Resolutions by Circulation: Section 175, Noting at the Next Meeting and Minute Entry
This article covers when a Board or committee decision can be taken without a meeting under Section 175 of the Companies Act, 2013, and how the resolution must afterwards be recorded under Section 118, with reference to Section 179(3) and Secretarial Standard-1 (SS-1) and the Secretarial Standard on passing of resolutions by circulation.
The route is used for urgent business between meetings, and it is often treated as complete once the directors have signed or replied by email. It is not: the resolution must be noted at a later meeting and entered in the minutes, and errors at this stage are common in secretarial audits.
When the route may be used
Typical uses are matters arising between meetings, such as opening a bank account, approving a vendor proposal, issuing a power of attorney or signing a routine agreement.
Matters that Section 179(3) requires to be decided at a meeting cannot be passed by circulation. These include approval of financial statements, borrowing, investing company funds and issuing securities.
Conditions for validity
Under Section 175, a resolution by circulation is valid only if the draft and the necessary papers are circulated to all directors, or all committee members in the case of a committee, and the resolution is approved by a majority of those entitled to vote.