Circular Resolution – Understanding Meaning, Process Structure
Written By
Garima Mitra, Sanmita Poojari, Darshana Chauhan
Share
-
Link copied to clipboard!https://treelife.in/compliance/circular-resolution-understanding-meaning-process-structure/
-
-
-
-
AI Summary
- Section 175 of the Companies Act, 2013 permits the Board of Directors to pass resolutions by circulation instead of convening a formal meeting.
- Circular resolutions are designed for urgent, time-sensitive matters that cannot wait for a scheduled board meeting.
- The draft resolution must be circulated to all directors at their addresses registered with the company in India, by hand delivery, post, or electronic means.
- A circular resolution is passed if approved by a majority of the directors entitled to vote on the matter.
- Directors who are interested in the subject matter of the resolution are excluded from the count of directors entitled to vote.
- Certain matters cannot be approved by circular resolution and must be decided at a duly convened board meeting.
- Exclusions from circular resolution include decisions on the issue of securities and the approval of financial statements.
- The circular resolution process offers a quicker and more efficient alternative to formal board meetings for routine or urgent approvals.
- Companies should maintain proper records of circulation and director responses to demonstrate compliance with Section 175.
Circular resolutions, as per Section 175 of the Companies Act, 2013, allow the Board of Directors to make urgent decisions without formal meetings. This method is quick, efficient, and essential for time-sensitive matters.
Key Points:
1. Process: Circulate the draft to all directors via hand delivery, post, or electronic means.
2. Approval: Resolution passes with majority approval.
3. Exclusions: Certain significant decisions like issuing securities or approving financial statements must be made in formal meetings.
About the Author
Share
-
Link copied to clipboard!https://treelife.in/compliance/circular-resolution-understanding-meaning-process-structure/
-
-
-
-
Garima Mitra
Co-founder | garima@treelife.in
Spearheads Transactions, Contracts, and Compliance verticals. Combines expertise in business law and a passion for social impact to shape the legal and financial ecosystem for startups.
Sanmita Poojari
Senior Associate | Compliance | sanmita.p@treelife.in
A compliance expert with a strong foundation in corporate legal and secretarial practices. Excels in corporate governance, regulatory filings, and advisory services on legal and financial matters, ensuring seamless corporate law compliance for clients.
Darshana Chauhan
Principal Associate | Compliance | darshana@treelife.in
Manages compliance for acquisitions, fundraising, and due diligence with meticulous execution. Ensures adherence to the Companies Act and FEMA while delivering seamless regulatory solutions.
We Are Problem Solvers. And Take Accountability.
Related Posts
Place of Effective Management(POEM) in India: A Complete Guide
India's POEM framework is one of the most consequential and least understood provisions in the Income Tax Act 1961. A...
Learn More
Advance Pricing Agreements(APA) in India: When certainty is worth the cost
India's transfer pricing environment shifted significantly on 1 April 2026, when the Income Tax Act, 2025 came into force and...
Learn More
Safe Harbour Rules for IT, ITES and Captives: Opting in and the Margins
India's transfer pricing safe harbour framework has been overhauled under the Income Tax Act, 2025 and Income Tax Rules, 2026,...
Learn More
© 2026 Treelife Ventures Services Private Limited. All Rights Reserved.