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      Question

      The Board of Directors of a listed company, Beta Corp,

      consists of 9 directors. A meeting is called to approve a contract with a firm in which 4 directors are interested within the meaning of Section 184(2). What is the minimum number of disinterested directors required to be present to form a valid Quorum for this specific agenda item?
      A 3 Directors Correct Answer Incorrect Answer
      B 2 Directors Correct Answer Incorrect Answer
      C 4 Directors Correct Answer Incorrect Answer
      D 5 Directors Correct Answer Incorrect Answer
      E 6 Directors Correct Answer Incorrect Answer

      Solution

      General Quorum (Section 174): 1/3rd of total strength or 2 directors, whichever is higher. In the above case that is 3 directors.   Interested Director Rule: If interested directors exceed or equal 2/3rds of total strength, the quorum is the number of non-interested directors present, provided there are at least 2. In the above example, Total strength is 9. Interested are 4. Since 4 is not equal to or more than 2/3rds (which is 6), the interested directors are simply excluded from the count for this item. Thus, the standard quorum of 3 disinterested directors must be present.

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