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Quorum

Reviewed by Anjaneyulu | Updated on Sep 30, 2020

Catalogue

Introduction

A quorum is a minimum number of members of a deliberative body (an organization that uses legislative procedure, such as a legislature) needed to conduct the group's business. The pre-requisite for a quorum is defence by an unduly limited number of individuals against totally unrepresentative action on behalf of the body. In contrast, a plenum is or is rather close to a meeting of the entire body.

Understanding

The Companies Act, 2013 includes the daily holding of general meetings as well as board meetings by a company set up under the act. To ensure that the organizations comply with this legislation and that these meetings are duly held, a quorum is required for it to be considered to be a legitimate meeting.

In simple terms, quorum means the minimum number of representatives that must be present. Under the terms of the act, the quorum for a general meeting, a board meeting, and an extraordinary general meeting shall be enumerated.

How it Works?

Since there is no strict quorum number, best practices recommend that a quorum is defined as a simple majority of members of an organization. It is also possible to specify a hard number in a company's by-laws, in which case, if the number is larger it overrides the simple majority.

It is crucial that the number chosen is not very small so that it does not represent the entire members correctly, but not so high that it is impossible to hold a meeting legally.

Regardless, in a decision-making position, the quorum number should be reflective of the members. For example, if a company has a ten-member board, a quorum could be a simple majority of six members of the board instead of 51 per cent of each shareholder in the company.

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