, in consultation with the Chairman or in his absence, the Managing Director or in his absence, the Whole-time Director, where there is any, unless otherwise provided in the Articles.”
Explanation
(Refer Guidance note on meetings of the board of directors based on revised SS-1)
1. Articles of Association (AoA)
• The articles can contain provisions on who has the authority to call a board meeting. In which case, that shall be followed by the company.
• The articles can contain stricter conditions than that of the Secretarial Standards. In such a case, the conditions of the articles shall prevail.
2. Authority of directors
• Any director can call a board meeting at any point of time.
• Any director means both executive and non-executive directors including an independent director.
• As a good governance measure, such a director should send his requisition to convene meeting in writing along with proposed agenda either to the Chairman or, in his absence, to the Managing Director (MD) or, in his absence, to the Whole-time Director (WTD) or the Company Secretary (CS) or, in his absence, to any other person authorised by the Board in this regard.
• Once the requisition is received, the Chairman or the MD or the WTD may proceed to convene the meeting. Or they may authorise the CS or any other person to convene the meeting.
• If the requisition is received by the CS, or by any other authorised person, he will present it to the Chairman or the MD or the WTD for consideration, and upon approval he should convene the meeting.
• If a company does not have a Chairman nor a MD nor a WTD, then the CS or the person authorised by the Board in this behalf should directly proceed to convene the meeting.
2. Authority of the Chairman or the MD or the WTD
• The Chairman himself or, in his absence, the MD himself or, in his absence, the WTD himself can send requisition to the CS or any other authorised person to convene the meeting.
• Once such a requisition is received, the CS or the authorised person shall proceed to convene the board meeting.
3. Authority of the Company Secretary
• The CS of a company cannot summon a board meeting on his own.
• Only if a CS is specifically authorised by the Board of Directors or the Articles to do so, then the CS can summon a meeting on his own.
• In case the Chairman or the MD or the WTD or any Directors do not proceed to summon a meeting that is required to be held under the Companies Act or any other Statute, the CS should write to the Chairman and the Directors about such statutory requirements and its implications.
4. Oral requisition
• In case a director has orally requested for the conduct of a board meeting and no written requisition is subsequently submitted by him, then the CS or the authorised person shall place it before the Chairman or the MD or the WTD in writing with a copy to the director who has requisitioned the meeting.
5. Refusal of the requisition
• The CS or the authorised person cannot hold a board meeting if the Chairman or the MD or the WTD refuses the requisition of the director for convening the board meeting.
• However, the provisions of the articles in this regard must be given priority and be followed even if the Chairman or the MD or the WTD is not willing to consider the requisition of the director.
• Upon refusal, the CS or the authorised person should communicate the same to the director.
• However, in any case, the director may, on his own, convene a meeting.
Here, the term 'authorised person' means any person authorised by the Board of Directors of the company. He should be clearly identifiable. He may be an officer of the company or any person other than the officer of the company.
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