First Board Meeting After Incorporation under Companies Act, 2013

The First Board Meeting after Incorporation is one of the most critical mandatory compliances for any newly incorporated company in India. It is not a ritual but the beginning of corporate governance, statutory compliance and business operations of the company. Under the provisions of the Companies Act, 2013, all companies (viz. Private Limited Company, Public Company, One Person Company, Section 8 Company etc.) are required to conduct their First Board Meeting within a specified time.

Such resolutions shall be effective for the purpose of the initial organization of the company, its appointments, its banking powers, and other matters relating to the ability of the company to do business. Non-adherence to this statutory requirement would result in penalties, unauthorized actions and even compliance problems in future.

Table of Contents

What is the First Board Meeting After Incorporation?

The initial meeting of the Board of Directors is termed the First Board Meeting which is conducted immediately after the company receives the Certificate of Incorporation from Registrar of Companies (ROC).

At this meeting the company:

Establishes its existence as a legal entity in a formal way
Checks its statutory documents
Designates key individuals
Approves financial and business transactions

With this meeting you’re basically enabling your company to be established as a legal and business entity.

Legal Regulations Governing the First Board Meeting After Incorporation

The First Board Meeting Right to Hold a First Board Meeting1 is governed by the following provisions:

Section 173 - Meetings of Board of Directors
Section 174 Quorum for Board Meetings
Section 118 – Minutes of court proceedings
Section 139(6) – Appointment of First Auditor
184(1) – director’s disclosure of interest
Secretarial Standard-1 (SS-1) - Meetings of the Board of Directors

Time Limit to Hold the First Board Meeting After the Incorporation

The First Board Meeting of the company to be held within 30 days of its incorporation.

Applicable to:

Non-compliance attracts penal provisions.

Notice of the First Board Meeting After Incorporation

Statutory Requirement

Notice of all directors to be given at least 7 days in advance.
Notice should be in writing

How to send notice

Hand delivery
Speed post/registered post
Email/electronic transmission

Shorter Notice

In cases of emergency business, a meeting may be called by shorter notice, stating the purposes for which it is called, and the same shall be recorded in the minutes of the meeting.

Quorum for the First Board Meeting After Incorporation

Section 174(1)

The quorum for the First Board Meeting shall be:

Two directors, or
One-third of the total number of directors,

Whichever is more.

In case of a two directors’ company, both shall be the directors. Quorum is determined by excluding those who have a conflict of interest on that agenda.

Mode of Conducting the First Board Meeting Post Incorporation

Physical meeting is allowed
Video conferencing is allowed

Matters prohibited by law shall be handled in accordance with the prescribed standards.

The first Board Meeting is usually held in person for convenience of documentation and signing.

What are the Key agenda items in First Board Meeting after Incorporation?

Here is the agenda for the first Board Meeting:

Acknowledging the Certificate of Incorporation

Organization of the Board The board acknowledges the company’s incorporation

Noting Memorandum and Articles of Association

The MOA and the AOA are adopted as the constitutional documents of the company

Appointment of First Auditor

Board has to appoint the first auditor within 30 days from incorporation of company, as mandated by Section 139(6).

Confirmation of Registered Office

The address of the registered office of the company is confirmed.

Opening of bank account Signing facilities

Authority to open a company bank account and to appoint signatories to the account.

Issue of Share Certificates

Authorisation for the issue of share certificates to subscribers.

Disclosure of Interest by Directors Under section 186

The directors submit Form MBP-1 under Section 184(1).

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

Appointment of Managing Director, CEO, CFO etc. (Where applicable)

Authorization for Preliminary Expenses

To authorize preliminary expenses and charges.

Maintenance of Statutory Registers

Resolution for maintaining statutory registers & records.

Disclosure of Interest form MBP-1

Every director has to disclose:

• His/her concern or interest

of the director or manager of a body corporate in another body corporate or company, firm or any other institution.

This disclosure shall be given by the end of the Board Meeting.

Non-disclosure may result in:

Fines
Contracts required to be rescinded
Potential disqualification and removal of the Director.

Minutes of First Board Meeting After Incorporation

Section 118 & SS-1

Must be drawn up within 15 days
Will be recorded in the Minutes Book

A Copy of the Minutes should be signed by the Chairman.

Minutes are proof of decisions.

Non-Compliance and fine

Section 173(4)

• Company: ₹25,000

For every officer who is in default, Rs 25,000

The First Board Meeting After Incorporation – The Importance of It in Practice

The First Board Meeting:

Led to the company becoming established in law
Attained the legal prerequisites
Created the governance culture
Protected the directors from liability

Such an obligation is unconditional.

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Conclusion

The First Board Meeting is a legal mandate in terms of the Companies Act, 2013. It’s a legal affirmation that the company is a going concern, and that it has a definable existence and structure. Penalties and litigation for the directors may ensue if there are breaches.

Frequently Asked Questions (FAQs)

1.Is first board meeting mandatory for OPC?

Yes, but it is also mandatory to hold the First Board Meeting within 30 days of the completion of the incorporation under Section 173 of the Companies Act, 2013 even though an OPC has soft compliance regime.

2. Whether First Board Meeting is required to be held on date of incorporation?

Yes, there is no bar to hold the First Board Meeting on the day of the incorporation as long as all the directors are physically present on the date of the meeting and a notice (or consent to short notice) is dispatched to them.

3.Is first auditor’s appointment compulsory?

Yes, the first auditor’s appointment is compulsory as per section 139(6) The company is also required to appoint the auditor within 30 days of its incorporation from its board of directors.

4.What if First Auditor is not Appointed on Time?

Where the board of directors fails to appoint the first auditor within 30 days after incorporation, the power to appoint the auditor shall pass to the members and they shall have the power to appoint the auditor in the general meeting convened for this purpose within the next 90 days.

5.Is MBP-1 mandatory in the first Board Meeting?

Yes, under a Code of Conduct Annexed to the Companies (Meeting of Board and Its Powers) Rules, 2014 Every director shall disclose his interest in other entities in Form MBP-1 in the first meeting of Board u/s 184(1).

6.Is Secretarial Standard-1 applicable?

Yes, The Secretarial Standard-1 (SS-1) formulated by the ICSI is a mandatory standard and is applicable to all the meetings of the Board of Directors including the first Board Meeting which is held immediately after the incorporation.

7.Can the meeting be conducted via video conferencing?

Yes, with the provisions in the Companies Act enabling the Board Meetings to be held through video conferencing or other audio-visual means, subject to certain procedural requirements and recording of the proceedings.

8.Is quorum mandatory even if all directors consent?

Yes, Quorum is a statutory stipulation and hence even if all the directors are unanimous to the decisions, quorum is still required under section 174.

9.What is the penalty for not holding the first Board Meeting?

If the first Board Meeting is not held within the specified time, by Section 173(4), a penalty of ₹25,000 shall be payable to the company and to every officer in default.

10.Can resolutions be passed by circulation instead of holding the meeting?

No, the first Board Meeting cannot be dispensed with by passing the resolution through circulation. To comply with the statutory formalities a physical or dial in meeting has to be held.