Quorum for Different Meetings01/03/2020
Quorum means the minimum number of persons who being entitled to attend a meeting must be present at the meeting so that the business of the meeting can be transacted validly. Such a number is desirable so that a meeting gets a representative character and no decisions are taken with a very small number of persons being present.
At the same time the quorum shall not be too big so that a meeting falls through on account of small attendance.
Features of Quorum:
(1) What shall be the quorum for different types of meetings of an organisation are usually mentioned in its bye-laws or in the Articles of Association in case of a company. Some statutes also make such provisions. For example Sec. 174 of the Companies Act makes such provisions. The bye-laws or the Articles cannot provide smaller quorum than what are provided in the statutes, if any.
(2) A meeting cannot be started if quorum is not present. The quorum might be continuously present. If any member or members leaves or leave earlier and by that the quorum falls, then any decision taken afterwards will not be binding, if the by-laws or Articles so provide.
(3) It is the duty of the chairman to see that the quorum is present. The secretary helps him in counting the quorum. If at the middle of the meeting quorum falls, any member present may draw the attention of the chairman to this fact by raising a ‘point of order’.
(4) If quorum is not present at the scheduled hour of a meeting already notified, then the members present will wait for half an hour.
After half an hour the following alternative effects can take place:
(A) In Case of an Informal Meeting:
(i) The chairman may allow informal discussions but no binding decisions can be taken. The meeting is adjourned and can be held afterwards after giving fresh notice.
(ii) If the quorum is missing by a small margin, the chairman may allow discussions and decisions may be taken which, however, have to be formally ratified at a next meeting where quorum must be present.
(B) In Case of Any Meeting of a Company:
The Act provides that the meeting shall be adjourned:
(i) In case of a general meeting to the same day in the next week, at the same time and place or to such other day and at such other time and place as the Board may determine.
(ii) In case of a Board meeting, unless the Articles otherwise provide, to the same day in the next week, at the same time and place or if that day is a holiday till the next succeeding day which is not a public holiday, at the same time and place.
(iii) In case of an extraordinary general meeting requisitioned by members the meeting is not adjourned and the meeting just fails.
(5) In case of a members’ meeting of a company where proxy is allowed only members present in person are counted for quorum and not the proxies but representatives are counted
(6) When fraction comes out while calculating quorum (like one-third, one-fourth) the next round number is taken into account.
(7) Conflicting views exist with regard to counting when there are joint holders of shares. Generally it is accepted that joint holders of shares shall be treated as a single member. Some people think that each joint holder is a separate member if his name appears in the Register of Members.
Where Quorum is Strictly not Necessary:
Normally the quorum is necessary for a valid meeting.
But in the following circumstances a less number of persons may make the quorum:
(1) Whenever a meeting is adjourned for want of quorum, any number of members present at the adjourned meeting shall make the quorum.
(2) At a Board meeting when a matter comes up in which one or more than one director is or are interested then, director or directors concerned cannot take part in the discussion. The remaining directors shall make the quorum. If only on- director is left out then of course there cannot be a quorum and the matter shall be referred to a general meeting of members for decision.
(3) In case of class meetings if one person alone holds all the shares of that particular class of shares then he alone shall make the quorum.
(4) In case of an annual general meeting of a company (ailed by the order of the Central Government on the complaint by only one member of the company, or a general meeting called by the Company Law Board on the application of one member of the company then the member alone present in person or by proxy, shall make the quorum when the meeting is held.
The General Patterns of Quorum:
Every company in its Articles of Association or an association in its bye laws or a Committee or Sub-Committee in its own rules and regulations usually provides what shall be the quorum for the different kinds of meetings to be held under it. The quorum for a general meeting is usually one-fourth or one-third of the total number of members or a fixed number like ten, fifteen etc. taking into consideration the total strength of the members.
The Companies Act is very liberal and provides that if nothing is mentioned in the Articles then any two members in case of a private company and any five members in case of a public company, present in person at a general meeting, shall make the quorum.
The quorum for the meeting of an important committee, like the Executive Committee or Managing Committee, is generally fixed at one-third. The Companies Act provides that the quorum for Board meeting, if nothing is provided in the Articles, shall be one-third or two whichever is bigger.
The directors themselves at the first Board meeting may fix the quorum for Board meetings. In some special cases, the quorum is fixed at a big percentage of the total number of members. For example, the quorum for a class meeting in a company is very often fixed by the Articles to be two- thirds or three-fourths or all the shareholders belonging to that class.
Sometimes all the members make the quorum. For example, in a private company having only two directors, both the directors shall make the quorum at a Board meeting. Again, in a private company having only two shareholders, both the members shall make the quorum at a general meeting.