Circular Resolution
Board resolution passed without a meeting, by circulation under Section 175. Permitted only for matters not restricted by Rule 8 of the Board Meetings Rules.
A circular resolution is a Board resolution passed by circulation rather than at a convened meeting. It is governed by Section 175 of the Companies Act 2013 read with Rule 5 of the Companies (Meetings of Board and its Powers) Rules 2014.
When permitted:
Section 175 allows circular resolutions for any matter that is not specifically required to be transacted at a Board meeting under Rule 8 of the same rules. Rule 8 mandates a physical or video-conferenced meeting for: approving annual financial statements and board's report, prospectus, audit committee recommendations on accounts, calls on shares, buyback authorization, issuance of securities including debentures, borrowing, investing surplus funds, granting loans or guarantees, approving amalgamation or reconstruction, and taking over a company.
Procedure:
1. Draft the resolution and circulate it to all directors (including alternates, if any) at their registered address — by hand, post, courier, fax, or email/electronic means. 2. Resolution is deemed passed when approved by a majority of directors entitled to vote on it. 3. If at least one-third of the total number of directors requires the matter to be decided at a meeting, the resolution cannot be passed by circulation and must be tabled at the next Board meeting. 4. The resolution must be noted at the subsequent Board meeting and recorded in the minutes.
Secretarial Standard SS-1 prescribes the form, dispatch, and recording of circular resolutions in detail.
Indian-context notes:
- Email circulation with read receipts and PDF signature is now market practice. Original signed copies should be collated and kept with the minute book.
- A Section 184 interested director cannot vote on a circular resolution concerning that interest — same as in a meeting.
- The date of passing is the date on which the last approving signature is received from a majority of voting directors.
Pitfall: Companies frequently pass items by circulation that legally require a meeting (e.g., approving the issuance of CCPS — issuance of securities is restricted under Rule 8). Such resolutions are void, and downstream filings (PAS-3, MGT-14) built on them are challengeable.
Kapitalyze's Board OS flags Rule 8 violations before a circular resolution is dispatched.
Formal decision passed by the Board of Directors. Three types: ordinary, special, and circular — each with distinct procedure and use cases.
Minimum directors required to validly conduct a board meeting under Section 174 — one-third of total strength or two directors, whichever is higher.
Statutory record of proceedings of board, committee, and general meetings under Section 118. Must be prepared and signed within 30 days; binding evidence in court.
ICSI's mandatory standard governing notice, agenda, conduct, and recording of Board meetings under Section 118(10) of the Companies Act 2013.