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What is quorum in company law?

3 Answer(s) Available
Answer # 1 #

Statutory provisions (Companies Act 2006)

Sec318 Quorum at meetings (1) In the case of a company limited by shares or guarantee and having only one member, one qualifying person present at a meeting is a quorum. (2) In any other case, subject to the provisions of the company's articles, two qualifying persons present at a meeting are a quorum, unless- (a) each is a qualifying person only because he is authorised under section 323 to act as the representative of a corporation in relation to the meeting, and they are representatives of the same corporation; or (b) each is a qualifying person only because he is appointed as proxy of a member in relation to the meeting, and they are proxies of the same member. (3) For the purposes of this section a "qualifying person" means- (a) an individual who is a member of the company, (b) a person authorised under section 323 (representation of corporations at meetings) to act as the representative of a corporation in relation to the meeting, or (c) a person appointed as proxy of a member in relation to the meeting.

Notice that these rules are subject to the provisions of the company's articles.

Model Articles provisions

Quorum for general meetings 38. No business other than the appointment of the chairman of the meeting is to be transacted at a general meeting if the persons attending it do not constitute a quorum.

Table A provisions

Art. 40. No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to vote upon the business to be transacted, each being a member or a proxy for a member or a duly authorised representative of a corporation, shall be a quorum.

Art. 41. If such a quorum is not present within half an hour from the time appointed for the meeting, or if during a meeting such a quorum ceases to be present, the meeting shall stand adjourned to the same day in the next week at the same time and place or to such time and place as the directors may determine.

Alternative provisions

Many companies state a higher quorum for their meetings. This may be particularly important where articles are drafted to ensure the ability of certain parties to attend any meeting.

Some company's articles add the following provisions:

Chloé Plymton
Petrochemical Engineer
Answer # 2 #

A quorum refers to the minimum number of group or organization members that must be present for official business to be carried out. This minimum number is usually set by the organization’s bylaws.

The main reason organizations form a board is to pool the talents of individual directors to make the best overall decisions about the current and future direction of the organization. That means the demographic that constitutes the “who” of the decision-makers holds great significance for every organization. The problem with not following quorum protocol is a few members may become too powerful, creating the risk that decisions may not benefit the good of the whole.

Robert’s Rules sets guidelines for quorums regarding protocols for what constitutes a quorum, how to change bylaws for them and the importance of giving notice of a meeting where important votes are taken.

Here, you’ll discover the following:

According to Robert’s Rules, the quorum definition is the minimum number of voting members who must be present at a properly called meeting to conduct business in the group’s name. It should consist of a number as large as can be depended upon for being present at all meetings when the weather is not exceptionally bad.

The definition sounds vague. It is! Robert’s Rules developed the definition of a quorum to accommodate the diversity of organizations that use parliamentary procedure.

If your nonprofit should ever make changes to the quorum requirements, be sure to update your bylaws in your board management software system.

The board chair must address the issue of a quorum before starting the agenda. For this reason, boards need to understand how to establish a quorum.

In most cases, the bylaws will state the rules for a quorum. In the absence of a stated definition, it constitutes a simple majority. A nonprofit could define a simple majority as 51% of the board.

Whether you are determining a quotient to establish a quorum for the first time or redefining the bylaws related to a quorum, it helps to consider a couple of things.

Keeping those primary questions in mind, the quorum can be set as a percentage of membership or a fixed number.

Some nonprofits establish a high percentage for a quorum to encourage board members to attend meetings. By contrast, nonprofit board attendance may typically be low, prompting boards to establish a low percentage for a quorum. One of the trends for small boards or boards with poor attendance is to hold shorter meetings to encourage attendance. On the lower end, it is comprised of as few as two or three people.

A board meeting rarely has perfect attendance at every meeting throughout the year. In light of this, Robert’s Rules designated rules for conducting business in the absence of a quorum. The rules are different for every state.

Overall, any business transacted without a quorum is null and void. There are a few exceptions which include:

There are also some pretty obvious things that can’t be done when a quorum is absent. Present members can’t give unanimous consent or give notice of another meeting. In either case, there would be insufficient members to secure a reasonable majority vote.

If a quorum exists at the beginning of a meeting and members leave during the meeting, causing the loss of quorum, the chair should state the loss before taking any vote. Other members may also make a point of order about the absence, but only when other members are not speaking.

Board members should note red flags indicating that it’s time for a change in the bylaws regarding the stated quorum. Progress and forward movement of an organization show positive signs of growth, but they can also signal a second look at the quotient section in the bylaws.

A good time to review the quorum protocol is at the annual strategic planning meeting unless something sparks a review before then. Here are a few red flags that trigger a review:

Boards should exercise caution regarding how they amend these rules. The proper way is to strike certain words or the whole rule, insert new words or a new rule and vote on it as one question. The risk in amending the quorum by striking the rule first is that it immediately becomes a majority of all members. For many organizations, it sets a nearly impossible forum for getting a quorum to adopt a new rule.

Following proper protocols keep an organization balanced and democratic. While the board chair is primarily responsible for establishing and announcing its existence, all board members should hold the chair accountable for adhering to proper parliamentary procedure as a system of checks and balances.

To help you understand how some nonprofit organizations have defined a quorum in their bylaws, we provide examples so you can see how various boards worded them.

The United Way of Tennessee

Quorum. A quorum shall consist when a majority of the board is attending in person or through teleconferencing. A majority of the quorum must be made up of Local United Ways. All decisions will be made by a majority vote of those present at a meeting at which a quorum is present. If less than a majority of the directors is present at said meeting, a majority of the directors present may adjourn the meeting on occasion without further notice. (United Way)

College of Saint Benedict Saint John’s University

In order for both Executive Board meetings and committee meetings to be deemed official, a majority of the members plus one (1) must be present. This number will denote a quorum. (Saint Benedict Saint John’s)

The Nature Conservancy

Quorums. One-third of the Board of Directors shall constitute a quorum for the transaction of business of the Board. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business by such committee. In the absence of a quorum at a duly called meeting, a lesser number may adjourn the meeting from time to time until a quorum shall be present. The affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be necessary and sufficient to the making of decisions by the Board, except as a larger vote may at any time be otherwise specifically required by law, the Articles of Incorporation of TNC, or these bylaws. (The Nature Conservancy)

Notice in these examples of a quorum that the wording in the bylaws can be very specific, as in The Nature Conservancy’s bylaws, or very simple, as in Saint Benedict Saint John’s University’s bylaws.

Following quorum protocols keep an organization balanced and democratic. While the board chair is primarily responsible for establishing and announcing the existence of a quorum, all board members should hold the chair accountable for adhering to proper parliamentary procedure as a system of checks and balances.

Organizations often require two-thirds of the members to be present to establish a quorum. The organization’s bylaws state a percentage needed to reach a quorum or the number of voting members. The percentage can be anything the voting members decide on as long as it is a majority of the members.

For the purpose of board meetings, a board quorum is the fewest number of board members who are eligible to vote at a meeting before the board can conduct any business. The nonprofit’s bylaws will state the rules for a quorum.

Much like a nonprofit board, the principle behind a government quorum is that a certain number of governing members must be present at a meeting for them to pass laws. This practice dates back to the Constitutional Convention in the late 1700s and continues today. Our constitution requires a majority of the body to be present to constitute a quorum.

As long as the organization’s bylaws state that a proxy can be used to establish a quorum, it is perfectly acceptable to do so. In this case, the proxy vote only counts to establish the quorum — nothing else.

Rod Gaurav
Answer # 3 #

(b) in the case of a private company, two members personally present, shall be the quorum for a meeting of the company.

Shepard Harlan
Commissioning Editor