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CA Foundation · Business Laws · The Companies Act, 2013

The board of Rathi Auto Ltd has 5 directors. A board meeting is called, and 2 directors attend in person while 1 director attends through video conferencing. The articles do not prescribe a higher quorum. Under the Companies Act, 2013, what is the quorum for this board meeting and is it met?

Quorum is one-third of total strength or two directors, whichever is higher. For five directors, one-third is about 1.67, so the quorum is two directors. Three directors are present, counting the video participant, so the quorum is met.

  1. AQuorum is 2 directors, and it is met
  2. BQuorum is 3 directors, and it is met because video conferencing participation countsCorrect
  3. CQuorum is 3 directors, and it is not met because the third director is not physically present
  4. DQuorum is 2 directors, and it is not met because only one-third are physically present

Explanation

Quorum for a board meeting is one-third of total strength or two directors, whichever is higher. One-third of 5 is 1.67, so the higher figure is 2 directors. Directors attending by video conferencing count towards the quorum, so 3 are present and the quorum is met. Option B's reasoning is wrong on the quorum figure, since the quorum is 2 not 3.

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