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

Sunrise Textiles Ltd has seven directors. The company secretary sends a draft resolution on a loan proposal, with the necessary papers, to all directors at their registered addresses in India, to be passed by circulation. Which of the following is a condition for the resolution to be deemed duly passed under Section 175?

A resolution by circulation is validly passed only if it is circulated in draft with the necessary papers to all directors and is approved by a majority of the directors who are entitled to vote on it. Unanimity or a physical meeting is not required.

  1. AIt must be approved by a majority of the directors entitled to vote on itCorrect
  2. BIt must be approved by all the directors without exception
  3. CIt must be approved by at least two independent directors
  4. DIt must be approved by two-thirds of the directors in a physical meeting

Explanation

Section 175(1) requires the draft resolution, with papers, to be circulated to all directors at their registered addresses in India and approved by a majority of the directors entitled to vote. Unanimity is not required, and no independent director quorum or physical meeting is needed.

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