Skip to content

CA Foundation · Business Laws · The Companies Act, 2013

Deshmukh Infra Ltd is a public company with a paid-up capital of Rs 50 crore. Its board proposes to pass a resolution by circulation to approve a routine matter. Which statement about such a resolution is correct?

A board resolution by circulation is valid when the draft and papers are sent to all directors and it is approved by a majority of those entitled to vote. It is not restricted to private companies, and it must be noted at the next board meeting.

  1. AIt is valid only if approved by all directors present at a physical meeting
  2. BIt is valid if approved by a majority of directors or members of the committee entitled to vote, after being circulated in draft to all of themCorrect
  3. CIt is not allowed for any public company
  4. DIt is valid only if signed by the company secretary

Explanation

A resolution can be passed by circulation if the draft is sent to all directors or committee members at their addresses in India with necessary papers and is approved by a majority of those entitled to vote. If at least one-third of directors want it decided at a meeting, it must be put to a meeting. Option C is wrong because circulation is permitted for all companies, and the approval is noted at the next board meeting.

Did you get it right without looking?

One question tells you little. A timed set on The Companies Act, 2013 shows your real accuracy, how long you take and where you lose marks.

Practise The Companies Act, 2013Free diagnostic mock

More The Companies Act, 2013 questions