Due to urgency, the Company Secretary suggested obtaining Board approval by a Circular Resolution for entering into a raw material purchase agreement with JK Suppliers which is an unrelated party. The company has nine di

CS Executive · Company Law and Practice · PYQS · June 2026
Due to urgency, the Company Secretary suggested obtaining Board approval by a Circular Resolution for entering into a raw material purchase agreement with JK Suppliers which is an unrelated party. The company has nine directors, out of whom three are interested in the transaction. Two non-interested directors have requested that the matter be discussed and decided at a Board Meeting. With reference to the provisions of the Companies Act, 2013: Examine whether it is mandatory for the Chairman to place the resolution before a Board Meeting instead of passing it by circulation in the given scenario mentioned above.

Answer & Explanation:

As per SS-1 (para 6.1.2), if not less than one-third of the total number of directors, not-excluding interested directors, require that a resolution proposed to be passed by circulation be placed before a Board Meeting, the Chairman shall do so. In the given case, one-third of nine directors is three, whereas only two directors have made such a request. Hence, it is not mandatory for the Chairman to place the resolution before a Board Meeting.

Topics: Board Meetings and Procedures

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