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Thursday, Nov 18, 2004

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Getting `even' on board meetings

Richa Mishra

New Delhi , Nov. 17

CORPORATE sector seems to favour even numbers on the issue of how many board meetings a company should hold in a year. In fact, India Inc is for retaining the existing norm under the Company Law of holding at least four meetings of the board of directors in a year instead of what has been proposed in the Concept Paper for revamped company law.

The Concept Paper provides that in the case of every company, a meeting of its board be held in such a manner that not more than three months lapse between two consecutive meetings of the board.

If the proposal of the Concept Paper were to be accepted, in practice, a company would need to have five board meetings as against the existing requirement of four such meetings in a year.

This, in effect, would mean additional secretarial work and paper work, and amount to unnecessary expenditure in the form of high sitting fee for independent directors, and travelling expenses.

"It is not clear as to how a `month' is to be determined - whether on calendar basis or on a 30-day basis. Besides, when should the second board meeting take place also needs to be specified," the Federation of Indian Chambers of Commerce and Industry (FICCI) said.

The chamber held that the proposal in the Concept Paper be modified to the effect that the companies must hold at least four meetings of the board with the maximum gap of four months between any two consecutive meetings.

Elaborating on the issue, corporate law expert said, "It has to be noted that one cannot keep on holding meetings strictly on 90-90 days basis, especially when the convenience of foreign joint venture partners have to be ascertained."

In the existing Companies Act, it has been prescribed that every company would hold a meeting of its board at least once in every three months and at least four such meetings would be held every year.

Similarly, Clause 49 of the Listing Agreement with Stock Exchanges, inter alia, requires companies listed with the stock exchanges to hold the meeting of its board in such a way that at least four meetings are held in a year with a maximum time gap of four months between two meetings.

The proposal, according to FICCI, is without justification as both the existing requirement of holding four board meetings in a year and the prerequisite of getting all the important matters approved by the board pursuant to the provisions of Clause 49 of Listing Agreement and those of Companies Act, 1956 have co-existed in harmony for years together.

J.J. Irani tipped to head panel

THE Ministry of Company Affairs has started work on setting up an expert group to examine the suggestions received from all stakeholders on the Concept Paper for new company law.

Sources in the Ministry hinted that Dr J.J. Irani, Director, Tata Sons, is being tipped to head the panel.

The Minister for Company Affairs, Mr Prem Chand Gupta, had clearly stated that this panel should be headed by a person holding position other than a Government office and based on the recommendations of the panel the Government will form its views.

In fact, the Ministry has already written to various chambers of commerce and other bodies to suggest names of their nominees. The panel would have representation from the trade and industry, professional institutes such as the chartered accountants, company secretaries, cost and works accountants, and those from legal field.

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