Auditing and Assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

The Members of Board of Directors of M/s Kantipur Bank Ltd. could not meet for meeting to decide on an important issue that required immediate decision. The chairman of the Board of Director instructed Company Secretary to draft the minute and circulate it to sign all the members as he had already talked the issue with other members and they had agreed to sign even there was not meeting. Examine the validity of the decision taken the Board of Directors in view of Companies Act, 2063.

Answer:

Company Act, 2063 section 97 deals with the meeting and decision of Board of Directors. Sub section
(4) of section 97 states that there would be no meeting if at least 51% of total members are not self- present in the meeting. Likewise sub section (7) of same section specifies that a minute should be prepared for such meeting mentioning the name of members present, the agenda and decision of the meeting and such minute should be signed at least 51% members present in that meeting.
However, sub section (9) of section 97 gives the board members full right to decide on agenda if all members agree in writing without holding the meeting. In given case, the decision of the Board of Directors is as per sub section (9) of section 97 so it is valid from the point of view of this section. However, if any of the members is not ready to sign on proposed minute the Chairman of the board, the decision shall not be valid.



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