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CS Executive · Company Law and Practice · Meetings of Board and its Committees

Orion Steels Ltd has a four-member Audit Committee. A draft resolution with papers is circulated to three members only, because the fourth is travelling. The three approve it. Is the resolution deemed duly passed by circulation?

No. Under Section 175(1), a resolution is not deemed duly passed by circulation unless the draft and necessary papers have been circulated to all members of the committee. A majority approval does not cure the failure to circulate to one member.

  1. ANo, because it was not circulated to all members of the committeeCorrect
  2. BYes, because three of four is a majority
  3. CYes, because the quorum of a committee is two members
  4. DYes, if the fourth member later agrees orally

Explanation

Section 175(1) says no resolution is deemed duly passed by circulation unless it has been circulated in draft with papers to all the directors or members of the committee. Approval by a majority is a separate requirement and cannot cure the omission of circulating to one member.

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