Section 378V Companies Act 2013 - Meetings of Board and Quorum
Section 378V of the Companies Act, 2013 lays down special rules for meetings of the Board of a Producer Company. It deals with the minimum frequency of Board meetings, written notice, shorter-notice meetings, quorum, the Chief Executive's responsibility for notice, and fees or allowances for directors attending Board meetings.
What Section 378V applies to
Section 378V forms part of Chapter XXIA of the Companies Act, 2013, which contains the statutory framework for Producer Companies. The provision specifically regulates Board meetings and quorum for a Producer Company.
Section 378V - Meetings of Board and quorum
Sub-section (1): Frequency of meetings. A meeting of the Board shall be held not less than once in every three months, and at least four such meetings shall be held in every year.
Sub-section (2): Written notice. Notice of every meeting of the Board of Directors shall be given in writing to every director for the time being in India and, for every other director, at the director's usual address in India.
Sub-section (3): Seven-day notice and penalty. The Chief Executive shall give the required notice not less than seven days before the date of the Board meeting. Failure to do so attracts a penalty of five thousand rupees.
Proviso to sub-section (3): Shorter notice. A Board meeting may be called at shorter notice, but the reasons for doing so must be recorded in writing by the Board.
Sub-section (4): Quorum. The quorum for a Board meeting is one-third of the total strength of directors, subject to a minimum of three directors.
Sub-section (5): Attendance fees and allowances. Subject to what is provided in the articles, directors, including a co-opted director, may be paid fees and allowances for attending Board meetings as decided by the Members in general meeting.
Practical meaning of Section 378V
| Requirement | Rule under Section 378V |
|---|---|
| Board meeting frequency | At least once every three months and at least four meetings in every year. |
| Form of notice | Written notice to every director in the manner stated in sub-section (2). |
| Normal notice period | Not less than seven days before the meeting. |
| Shorter notice | Permitted if the Board records the reasons in writing. |
| Quorum | One-third of total director strength, with a minimum of three. |
| Failure by Chief Executive to give notice | Penalty of Rs. 5,000 under sub-section (3). |
| Director attendance fees | Subject to the articles and as decided by Members in general meeting. |
Important compliance points
The Producer Company should maintain a Board-meeting calendar that satisfies both parts of sub-section (1): the gap requirement and the minimum number of meetings per year. The Chief Executive should ensure timely written notice to all directors and preserve evidence of dispatch or delivery.
Where urgent business requires a meeting at shorter notice, the Board should expressly record the reasons in writing. Before transacting business, the company should also verify that the statutory quorum of one-third of the total strength, subject to a minimum of three, is present.
Legislative background
Chapter XXIA relating to Producer Companies, including Section 378V, was inserted in the Companies Act, 2013 by Section 52 of the Companies (Amendment) Act, 2020 and came into force on 11 February 2021. The provision substantially carries forward the earlier Producer Company framework under the Companies Act, 1956.