Book Name: Commercial Law and Industrial Law 26th Edition
Writer: Arun Kumar Sen, Jitendra Kumar Mitra
MEETINGS AND RESOLUTIONS
Objects
The corporate system of business: organisation is essentially democratic in structure. The business of the Company is carried on by officials acting under the orders of the Board of Directors, which is the executive head of the Company. But the directors are elected to the Board by the shareholders of the Company and must abide by the wishes of the shareholders as expressed in resolutions passed in meetings convened for the purpose. The shareholders are, subject to the provisions of the Memorandum and the Articles, the final authority as regards the affairs of the Company. The shareholders cannot interfere in the day to day administration of the Company but they can elect Directors who will carry on the administration in the manner desired by them. Also, there are many matters which are beyond the powers of the Board of Directors to decide and which must be placed before the shareholders for decision. Meetings of shareholders are held for this purpose and the decisions of the shareholders are expressed in the form of resolutions.
Meetings
The Companies Act provides for the following types of meetings :
A. Meetings of the shareholders :
(1) Statutory Meeting
(2) Annual General Meeting
(3) . Extra-ordinary General Meeting
(4) Class MeetingsUnder certain circumstances the Court can order certain meetings.
B. Other Meetings :
(1) Meetings: of the creditors
(2) Meetings of the debenture holders.
C. Meetings of directors.
STATUTORY MEETING
Every public company limited by share–3 and every company limited by guarantee and having a share capital, must within a period of not less than one month arid not more than six months from the date at which the company is entitled to Commence business, hold a general meeting of members which is to be called, the Statutory Meeting. In this meeting the members are to discuss a report by directors, known as the Statutory Report, which contains particulars relating to the formation of the Company.-Sec. 165(1).
STATUTORY REPORT
This is a report drafted by directors and certified as correct by at least two of them (including the managing director, where there is one). A copy of the report must be sent to every member, at least 21 days before the date of the meeting. A copy is also to be sent to the Registrar for registration. Section 165(3) provides that the Statutory- Report must contain the following particulars :
(a) the total number of fully paid up and partly paid up shares allotted :
(b) the total amount of cash received by the company in respect of the shares ;
(c) an abstract of the receipts, classifying them according to source and mentioning the expenses incurred for commission, brokerage etc. ;
(d) the name, address and occupations of directors, auditors. manager and secretary and changes of the names, addresses etc. ;
(e) particulars of contracts which are to be submitted to the meeting for approval, with proposed modifications. if any ;
(J) if any underwriting `contracts have not been carried out, the reasons therefore;
(g) the arrears due on calls from directors and others :
(h) particulars of commissions and brokerages paid to directors and managers.
Particulars as regards cash in the statutory report are to be certified as correct by the auditors of the Company.
The members of the company 'w ho are present in the Statutory Meeting are at liberty to discuss any matter relating to the formation of the company or arising out of the Statutory Report. whether previous notice has been –given or not. But no resolution can be passed of which notice has not been given in accordance with the provisions of the act.
If default is made in complying with the provisions o Section 165, every director or other officer of the company why is in default shall be punishable with fine which may extend U Rs. 500.
ANNUAL GENERAL MEETING
General Meeting of a company means a meeting of it member for specified purposes. There are two kinds of Genera Meetings, (i) the Annual General Meeting and
(ii) other General meetings.
The statutory provisions regarding the Annual Genera Meeting are summarised below :
(a) ,Section 166: The first Annual General Meeting of : company may be held within a period of not more than 18 month! from the date of its incorporation. If such a meeting is held within the period, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year.
Subject to the above mentioned provision. a company must hold an annual general meeting each year. Not more than I S months shall elapse between the date of one annual general meeting and the next.
The Registrar may, for any special reason, extend the time of holding an annual general meeting (other than the first annual general meeting) by a Period not exeeding-3 months.
The notice, by which an annual general meeting is called, must specify it as such. Every annual general meeting shall be called during business hours, on a day which is not a public holiday, at the Registered Office of the Company or at some other place within the town or village where the Registered Office is situated. The Central Government may exempt any class of companies from the provisions mentioned in this paragraph.
The time of holding of the annual general meeting may be fixed by the articles of the company: 11 -public company or a private company which is a subsidiary of a public company may, by a resolution passed in one general meeting, fix the time for its subsequent general meetings. Other private companies may do so by a resolution agreed to by (it/ the members thereof.
(b) Sec. 167: If default is made in holding an annual general meeting in accordance with Sec. 156: the Regional Director of
The Company Law Board may (on the application of any member f the company) call or direct the calling of a general meeting. He may also give directions regarding the calling, holding and conducting the meeting. Such a meeting shall be deemed to be an annual general meeting of the Company.
(c) Sec. 168 : If the provisions of Sections'166d 167 are not complied with the company and every officers of the company in default be fined. (Maximum fine-Rs. 5.000. for: continuing default-further fine of Rs. 250 per day.)
(d Sec. 171: A general meeting may be called by giving not less than 21 days' notice in writing. The annual, general meeting may be called with a shorter notice if it is agreed to by all the members entitled to vote in the meeting:
The court has no power to direct the calling annual general meeting. In re Coal Marketing Company of India) Ltd. OTHER
GENERAL MEETINGS
Meeting called by the Board of directors
The Board of directors can call a general meeting of the members any time by giving not less than 21 days,, notice. A general meeting may be called with a shorter notice under certain circumstances (See below, under Notice).
Meeting by order of Company Law Board
The Company. Law Board can order .a meeting of a company other than an annual general meeting. The Company Law Board can call such a meeting of its own motion or on the application of any director of the company or any member of the company who would be entitled to vote in the meeting. The Company Law Board can decide when the meeting is to be called, how it is to be conducted and also direct other ancillary and consequential matters regarding such meetings.-Sec. 186; (as amended in 1974).
Extraordinary General Meeting on Requisition
The Board of directors can be compelled to hold a General Meeting upon request or requisition made for it, under thefollowing conditions sec169
(a) The requisition must be signed by members holding at least 1/10th of the paid up capital of the Company, in the case of Companies having a share-capital ; and, by members holding at least 1/10th of the total voting power in other cases.
(b) The requisition must set out the matters which will be considered at the meeting.
(c) The requisition must be deposited at the registered office of the Company.
The Board must, within 21 days of the receipt of a valid requisition, issue a notice for the holding of the meeting on a date fixed within 45 days of the receipt of the requisition. If the Board does not hold the meeting as aforesaid, the requisitionists can call a meeting to be held on a date fixed within 3 months of the date of requisition.
Resolutions, properly passed at a meeting called by the reqtrisitionists, are binding on the Company.
RULES OF PROCEDURE REGARDING MEETINGS
The general rules of procedure as regards shareholders' meeting can be summarised as follows :
1. Proper authority
The Board of directors is the proper authority to pass a resolution at a duly convened Board meeting to convene a meeting.
2: Notice (Sec. 172)
Notice of every meeting must be given to
(a) all members entitled to vote upon the matters which are proposed to be dealt with in the meeting ;
(b) the legal representatives of deceased
or insolvent members coming under the above category ; and
(c) the auditors of the Company. Notice must be given at least 21 days before the Meeting.
Meetings may be called with a shorter notice under the following circumstances :
(a) in the case of an annual general meeting, if it is agreed to by all the members entitled to vote thereat.
(b) In the case of any other meeting of a with a share capital, if it is agreed to by members holding not less than 95% of such part of the paid up share capital of the company as gives a right it vote at the meeting. If the company has no share capital. a ;meeting may be held with a shorter notice if the shareholders of not less than 95% of the total voting power exercisable at that meeting agree to it.
3. The Agenda: The Explanatory Statement (Sec. 173)
The- notice must specify the business to be transacted in the meeting. The Act states that notice must annex an "Explanatory Statement" at which some special business is to be transacted. The statement must contain all the material facts relating to each item of the business, indicating the nature and extent of the interest of every director and the manager of the company. Tile statement must mention the time and place where all documents relating to special business can be inspected.
The business transacted in a shareholders' meeting, can be divided into two classes,
(i) Ordinary and
(ii) Special. Ordinary business means, consideration of accounts and the balance sheet ;declaration of dividend ; appointment of directors ; and appointment of fixation of remuneration of auditors. All other business in special business.
4. The Quorum (Sec. 174)
Quorum means the minimum number of members required to , hold a meeting. According to the Act, quorum is constituted by 5 members, personally present (in the case of a public company, other than a public company which has become such by virtue of Sec. 43A) and 2 members, personally present in the case of other companies. The articles may prescribe a larger number If there is no .quorum within half an hour of the notified 1wm for starting the meeting, it is dissolved. If the meeting is onecalled upon requisition, no further meeting on the same notice Its permitted. In other cases, the meeting is automatically adjourned to the same day next week at the same hour and place or at Iv h other day, hour and place as the Board may determine.
No quorum is necessary in any adjourned meeting. Chairman (Sec. 175)
5.chairman (sec175)
Unless other–wise laid down in the articles, the members personally present at the meeting shall elect a Chairman, from amongst themselves, by show of hands. But if a poll is demanded, it must be taken forthwith with a chairman elected for thepurpose (Poll means secret voting by ballot papers.)
6.. Proxy (Sec. 176)
Any member, entitled to attend and vote in a meeting, can appoint another person to attend and vote on his behalf The person appointed is called the Proxy. The appointment of a proxy must be made by -a written instrument (See below) signed by the appointer and deposited with the Company, not more than 48 hours before the meeting.
A.B. LIMITED
Registered Office
201IA, Netaji Subhash Chandra Hose Road,
Kolkata-700001
PROXY FORM
Twelfth Annual General Meeting-September 24th, 2001
Regd. Folio No. ……………………………………………………………………………………
l/We ….:……………………………………………….of ………………………………….. being
a member/members of the above company hereby appoint ……………………… . ……………..:…………………………. of ……………………………………………. or failing him/her ………………………………………….. of ……………………………………………… as my/our proxy to vote for me/us on my/our behalf at the TWELFTH ANNUAL GENERAL MEETING of the Company to be held on Monday, , September, 24th 2001 and at any adjournment thereof.
Signed this …………………………… day of ………………………….. 2001
Signature ………………………………..1/- Rupee Revenue stamp…………………………………………
Note : This form in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the Company not less than 48 hours before the meeting.
A. B. LIMITED
Registered Office
201/A, Netaji Subhash Chandra Bose Road, Kolkata-700001 .
ATTENDANCE SLIP
Twelfth Annual General Meeting-September 24th, 2001
Regd. Folio No. ………………………………
i certify that 1 am a registered shareholder proxy for the registered shareholder of the Company. 1 hereby record my presence at the Twelfth Annual General Meeting of the Company at Bharatiya Bhasha Parishad Auditorium, 36A, Shakespeare Sarani, Kolkata-700017 on Monday, September, 24th 2001.
……………………Members/Proxy's name. in .BLOCK. letter …………………………Members/Proxy's signature
Note : Please fill in this attendance slip and hand it over at the Entrance of the meeting Hall.
A proxy is not entitled to speak in the meeting and can vote only on a poll unless the articles provide otherwise. A proxy need not be a member of the Company. A member of a private company cannot appoint more than one proxy to attend on the same occasion, unless the articles otherwise provide.
A member entitled to vote can inspect the proxy forms deposited, if he gives 3 days' notice of his– intention to do so. An instrument appointing a proxy, if in one of the forms set out in Schedule IX to the Act, cannot be questioned on the ground that it fails to comply, with any special requirement specified for such instruments in the articles.
Every notice of meeting must prominently mention that a member is entitled to appoint a proxy and that the proxy need not be a member.
A body corporate, which is a member of a Company, can appoint a representative or proxy, by resolution of the Board. The President of India or the Governor of a State, if he is a member of a company, may appoint any person to act as his representative in a meeting.-Sec. 187A.
7. Method of Voting (Sections 177-185)
Resolutions are to be voted upon, in the first instance, by show of hands. The Chairman's declaration of the results of voting by show of hands is conclusive.
A poll is to be taken
(i) if the Chairman so directs;
(ii) in all cases, if it is demanded by members holding at least 1/10th of the voting power or paid up capital ;
iii) in the case of public companies if it is demanded by 'at least S members present and entitled to vote; and-
(iv) in the case of private companies if it is demanded by -any one member if not more than seven members are present and by two members if more than seven members are present.
A poll on a resolution for adjournment, or for the appointment of a Chairman is to be taken immediately. In other cases it is to be taken when the Chairman decides; but it must be within 48 hours of the demand for poll.
A poll is to be taken in the manner decided by the Chairman. The usual method is to ask each member to record his decision on ballot papers provided for the purpose. The Chairman shall appoint two scrutineers to scrutinise the ballot papers. At least one of them shall be a member present in the meeting, if a member, willing to act as such, is found.
The Chairman has a casting vote in addition to his ordinary vote i.e., in case of a tie, he can give another vote, either for or against the resolution.
Section 179 states that a poll may be ordered on a demand made in that behalf by the shareholders
RESOLUTIONS
The Act of 1956 classifies resolutions into the, following types :
(i) Special Resolution
(ii) Ordinary Resolution and
(iii) Resolution requiring Special Notice.
Special Resolution
A special resolution is necessary for deciding important matters. The Act specifies what these matters are. (Examples :Reduction of Capital ; Winding up etc.)
Procedure for Passing a Special Resolution .
A special resolution may be passed in a general meeting of members called in the usual way with the usual notice. But the following conditions must be satisfied.-Sec.189
(a) The notice calling the general meeting must specify that ,a special resolution will be moved.
(b) The number of votes cast in favour of the resolution whether by show of hands or by poll, must be at least three times the number cast against it.
Special resolution is required for the following issues.
(a) Alteration of Memorandum for changing the place of registered off ice from one state to another or alteration of objects with the leave of the Company Law Board,
(b) change of name of the company with the consent of the Central Government,
(c) alteration of the Articles of the company,
(d) conversion of any portion of the, uncalled capital into reserve capital,
(e) reduction of share capital,
(f) variation of shareholders' rights,
(g) payment of interest out of capital,
(h) allowing a director to hold an office of profit under the company,
(i) 'alteration of memorandum of render the liability to directors unlimited,
(j) winding up a company voluntarily. .
Ordinary Resolution
All matters not required to be decided by a special resolution, may be decided by ordinary resolution. An ordinary resolution is passed, when the number of votes cast in its favour- exceeds those cast against it.
Member's Resolution
If members of a Company intend to move a resolution, at the next annual general meeting, the following procedure is to be adopted. (Sec. 188) :
l. A requisition in writing, with a copy of the resolution, must be deposited with the Company. If it is desired to circulate the requisition to the members, it must be deposited not less than 6 weeks before the meeting. In other cases it may be deposited not less than 2 weeks before the meeting.
2. The requisition must be signed
(a) by members holding at least 1/10th of the total voting power, or
(b) by not less than 100 members, holding shares with an aggregate paid up capita) of Rs. l lakh.
3. The requisition may, require the circulation to the members, along with the resolution, a statement of not more than 1000 words relating to the resolution.
4. The requisitionists must pay the expenses necessary for circulating the notice and the statement.
If the aforesaid procedure is complied with, the resolution must be dealt with at the next annual general meeting. But the statement, if any is sent with the resolution, will not be circulated in the following cases :
(a) If the Company is a banking company and the Board of Directors is of opinion that its circulation will injure the interest of the Company.
(b) If on an application made by the company or of any person feeling aggrieved, the Court is satisfied that the rights conferred by Section 188 are being abused to secure needless publicity for defamatory matter, it may prohibit the circulation.
Registration of Resolutions
All special resolutions and important resolutions (like voluntary liquidation) must, within 30 days of their adoption be registered with the Registrar and also annexed to a11 copies of the articles.-Sec. 192.
RESOLUTION BY SPECIAL NOTICE
Where by any provision contained in the Act or in the articles, special notice is required of any resolution, the intention to move the resolution shall be given to the Company not less than 14 days before the date of meeting where the resolution is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of the meeting.-Sec. 190(1). . The Company shall give notice of the resolution to the members in the same manner as it gives notice of the meeting. If this is not practicable, it shall give notice by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the articles, not less than 7 days before the meeting.-Sec. 190(2).
The Act requires special notice in certain cases. Examples Appointment of a retired or removed auditor (Sec. 225) ; appointment of a director in place of a removed director ; etc.
MINUTES OF PROCEEDINGS
By the term "minutes" is meant a written record of the proceedings of a meeting. As company meetings are of considerable legal importance, it is necessary to keep a record of the proceedings in a permanent form. Section 193 of the Act provides as follows :
(1) Every company shall keep minutes of all proceedings of every general meeting, meetings of its Board of Directors, and of every committee of the Board. Entries in the minute books must be made within 30 days of the conclusion of a meeting. The pages of a minute book must be consecutively numbered. Each page must be initialled or signed and the last page recording the proceedings of a meeting must be dated and signed
(a) in the case of Board meetings or committee meetings, by the Chairman of the meeting or the succeeding meeting, and
(b) in the case of general meetings, by the Chairman of the same meeting, or in the event of his death or liability, by a director duly authorised by the Board. Entries in a minute book must not be attached to it by pasting or otherwise.
(2) The minutes of each meeting shall contain a fair and correct summary of the proceedings.
(3) All appointments of officers made at the meeting shall be included in the minutes.
(4) In the case of a meeting of the Board of directors or of a committee of the Board, the minutes shall also contain
(a) the names of the directors present at the meeting, and
(b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring in, the resolution.
(5) The minutes need not contain any matter which, in the opinion of the chairman of the meeting
(a) is, or could reasonably be regarded as, defamatory of any person ;
(b) is irrelevant or immaterial to the proceedings, or (c) is detrimental to the interests of the company.
The Chairman's discretion, as regards what is to be included in the minutes, is final.
The minutes kept in accordance with the aforesaid rules shall be evidence of the proceedings in a meeting. They are presumed to be correct records of proceedings, unless otherwise proved. The minutes of general meetings are to be kept at the registered office of the Company and can be inspected members. Copies of any minutes are to be furnished upon' payment of the requisite fees.
Apart from the minutes, no reports of the proceedings of general meeting are to be published at the expense of the Company. .
ANNUAL Return
The Annual Return is a statement of particulars, which is required to be filed by a company after every annual general meeting. Section 159 of the Act provides that every company having a share capital shall, within sixty days from the day on which each annual meeting is held, prepare and file with the register a return containing particulars regarding the following :
(a) its registered office,
(b) the register of its members,
(c) the register of its debenture holders,
(d) its shares and debentures,
(e) its indebtedness,
(f) its members and debenture holders, past and present, and
(g) its directors, managing directors, managing agents, secretaries and treasurers, managers and secretaries, past and present.
Where full particulars as to past or present members were given in any of the two immediately preceding Returns, a Return may mention only the changes that have occurred in shareholding.
The Return must be in the form set out in Part II of Schedule V or as near thereto as circumstances admit.
A similar return is to be field by Companies not having a share capital.-Sec. 160.
The copy of the Annual Return filed with the Registrar by a director and by the manager or secretary of the company ; or where there is no manager or secretary, by two directors of the company, one of whom shall be the managing director where there is one.-Sec. 16](1). Section 161 has been amended and the amended section states that where the annual return is filed by a Company whose shares are listed on a recognised stock exchange, the copy of such annual return shall be signed by a secretary in whole-time' practice.
In the case of private companies, the directors must certify that there has been no violation of the rules of private companies regarding number of members and invitation to the public for purchase of shares.-Sec. 161(2)(b) The directors must also certify that 25% or more of the shares are not being held by any bodies corporate and if so, why the company will continue to be treated as a private company.–Sec. 43A.