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Circular Resolution (Business Law)

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This query is : Resolved


Author : Gaurav Agarwal

Posted On 15 November 2009 at 19:00

In respect of a private limited company what is circular resolution? How it is issues? Please enlighten with all the details?




Expert : G V S Jagannadha Rao

Posted On 15 November 2009 at 20:10

A board of Directors of a Private Limited company discusses all issues in the Board meeting and the decisions taken in such meeting are recorded as resolutions. The resolutions are implemented by the Management.

Only decisions taken by Board with required Corum or quorum are valid.

When any issue which requires a decision of the Board crops up, a meeting of Directors is called for. Sometimes a required corum may not be there or the Directors may not be able to meet for some reason. If an urgent decision is required, the issue is circulated and the decision of the Directors is taken by circulation of the issue requiring decision. The resolution passed by the Directors on issue thus circulated is caled circular decision. I hope my explanation is clear to you.



Expert : raj kumar makkad

Posted On 15 November 2009 at 20:12

the opinion of GVS is pefect and I also go with this.



Author : Gaurav Agarwal

Posted On 16 November 2009 at 00:48

Mr. Rao, thanks. How circular notice is distributed amongst Directors? Can email be used as a means to circulate notice to the Directors and their consent be taken by an email only.
Are email messages admissible in court of law?



Expert : adv. rajeev ( rajoo )

Posted On 16 November 2009 at 06:56

I Agree with GVS. Yes email msgs are admissable in the court.



Expert : G V S Jagannadha Rao

Posted On 16 November 2009 at 13:23

An issue for resolution of the board can be circulated by email. The directors can give send their vote for or against the resolution by email. Once a resolution is made by majority decision, an extract of the same can be certified to be a true copy either by one of the Directors or the Company Secretary. That would suffice. The emails need not be produced in the Court and therefore the question of admissibility does not arise.

On a separate note, emails are admissible in evidence, after amendment of Evidence Act pursuant to passing of Information Technology Act.



Author : Gaurav Agarwal

Posted On 16 November 2009 at 15:06

Thanks all the experts specially Mr. Rao.



Expert : Sachin Bhatia

Posted On 21 November 2009 at 16:46

Agree with Mr.Rao


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