Section 174: Quorum for meetings of Board
This section determines the minimum number of directors required to be present at a meeting of the Board of Directors for it to be considered valid.
The section, clause by clause
What the section says
In plain terms
(1)The quorum for a meeting of the Board of Directors of a company hall be one-third of its total strength or two directors, whichever is higher, and the participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section.
The minimum number of directors required to be present at a meeting of the Board of Directors is one-third of its total strength or two directors, whichever is higher, and directors participating by video conferencing or other audio visual means are also counted towards the quorum.
(2)The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company and for no other purpose.
The remaining directors can continue to act even if there are vacancies on the Board, but if their number falls below the required quorum, they can only act to increase the number of directors or summon a general meeting.
(3)Where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time. Explanation.—For the purposes of this sub-section, “interested director” means a director within the meaning of sub-section (2) of section 184.
If more than two-thirds of the directors have an interest in a matter, the quorum is the number of non-interested directors present, which must be at least two.
(4)Where a meeting of the Board could not be held for want of quorum, then, unless the articles of the company otherwise provide, the meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.
If a meeting of the Board cannot be held due to a lack of quorum, it will automatically be adjourned to the same time and place the following week, unless the company's articles specify otherwise.
explanationExplanation.—For the purposes of this section,—
(4)(i)any fraction of a number shall be rounded off as one;
(4)(ii)“total strength” shall not include directors whose places are vacant.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The proviso ins. by Act 1 of 2018, s. 56 (w.e.f. 7-5-2018).
- 1. Subs. by Act 1 of 2018, s. 57, for “every listed company” (w.e.f. 7-5-2018).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.