What must our first board meeting do within 30 days of incorporation?
Your company is newly incorporated. The first Board meeting is due within 30 days. Here is what to table, what to file, and what slips if you miss it.
CA Harun Raaj
pvtltd.co
Your company has its certificate of incorporation and named directors. Someone says, "We need to hold the first Board meeting," and nobody is sure by when, or what it must decide.
This article is for directors of a newly incorporated private company with a share capital. It covers the deadline, notice, quorum, agenda, minutes and the filings on the same clock.
Your situation: incorporated, but no Board meeting yet
Several legal clocks start at once when a company is born. Most are easiest to meet if the first Board meeting is held early.
The Act itself fixes the first deadline. It says: "Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation" (s.173(1), Companies Act 2013).
Notice that the clock runs from the date of incorporation, and that the duty is on "every company". After the first meeting, the Board must meet at least four times a year, with "not more than one hundred and twenty days" between two consecutive meetings (s.173(1), Companies Act 2013).
What you can still do today
If you are inside the 30 days, the plan is simple. Fix a date, send the notice, hold the meeting, and write the minutes.
If you have already passed the 30 days, hold the meeting now. Do not wait for the next convenient date. Section 173 sets no specific penalty for a late first meeting. The general residual provision, s.450, Companies Act 2013, covers a contravention "for which no penalty or punishment is provided elsewhere in this Act". Whether it fits a late first meeting is for your CA to confirm. Check the current text of s.450 for the amounts.
Directors can join by video: "either in person or through video conferencing or other audio visual means" that can record and store the proceedings (s.173(2), Companies Act 2013). The Central Government may specify matters that cannot be dealt with by video, so ask your CA before taking a restricted item that way.
The deadline clock
Here is the clock, counted from the date of incorporation, with the section behind each date.
Step by step: running the first meeting
Step 1. Send a proper notice
A Board meeting is called "by giving not less than seven days' notice in writing to every director at his address registered with the company". The notice can go "by hand delivery or by post or by electronic means" (s.173(3), Companies Act 2013).
A shorter notice is allowed for urgent business only if "at least one independent director, if any, shall be present" (s.173(3), first proviso, Companies Act 2013). If your Board has no independent director, plan for seven days.
An officer whose duty it is to give notice and who fails to do so "shall be liable to a penalty of twenty-five thousand rupees" (s.173(4), Companies Act 2013). So give the notice, in writing, to each director, and keep proof.
Step 2. Check the quorum
Quorum means the minimum number of directors who must be present for the meeting to be valid. The Act says the quorum "shall be one-third of its total strength or two directors, whichever is higher", and directors joining by video count toward it (s.174(1), Companies Act 2013).
With two directors, you need both.
Step 3. Table the agenda
The Act does not give a fixed "first meeting agenda". What it does give is a set of duties that fall on the Board, or on each director, at or around this meeting. A sensible agenda covers the following.
Disclosure of interests by each director. The Act says: "Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made... disclose his concern or interest" in other companies, firms and bodies, "which shall include the shareholding" (s.184(1), Companies Act 2013). The rules say this is done "by giving a notice in writing in Form MBP 1", and the director must cause it to be disclosed at the meeting held immediately after the date of the notice (rule 9(1) and (2), Companies (Meetings of Board and its Powers) Rules 2014). A director who breaks this "shall be liable to a penalty of one lakh rupees" (s.184(4), Companies Act 2013). Ask every director to bring a signed MBP-1.
The first auditor. The Board appoints the first auditor "within thirty days from the date of registration of the company". If the Board does not, it "shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor" (s.139(6), Companies Act 2013). The auditor holds office "till the conclusion of the first annual general meeting" (s.139(6), Companies Act 2013). Put this on the agenda so it is not left to the members.
The registered office. The company must "within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices", and must "furnish to the Registrar verification of its registered office" within the same 30 days (s.12(1) and s.12(2), Companies Act 2013). Record the address in the minutes and authorise a director to sign the filing. The rules say the verification is filed "in Form No. INC.22 along with the fee", with one of a short list of documents attached, such as a registered title document, a notarised lease or rent agreement with a recent rent receipt, or an authorisation from the owner or occupant with proof of ownership (rule 25, Companies (Incorporation) Rules 2014). Check the current form and fee on the MCA portal before you file.
Commencement. A company incorporated after the Companies (Amendment) Act, 2019 and "having a share capital shall not commence any business or exercise any borrowing powers" until two things are done: a director files a declaration within 180 days of incorporation "that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him", and the company has filed the registered office verification (s.10A(1), Companies Act 2013). The declaration is in "Form No. INC-20A" and its contents are "verified by a company Secretary or a chartered Accountant or a cost Accountant in practice" (rule 23A, Companies (Incorporation) Rules 2014). If the company's objects need approval from a regulator such as the RBI or SEBI, that approval must also be attached (rule 23A, proviso).
Use the meeting to note who has paid and to authorise the signing director. The penalty is "fifty thousand rupees" on the company and "one thousand rupees for each day" on each officer in default, up to one lakh rupees (s.10A(2), Companies Act 2013). If no declaration is filed in 180 days and the Registrar believes the company is not carrying on business, he "may... initiate action for the removal of the name of the company from the register of companies" (s.10A(3), Companies Act 2013).
Banking and borrowing. Some powers need a resolution "passed at meetings of the Board", including to issue securities, to borrow monies, to invest funds, and to grant loans or guarantees (s.179(3), Companies Act 2013). The Board may delegate borrowing, investing and loan powers by resolution "on such conditions as it may specify" (s.179(3), first proviso, Companies Act 2013). If you will open a bank account or borrow soon, pass the resolutions now.
Step 4. Write and keep the minutes
Minutes are the written record of the meeting. The Act requires every company to prepare them for every Board meeting, to sign them "in such manner as may be prescribed", and to keep them "within thirty days of the conclusion" of the meeting "in books kept for that purpose with their pages consecutively numbered" (s.118(1), Companies Act 2013).
The minutes must give "a fair and correct summary of the proceedings" and include all appointments made at the meeting (s.118(2) and (3), Companies Act 2013). For a Board meeting, they must also list "the names of the directors present" and, for each resolution, the names of any directors "dissenting from, or not concurring with the resolution" (s.118(4), Companies Act 2013).
Minutes kept this way "shall be evidence of the proceedings recorded therein", and the meeting is deemed "duly called and held" until the contrary is proved (s.118(7) and (8), Companies Act 2013).
Step 5. File and keep
File the registered office verification, Form INC-22 (rule 25, Companies (Incorporation) Rules 2014), and Form INC-20A (s.10A, Companies Act 2013). For the first auditor's intimation to the Registrar, check the current form and time limit on the MCA portal. Keep the signed MBP-1 notices at the registered office for eight years (rule 9(3), Companies (Meetings of Board and its Powers) Rules 2014).
What not to do
- Do not treat the 30 days as the next convenient date. The meeting, the auditor appointment and the registered office verification all sit on the same clock.
- Do not skip the notice. A written notice to every director, at least seven days before the meeting, is the rule. The penalty for a missed notice is ₹25,000 on the officer whose duty it was (s.173(4), Companies Act 2013).
- Do not let an interested director take part in the deal. He "shall disclose the nature of his concern or interest at the meeting... and shall not participate" (s.184(2), Companies Act 2013), or the contract is "voidable at the option of the company" (s.184(3), Companies Act 2013).
- Do not start trading or borrowing before INC-20A is filed. The bar in s.10A(1) is on commencing business or exercising borrowing powers.
- Do not leave the minutes unsigned in a drawer. The 30-day limit is in s.118(1).
One Person Company, small company, dormant company
For a One Person Company, small company or dormant company, the Act treats the meeting rule as met "if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days". A One Person Company with only one director on its Board is outside s.173 and s.174 altogether (s.173(5), Companies Act 2013). Ask your CA whether this covers your company before relying on it for the first meeting.
What to do now
- Next step: fix a date inside the 30 days, send written notice of at least seven days to every director, and ask each director for a signed MBP-1 (s.173(3), Companies Act 2013; rule 9(1), Companies (Meetings of Board and its Powers) Rules 2014).
- Deadline: the meeting, the registered office verification and the first auditor appointment are all due within 30 days of incorporation (s.173(1), s.12(2) and s.139(6), Companies Act 2013). Form INC-20A is due within 180 days (s.10A(1), Companies Act 2013).
- Consequence of missing it: ₹25,000 for a missed notice (s.173(4), Companies Act 2013); ₹1,000 per day up to ₹1 lakh for a default on the registered office (s.12(8), Companies Act 2013); ₹50,000 on the company for a missed commencement declaration, and ₹1,000 per day on each officer up to ₹1 lakh (s.10A(2), Companies Act 2013); ₹1 lakh on a director who does not disclose his interest (s.184(4), Companies Act 2013).
Have a CA review your facts before you act or file.
FAQs
Does the 30 days count from the date on the certificate of incorporation?
The Act says "within thirty days of the date of its incorporation" (s.173(1), Companies Act 2013). Confirm the date of incorporation from your own certificate.
What is the quorum for a first meeting of a company with two directors?
One-third of the Board's strength or two directors, whichever is higher (s.174(1), Companies Act 2013). With two directors, that means both must be there. Directors on video count.
What if the first meeting was held after 30 days?
Hold it now. Section 173 has no specific penalty for a late first meeting, so your CA should confirm whether the residual provision in s.450 applies (s.450, Companies Act 2013). Also check the other items on the same clock, especially the registered office verification and the first auditor.
Does a One Person Company need a first Board meeting?
A One Person Company with only one director is outside ss.173 and 174 (s.173(5), Companies Act 2013). A One Person Company with more than one director, a small company and a dormant company have the half-yearly rule in s.173(5). Check which applies to you.
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