Quorum

Definition: To constitute a valid and binding meeting, the minimum number of members which must be present to transact the business, is termed as Quorum.

Hence, it is a basic criterion for attendance which needs to be fulfilled, to make the proceedings legal. Further, the members should have a vested interest in the company.

The members of the company are required to be present in person and therefore, while ascertaining the quorum proxies are not considered. ‘Members present in person’ means those members who have the right to vote concerning the items of business.

Quorum for General Meeting

The requirement for the least number of members which must be present at the meeting, for different types of companies are:

For Public Limited Company:

• When the total number of members is less than equal to 1000 – At least 5 members need to be present in person.
• When the total number of members exceeds 1000 but not more than 5000 – At least 15 members need to be present in person.
• When the total number of members exceeds 5000 – At least 30 members need to be present in person.

For Private Limited Company: To constitute a quorum for the meeting, 2 members must be present in person.

However, if the Articles of Association (AoA) of the company provides for a larger quorum than that provided in the Companies Act, then the quorum has to adhere to such larger stipulation.

Consequences of No Quorum in General Meeting

In case of non-existent of the requisite quorum within half an hour from the time decided for convening the meeting, then the meeting shall be postponed to the upcoming week. Further, the day, time and place will be the same. Moreover, the Board may also decide some other date, time and place for holding the meeting.

Further, when the meeting is called by requisitionists, then in the absence of the required quorum, it will stand cancelled.

A three days prior notice is to be served to the members individually or by circulating an advertisement in the newspaper (one in local language and one in English) at the city where the company’s registered office is located, for the adjourned meeting or for the change in a day, time or place of meeting.

When in the adjourned meeting also the requisite quorum is not existent within half an hour of the time appointed, then the members present shall constitute the quorum.

Quorum for Board Meeting

• The quorum for a meeting of the Board of Directors is one-third of the total strength or two directors, whichever is higher. Any fraction of a member would be taken as one. Further, the total strength excludes directors whose places are vacant.
• To constitute the quorum, presence of the director by way of Video Conferencing or any other audio-visual mode will be considered.
• When the number of directors who are interested, is more than or equal to two-thirds of the total strength of the Board, the number of the directors who are disinterested and present at the meeting, than in such an event the two disinterested directors would form a quorum.
• As a result of resignation or removal or due to any other reason, the number of directors is less than the required quorum. In such a case the continuing direct may act in order to raise the number of directors stipulated to form a quorum.

Consequences of No Quorum in Board Meeting

Due to the absence of a requisite quorum at the Board Meeting, the meeting is adjourned. Further, if at the adjourned meeting also, no quorum is present then the meeting stands dissolved.

Quorum is not just required at the beginning of the meeting. But it is also required for transacting business.