Query : A company has two director and one director being in India and other in foreign nation. Can a Single Director sign the B/S and P& L account through a validly convened board meeting ?
Even if a single director in India signs the B/S and P&L account and makes a statement in this regard as per requirement of section 215 (2) .
Save as provided by sub-section (2), every balance sheet and every profit and loss account of a company shall be signed on behalf of the Board of directors-
in the case of banking company, by the persons specified in clause (a) or clause (b), as the case may be, of sub-section (2) of section 29 of the Banking Companies Act, 1949 (10 of 1949);
(ii) manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.
(2) In the case of a company not being a banking company, when only one of its directors is for the time being in India, the balance sheet and the profit and loss account shall be signed by such director; but in such a case there shall be attached to the balance sheet and the profit and loss account a statement signed by him explaining the reason for non-compliance with the provisions of sub-section .
(3) The balance sheet and the profit and loss account shall be approved by the Board of directors before they are signed on behalf of the Board in accordance with the provisions of this section and before they are submitted to the auditors for their report thereon.
From the above mentioned provisions it is clear that one director in India can sign the B/S and P/L Account.
However , section 215 (3) requires even before signing B/S and P& L account , the same has to be approved by the Board.
2) stipulates that the quorum for a meeting of the Board of directors of a company shall be one-third of its total strength (any fraction contained in that one-third being rounded off as one), or two directors, whichever is higher : ( minimum and articles may prescribe more) .
With only one director in India , a valid board meeting cannot be convened under section 287(2) of the Companies Act 1956. Hence , it is suggested an alternate director has to be appointed and this will take care of the requirement of section 287(2) of the Companies Act .
A valid board meeting can be convened with the alternate director and B/S and P&L can be ratified in such meeting .Then , B/S and P&L can be signed by a single director as stated in the section 215 or two directors can sign ( including the alternate director) the same.
This could be the possible solution to the issue.