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Tuesday, January 8, 2008

The Board of Directors of a public company

The Board of Directors of a public company met on three times in the previos year, the fourth meeting though called could not be held for want of quorum on two occasions successivy. Discuss whether any provisions of the Companies Act has been contravened.
Or
Examine, with reference to the relevant provisions of the Companies Act, 1956.
the validity/legality of the following:
A meeting of the Board of Directors of OPO Co. Ltd. due to be held on 30.9.2001 did not take place for want of quorum. As a result, the Company did not hold any Board meeting for the quarter ended 30.9.2001 and there is a complaint that the company
has violated the provisions of the Act in this regard. [C.A. (Final) Nov., 2001J
As per Section 285 of the Companies Act, 1956, a company must holg
of its Board of Directors at least once in every three calendar monthsanatl\ere should be ac least four meetings of the Board every year. But, Section 288(2) provides that
where a meeting was called but could not be held for want of quorum, there is no contravention of any provisions of the Companies Act, 1956.
The Auditor of a company wanted to see the minutes book of Directors’ meetings. The Chairman of the company refused on the ground that matters of confidential nature were contained therein. Advise the Auditor.
Under Section 227(1) of the Act, the Auditor of a company has the right of access at all times to all books and information which he considers necessary for the proper performance of his duties, even though the information is of a confidential nature. He has, accordingly, a statutory right to inspect the Director’ minutes book. In case, he is denied access to it, he should state that in his report alongwith the reasons therefor. The Board of Directors are bound to give the fullest information and explanations in their report on the accounts of the company, on every reservation, qualification or adverse remark contained in the Auditor’s report.

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