SECTION 175 OF COMPANIES ACT 2013 - PASSING OF RESOLUTION BY CIRCULATION
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SECTION 175 OF THE COMPANIES ACT 2013 PASSING OF RESOLUTION BY CIRCULATION
In case of companies all the decisions are taken by passing a resolution which may be an ordinary resolution or a special resolution.
As Section 173 of the Companies Act 2013 provides that the companies are required to hold 4 board meetings in each year and the gap between these two consecutive board meetings should not be more than 120 days. The companies normally take decisions at such board meetings and used to hold 1 Board Meeting in each quarter normally to comply with the statutory requirement. But in case some urgent decision is required to be made by the company and in that case if we wait for the next board meeting then it may affect the profitability of the company. In that case a provision is provided under companies’ act that in such case the company can pass the resolution for such activity by circulation. Provisions in respect of passing of resolution by CIRCULATION are provided u/s 175 of the Companies Act 2013.
This section provides that in order to pass a resolution by circulation, a draft of such resolution along with the necessary papers ,if any, should be circulated to all the directors, or members of the committee ,as the case may be ,at their registered address. Such draft can be circulated though post or by courier or through email or fax. Such resolution is required to be approved by majority of directors or members who are entitled to vote on such resolution. After approval of the resolution by majority of directors or member’s , such resolutions shall be noted at the subsequent meeting of board or the committee thereof, as the case may be, and made part of minutes of such meeting.
However this section provides that the directors may require that any resolution under circulation must be decided at the meeting and in that case the Chairperson shall put the resolution to be decided at the meeting of the board. However such objection is required to be made by at least 1/3 of the total number of directors.
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