Companies Act Section 173

Companies Act Section 173: Meetings of the Board

1. Requirement for Holding Board Meetings

Every company is required to conduct its first Board of Directors meeting within a period of thirty days from the date of its incorporation. Following this, the company must hold a minimum of four Board meetings in each financial year, ensuring that the gap between two consecutive meetings does not exceed one hundred and twenty days.

Government Exemptions

The Central Government retains the authority to issue notifications exempting certain categories of companies from complying with the provisions of this subsection. These exemptions may be granted subject to specified exceptions, modifications, or conditions.

2. Modes of Participation in Board Meetings

Directors of a company can participate in a Board meeting either by physically attending in person or by using video conferencing or other audiovisual means. The chosen mode of participation must meet prescribed standards ensuring that:

The presence of directors is identifiable and recorded.
The proceedings of the meeting are duly recorded and stored.
The date and time of participation are documented.
Restrictions on Virtual Meetings

The Central Government may issue a notification specifying certain matters that cannot be discussed or resolved via video conferencing or audiovisual means. However, an additional provision states that if a quorum is achieved through the physical presence of directors, then other directors may participate virtually even on matters restricted in the first proviso.

3. Notice Requirements for Board Meetings

A Board meeting must be called by issuing a written notice at least seven days in advance. This notice must be delivered to every director at their registered address and may be sent through:

Hand delivery
Postal services
Electronic means (e.g., email, fax)
Shorter Notice for Urgent Matters

In situations where urgent matters necessitate calling a Board meeting at shorter notice, the meeting can be convened under the following conditions:

At least one independent director, if any, must be present at the meeting.
If an independent director is not present, then any decisions made during the meeting shall be circulated to all directors and will only become final upon ratification by at least one independent director (if any).
4. Penalty for Non-Compliance

Any officer of the company who is responsible for issuing notices for Board meetings and fails to do so shall be subject to a penalty of twenty-five thousand rupees.

5. Special Provisions for Specific Company Types

A One Person Company (OPC), a small company, or a dormant company is deemed to have complied with the Board meeting requirements if it holds at least one Board meeting in each half of a calendar year, provided that the gap between two consecutive meetings is not less than ninety days.

Exception for One Person Companies

If a One Person Company has only one director, the provisions of this section and the quorum requirements under Section 174 do not apply to such a company.