Circular resolution

Passing of a Board Resolution by Circulation

Provisions Applicable

Section 289 read with Regulation 81 of Table A of Schedule I.

Provisions in Brief

• Whatever act is required to be done by the Board, unless the same is specifically required to be done by calling a meeting of the Board (like the one mentioned in section 292) may be done by the directors by passing a resolution by circulation.

• A resolution passed by circulation does not, however, dispense with the need for holding a meeting once at least in three months, as is required under section 285.

• There is prohibition on a resolution being passed by circulation, if the number of directors then present in India is less than the number which is necessary to form the quorum, had there been a meeting of the Board or committee of directors, as the case may be.

Procedure and Documentation

1. The draft of the resolution, in duplicate, shall be circulated with all necessary papers, if any, to all the directors then in India. In case of directors who at that time

are abroad, circulation has to be at their usual address in India [Doc.1].

2. This circular resolution is to be approved/disapproved by majority of all the directors (if some of the directors are outside India, at the time of circulation of the

resolution, then majority of those in India can approve the resolution provided that

such majority is not less than the number of the quorum) and return the duly signed

copy to the company.

3. A copy of the circular resolution shall be enclosed to the agenda of the immediately next Board meeting mentioning in the notes that the said resolution was voted for, or, against by so many number of directors and that it was passed by majority of directors.

4. While recording the minutes of the Board meeting, it must be ensured that thewhole of the resolution passed by circulation finds place in the minutes of the Board

meeting.

Those matters which, by the provisions of the Act, are required to be decided at meetings of the Board cannot be decided by circular resolutions. These matters are as follows: 

1	262(1)	To fill a casual vacancy occurred in the Board
2	292(1)(a)	Power to make calls on shareholders in respect of money unpaid on shares
3	292(1)(aa)	To authorise buy-back of securities upto ten percent of the total paid-up equity capital and free reserves
4	292(1)(b)]	Power to issue debentures
5	292(1)(c)	Power to borrow moneys otherwise than on debentures
6	292(1)(d)	Power to invest the funds of the company
7	292 (1)(e)	Power to make loans
8	proviso to section 292(1)	Power to delegate to any committee of directors, managing director, manager or any other principal officer of the company or in the case of branch office of the company, a principal officer of the branch office, the powers specified in clauses (c), (d) and (e) of sub-section (1) of section 292
9	293A(2),proviso	Decision to make any political contribution
10	299(1)	Disclosure of interest by a director who is in any way directly or indirectly concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into on behalf of the company
11	299(3)(c)	To give general notice of interest specifying firms or bodies corporate in which the director may be deemed to be concerned or interested
12	297(4)	To accord consent to a contract in which a director or other specified persons are interested [section
13	308(2)	To give a notice of disclosure of interest by a deemed director under section 307
14	316(2)	In the case of a public company or a private company, if it is a subsidiary of a public company, to appoint a person as a managing director, if he is already a managing director or manager of any other company, by an unanimous resolution
15	372(5)	To invest in the shares of any other body corporate within the limits specified in sub-section (2) of section 372
16	386(2)	In the case of a public company or a private company, if it is a subsidiary of a public company, to appoint a person as a manager, if he is already a manager or managing director of any other company, by an unanimous resolution
	488(1)	To make a declaration of solvency where it is proposed to wind up the company voluntarily
	372A(1)(a)	Guarantee to be given

Format

<Date>
<To address>
Dear Sir
I am sending herewith the following circular resolution for appointment of Mr. <>as an Additional Director on the Board of Directors of <>>,  in duplicate, which is intended to be passed as a resolution by circulation as provided in section 289 of the Companies Act, 1956 read with Article 152 of the Articles of Association of the Company, for your kind consideration.
"RESOLVED THAT pursuant to the provisions of Section 260 of the Companies Act, 1956 read with Article 154 of the Articles of Association of Company Mr. <>  be and is hereby appointed as an Additional Director of the Company upto the date of commencement of the next annual general meeting of the Company. FURTHER RESOLVED THAT <>of the Company be and are hereby authorized to sign and execute all such documents, papers, etc. and to do all such acts, deeds, matters and things to give effect to above resolution."
For	Against
Signature	Siganture
You are requested to return the duly signed duplicate copy of the same at the registered office of the company within 7 days of this letter
Sincerely
For
Name Company Secretary.
Note on appointment of Mr._________ as an Additional Director
I am glad to inform the members of the Board of Directors of the Company that Mr.<>, a prominent and leading personality of the Indian Corporate Industry, who has revolutionized the ________sector in India, has accepted to become Director on the Board of Directors of the Company and conveyed his consent to act as such vide his letter dated _______ which is enclosed herewith for your consideration and noting. In order to complete his appointment formalities it requires approval of the Board of Directors of the company by way of passing a resolution. Since approval of this business does not require holding of Board meeting in terms of the Companies Act, 1956 and can be approved by way of passing of circular resolution. Therefore, it will be convenient to complete his appointment formalities by way of passing a circular resolution since deferring his appointment formalities till next Board Meeting will not be in the best interest of the Company. The relevant papers and documents are attached herewith for your consideration and action.
Company Secretary
Enclosed: a) Circular Resolution
b) Consent Letter sent by Mr. __________