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CMA Final · Corporate and Economic Laws · Board Meetings and Procedures

At a Board meeting of Kaveri Industries Ltd. called at shorter notice to transact urgent business, no independent director attended. Under section 173, what is the position of the decisions taken?

The decisions must be circulated to all directors and become final only when ratified by at least one independent director, if any. They are neither automatically valid nor void, and the Act does not require ratification by members in general meeting.

  1. AThey are void and cannot be ratified
  2. BThey are valid and final without any further step
  3. CThey must be circulated to all directors and are final only on ratification by at least one independent director, if anyCorrect
  4. DThey become final once ratified by the members in general meeting

Explanation

The second proviso to section 173(3) says that where independent directors are absent from a shorter-notice meeting, decisions are circulated to all directors and final only on ratification by at least one independent director, if any. Member ratification is not the prescribed route.

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