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A board resolution is a decision made by the Board of Directors of a company. Under the Companies Act 2013, various corporate actions such as, the payment of a dividend; alteration of share capital; approval of related party transaction; and other matters related to the operation of the company require the board approval, which is given through a board resolution(s) passed at the board meeting.
A board resolution is signed on a letterhead of the company. While in India there are no guidelines for a valid letterhead of a company, however, in some countries there are strict guidelines for the same. Accordingly, it should, at least, contain the name of the company, company identification number (CIN), registered and corporate office address and contact details.
Frequently Asked Questions
1. Are there any restrictions on passing a board resolution?
Under section 179 of the Companies Act 2013, the Board of Directors are entitled to exercise all such powers and do all such acts and things, as the company is authorized to do. However, these powers and actions are subject to express provisions contained in the Companies Act 2013, Memorandum of Association, Articles of Association, including the regulations made by the company in general meeting.
2. When is a board resolution considered passed?
The passing of a board resolution depends on the conditions set out in the Articles of Association. The Companies Act 2013 states that a board resolution is deemed to be passed when the majority of directors affirm the decision. In case of equal votes, for and against the resolution, the vote of the chairman of the board shall be the tiebreaker.
3. Can a board resolution only be passed at a board meeting?
Under Section 175 of the Companies Act 2013, a board resolution can also be passed by circulation of the resolution, together with the necessary documents, in addition to the board meeting.
4. Can a nominee director vote on a resolution?
A nominee director may be allowed to vote on a resolution subject to the provisions of the Articles of Association of the company.
5. Can an alternate director vote on a resolution?
An alternate director may be allowed to vote on a resolution subject to the provisions of the Articles of Association of the company.