Passing of Board resolution by circulation under

Section 289 of the Companies Act, 195!

"n the absence of any pro#ision in the Act or the Company$s articles of
association, re%uiring that the e&ercise of a particular po'er of the directors
should be only at Board (eeting, there is no reason 'hy they cannot e&ercise
the same by passing resolution by circulation!
)urther, the section enables any director to propose any resolution *other than
those re%uired to be passed only at Board (eeting+ and ha#e it passed by
circulation, and thus discharge his responsibilities effecti#ely under the Act!
,he passing of resolution by circulation does not, ho'e#er, dispense 'ith the
need for holding a meeting once at least in three months, as re%uired by section
285!
Pasting of resolution passed by circulation in minute
book
-here a resolution is passed by circulation the proper course 'ill be for the
resolution to be pasted in the minute boo. and minute also placed at the ne&t
meeting of the Board recording the fact of the resolution ha#ing been passed by
circulation! /r, the minute recording it may itself copy or reproduce the 'hole of
the circular resolution or a separate boo. may be maintained for recording
resolutions passed by circulation! -hate#er may be the mode of recording any
such resolution, it should find a place in the minutes of the ne&t Board (eeting, in
order to ensure its authenticity!
Matters which require sanction at Board Meetings, and
not by circulation
,here are certain matters in reference to 'hich the pro#isions of the act 'ould
re%uire a resolution at an actual Board (eeting and not one by circulation! ,hey
are as follo's0
S!
1o!
Pro#ision2Sectio
n
(atter
1! Section322 )illing a casual #acancy in the Board
2! Section3292 ,he po'er to0
*i+ ma.e calls on shareholders4
*ii+ issue debentures4
*iii+ borro' moneys other'ise than on
debentures4
*i#+ in#est the company$s funds4
*#+ ma.e loans4
5! Section3296 Board$s sanction for certain contracts in 'hich
particular directors are interested4
7! Section3299 8isclosure to the Board of a director$s interest in a
transaction of the company4
5! Section3598 8isclosure to the Board of a director$s shareholding
! Section351 :
58
Appro#al to the appointment of a person as (anaging
8irector or manager in more than one company4
6! Section3562A Sanction for inter3corporate loan, in#estment or gi#ing
of guarantees or pro#iding security!
;egulation381of table A is the (odel ;egulation pertaining to this section in the
Article of Association!
Text of Regulation-!of table "# Sa#e as other'ise e&pressly pro#ided in the
Act, a resolution in 'riting, signed by all the members of the Board or a
committee thereof, for the time being entitled to recei#e notice of a meeting of the
Board or committee, shall be as #alid and effectual as if it had been passed at a
meeting of the Board or committee, duly con#ened and held!
$s circulation resolution required to be confirmed in the next
Board Meeting
,here is no specific pro#ision in the Act 'hich re%uires that circulation resolution
should be confirmed 2 recorded by the board at the ne&t Board (eeting! <o'e#er
as a good secretarial practice, the resolutions of directors passed by circulation
should be recorded at the ne&t board meeting to ensure their authenticity!
Also the Secretarial Standard on Board (eeting *SS31+ issued by "CS" states that
circular resolution should be placed before the ne&t Board (eeting for noting and
should be reproduced as part of minutes of that meeting!
-hile recording the minutes of the Board (eeting, it must be ensured that the
'hole of the resolution passed by circulation finds place in the minutes of the
Board meeting!
Circular ;esolution
Board Resolution (to be circulated to all directors+
,o
(r=====
=========!
*Address in "ndia only+
8ated====!
8ear Sir,
"t is proposed to=====!!*here mention the purpose+! ,his cannot 'ait till the
ne&t meeting of the Board of 8irectors! Accordingly " am sending here'ith the
follo'ing resolution, in duplicate, 'hich is intended to be passed as a resolution
by circulation as pro#ided in section 289 of the Companies Act, 195 for your
.ind consideration!
>;?S/@A?8 ,<A,============!B
*Set out the resolution intended to be passed+
)or2Against
*Please tic.+
======
=!!
Signature
Cou are re%uested to return the duly signed duplicate copy of the same after
indicating your assent or dissent to the proposal under your signatures at the
registered office of the company at your early con#enience!
Cours faithfully,
)or====
@imited
,o conclude 'e may say that a resolution passed by circulation does not,
ho'e#er, dispense 'ith the need for holding a meeting once at least in three
months, as is re%uired under Section 285!
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