Procedure for Cancellation of Resolution passed in Board Meeting

There is no provision in the Companies Act 2013 for the annulment of a resolution, whether it is a resolution of the board of directors or a resolution passed at a general meeting. However, sometimes there are circumstances where it is necessary to cancel/revoke the resolution, and the Board of Directors is responsible and can take appropriate action. A resolution of the board of directors or a resolution passed at a general meeting may be revoked by the board of directors or the members, as the case may be. So let us have a look at the procedure for the cancellation of the resolution passed by the Board.

What is a Company Resolution?

In companies, major decisions are taken by the board of directors of the company in its respective board meeting, generally called a “Board Resolution”. However, some decisions that have a major impact on the organization and go beyond the scope of ordinary business require the intervention of company members approved at the annual general meeting or an extraordinary general meeting, called “ordinary resolutions” and “special resolutions”.

Resolution Withdrawal

The complete procedure for passing any resolution is prescribed by law and we must follow it. But what about reversing the whole process? If the company is unwilling to proceed with the adopted resolution, what is the procedure for withdrawing this resolution?
First of all, it should be noted that neither the Companies Act, 2013 nor any other previous Acts contain any specific provision in this regard. But the board is the savior here, if such a necessity arises, it is responsible for taking appropriate measures.

Procedure for revoking a resolution of the board of directors 

A resolution of the board of directors can be revoked by adopting a new resolution of the board of directors on revoking the previous resolution (which is being revoked) at the next meeting of the board of directors. The details of the previous resolution, such as the serial number of the meeting, date, time, and place of the meeting, number of the resolution, etc., must be stated in the new resolution, where a resolution to cancel the earlier resolution will be proposed.

Procedure for revoking the resolution of the general meeting 

The board of directors approves the resolution on revoking the earlier resolution (which is to be rescinded) and also convenes the MVH, where a resolution on revoking the earlier resolution will be proposed. A general meeting will be held and the members will consider and approve or reject the cancellation of the earlier resolution.
The details of the previous resolution must be given in the new resolution, such as the serial number of the meeting, date, time, and place of the meeting, number of the resolution, etc.

Revocation of resolutions at the same meeting 

It should be noted here that resolutions cannot be revoked at the same meeting. If a resolution is approved and later at the same meeting the majority of executives disagree with it, the disagreement with this plan will be noted in the minutes and the resolution will not be adopted.

Effect of revocation of the resolution 

The revocation of the resolution will be effective from the day it was revoked. It cannot be revoked with retroactive effect, that is, from the time the resolution was passed until the date on which the resolution was passed, the earlier resolution will be considered valid for that period. The company will be responsible for the acts done by it or others based on this resolution.

Points to be considered

• A decision taken with malicious or fraudulent intent to defraud the parties concerned will not be allowed to be set aside by the ROC or the Tribunal.
• The resolution cannot be withdrawn or revoked at the same board or general meeting.
• The new resolution adopted at the following meeting will not have a retroactive effect, it will take effect on the date of adoption of the new canceling resolution, not on an earlier date.

Final words

As individuals, we are very well equipped with decision-making skills. From choosing between alternatives to choosing what is right or wrong, the individual is solely responsible for his actions. Similarly, the company has to go through constant ups and downs, viz-a-viz, changes in the regulatory framework, control, government policy, national, and international affairs, and political pressure and must take the right decisions with utmost care. It can impact several people such as employees, retailers, suppliers, consultants, and a range of stakeholders. As an artificial person having a separate legal personality, a company through its resolution takes its decision, which though named as a company resolution, in both cases is taken by an individual or a group of individuals with rational intelligence, knowledge, and expertise.