(vi) meetings of a company

7/30/2019 (Vi) Meetings of a Company

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COMPANYMEETINGS


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A company is an association of several

persons for some common object(s).

Therefore, various issues have to be

discussed and decided according to the

view of the majority. These deliberationstake place at various meetings which

occur between members (shareholders)

and between the directors.


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Learning Objectives

Kinds of Company Meetings; Board Meetings,Meetings of Members

General Meetings: Statutory, Annual General Meetings andExtraordinary General meetings

Class Meetings Other Meetings:Meeting of debenture holders, Meeting of

creditors

Requisites of a Valid Meeting

Proxy; Quorum

Chairman and his Duties

Voting and Demand for Poll

Agenda; Motion; Resolutions; Minutes


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KINDS OF COMPANY MEETINGS

Company meetings can broadly be categorizedinto the following types:

I Board Meetings

II Meetings of Members(1) General Meetings:(a) Statutory meeting,(b) Annual general meetings, and(c) Extraordinary general meetings.

(2) Class Meetings

III Other Meetings(1)Meeting of debenture holders(2) Meeting of creditors


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Board Meetings

Board meetings refer to meetings of directors. The directorsare supposed to act collectively as a single entity, called theboard, hence the term boardmeetings. Rules relating to boardmeetings can be summarized as under:

Periodicity of the Board meetings. Every companyprivate orpublicshall hold at least one meeting of the Board in threemonths or four meetings in a year. However, a Section 25company has the privilege to convene a meeting of the Board

or Governing Body at least once in six months or twice a year.[Section 285]

Interval between two Board Meetings. The expression everythree months in Section 285 means three months takentogether or every quarter of the year. Provisions of Section 285

are fulfilled say if the Board of directors meets on the first ofJanuary, or 31st March, or any day in between. Similarly, it isopen to the Board to meet on any day during the next threemonths say from April to June, and then at least once in thenext quarter say from July to September and so on.

Cont..


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Board Meetings

Day of holding meeting. Though an original Board

meeting should normally be held during business hoursand only on a working day, it may validly be held on apublic holiday too.

Time of holding Board meetings. Board meetings canbe held during business hours or outside businesshours. There is no restriction on that matter under theCompanies Act.

Place for holding a Board Meeting. Board meetingscan be held at any place, be it the companys registered

office or head office, or any other premises within oroutside the city, town, village, or state in which theregistered office of the company is situated. A Boardmeeting may also be held abroad if the situation sowarrants.


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Meetings of Members

These are the meetings where shareholders of acompany meet to discuss various matters andtake decisions by means of passing resolutions.Members meetings may further be classified asgeneral meetings and class meetings.

General MeetingsGeneral meetings can further be discussed underthe following three heads:

Statutory Meeting

Annual General Meetings and

Extraordinary General Meetings

Contd.


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Meetings of Members

Statutory Meeting

This is the first meeting of the shareholders of apublic co. and is held once in the life span of thecompany. A public co. limited by shares, or acompany limited by guarantee and having sharecapital is required to hold a statutory meeting.Such a meeting must be held between one andsix months from the date on which the companybecomes entitled to commence business i.e., it

obtains the certificate of commencement ofbusiness. A private limited co. is, however,exempt from holding a statutory meeting.[Section 165] Contd..


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. Statutory Meeting

Purpose of Statutory Meeting. The purpose of the meeting

is to enable members to know all the important matterspertaining to the formation of the company and its initiallife history. The matters discussed include inter alia, whichshares have been taken up, what money has been received,what contracts have been entered into, and what sums

have been spent on preliminary expenses, etc. However, noresolution in respect of which no notice has been given inaccordance with the provisions of the Act can be passed atthe statutory meeting. In such a meeting, only the followingmatters can be discussed:

Floatation of shares / debentures by the company

Modification to contracts mentioned in the prospectus

Contd.


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. Statutory Meeting

Notice of Statutory Meeting . A clear writtennotice at least 21 days before the meeting

must be given to all the members of the

company unless consent is accorded to a

shorter notice by members, holding not less

than 95 per cent of paid-up capital i.e., voting

rights in the company. The notice must clearly

state that the meeting is the statutorymeeting of the company.

Contd.


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. Statutory Meeting

Statutory Report . The Board of directors must prepare and

send to every member a report called the StatutoryReportalong with the notice. But if all the members entitled to

attend and vote at the meeting agree, the report could be

forwarded later also. The report should be certified as correct

by at least two directors, one of whom must be the managing

director, where there is one. It must also be certified as

correct by the auditors of the company with respect to the

shares allotted by the company, the cash received in respect

of such shares, and the receipts and payments of the

company. A certified copy of the report must be sent to theROC for registration immediately after copies have been sent

to the members of the company.

Contd


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. Statutory Meeting

Contents of Statutory Report . The statutory report is prepared by the

directors to help members acquaint themselves with the assets and

properties of the company and to discuss the success of floatation.

According to Section 165 (3) of the Companies Act, the statutory report

must furnish the following particulars:

1. The total number of shares allotted, distinguishing those fully or partly

paid-up, otherwise than in cash, the extent to which partly paid shares arepaid-up, and in both cases the consideration for which they were allotted.

2. The total amount of cash received by the company in respect of all shares

allotted, distinguishing as aforesaid.

3. An abstract of the receipts and payments up to a date within seven days of

the date of the report and the balance of cash and bank accounts in hand,

and a description of preliminary expenses.

4. Any commission or discount paid or to be paid on the issue or sale of

shares or debentures must be separately shown in the aforesaid abstract.

Contd.


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. Statutory Meeting

5. The names, addresses, and occupations of directors, auditors, managerand secretary, if any, of the company and the changes which have takenplace in the names, addresses and occupations of the above since thedate of incorporation.

6. Particulars of any contracts to be submitted to the meeting for approvaland modifications done or proposed.

7. If the company has entered into any underwriting contracts, the extent, ifany, to which they have not been carried out and the reasons for thefailure.

8. The arrears, if any, due on calls from every director, and from the manager.

9. The particulars of any commission or brokerage paid or to be paid, inconnection with the issue or sale of shares or debentures to any directoror to the manager.

10. The auditors have to certify that all information regarding calls andallotment of shares are correct.


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Annual General Meeting

An annual general meeting (AGM) must be held by every companypublic

or private, limited by shares or by guarantee, with or without share capitalor unlimited companyonce a year. AGM is an important platform by

which the general body of shareholders finds an opening to exercise their

power of control. Every company must hold an AGM each year.

Rules Relating to Annual General Meeting. Following are the rules

regarding annual general meetings:i. A company may hold its first AGM within 18 months from the date of its

incorporation. However, not more than 15 months must elapse between

two AGMs.

ii. In case there is any difficulty in holding any AGM (except the first one),

the ROC may, for any special reasons shown, grant an extension of timefor holding the meeting by a period not exceeding three months

provided the application for the purpose is made before the due date of

the annual general meeting. Contd.


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.Annual General Meeting

iii. A notice of at least 21 days before the meeting must be given to themembers unless consent is accorded to a shorter notice by members,holding not less than 95 per cent of voting rights in the company. Thenotice must state that the meeting is an annual general meeting. Thetime, date and place of the meeting must be mentioned in the notice.

iv. The notice of the meeting must be accompanied with a copy of theannual accounts of the company, directors report on the position of thecompany for the year, and auditors report on the accounts. Companies

having share capital should also state in the notice that a member isentitled to attend and vote at the meeting and is also entitled toappoint proxies in his/her absence. A proxy need not be a member ofthat company. A proxy form should be enclosed with the notice.

v. The AGM must be held on a working day during business hours at theregistered office of the company or at some other place within the city,

town or village in which the registered office of the company is situated.The Central Government may, however, exempt any class of companiesfrom the above provisions. If any day is declared by the Centralgovernment to be a public holiday after the issue of the noticeconvening such meeting, such a day will be treated as a working day.

Contd.


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Business transacted at Annual General Meeting. At every AGM, thefollowing matters must be discussed and decided. Since such matters arediscussed at every AGM, they are known as ordinary business. All othermatters and business to be discussed at the AGM are special business.

The following matters constitute ordinary business at an AGM :-

1. Consideration of final accounts, directors report and the auditors report

2. Declaration of dividend

3. Appointment of directors in the place of those retiring

4. Appointment of and the fixing the remuneration of the statutoryauditors.

5. In case any other business (special business) has to be discussed and

decided upon, an explanatory statement of the special business mustalso accompany the notice calling the meeting. The notice should alsogive the nature and extent of the interest of the directors or manager inthe special business, as also the extent of the shareholding interest inthe company of every such person. Contd.


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Consequences of not holding annual general meeting. Default in holding an

AGM may result in the following consequences:

1. Any member of the company may apply to the NCLT which may in turn

call, or direct the calling of the meeting, and give such ancillary or

consequential directions as it may consider expedient in relation to the calling,

holding and conducting of the meeting. The NCLT may also direct that onemember present in person or by proxy shall be deemed to constitute the

meeting. A meeting held in pursuance of this order will be deemed to be an

annual general meeting of the company.

2. A fine, which may extend to Rs 5,000 on the company and every officer of the

company who is in default, may be levied and for continuing default, a furtherfine of Rs 250 per day for the duration of the default may be levied.


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Extraordinary General Meeting

Regulation 47 of 'Table A' provides: All general meetings other thanannual general meetings shall be called extraordinary general meetings.Thus, every general meeting other than the statutory meeting and theannual general meeting or any adjournment thereof, is an extraordinarygeneral meeting (EGM). Such a meeting is usually called by the Board ofdirectors in emergencies for taking up some urgent business that cannot

stay to be decided till the next AGM.Every business transacted at such a meeting is a special business. Anexplanatory statement of the special business must also accompany thenotice calling the meeting. The notice should also give the nature andextent of the interest of the directors or manager in the special business,as also the extent of the shareholding interest in the company of every

such person. In case approval of any document has to be done by themembers at the meeting, the notice must also state that the documentwould be available for inspection at the Registered Office of the companyduring the specified dates and timings. Contd.


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..Extraordinary General Meeting

Who can call an extraordinary general meeting? An Extraordinary general

meeting may be called by any four of the following.

1. The Board of directors The Articles of a company may contain provisions for

convening an extraordinary general meeting. For example, it may provide that the

Board may, whenever it deems fit, call an extraordinary general meeting or it may

provide that if at any time directors capable of acting who are sufficient in

number to form a quorum are not in India, any director or any two members of

the company may call an extraordinary generalmeeting.

2. The Board on requisitions The members of a company have the right to seek

calling of an EGM by the directors. The Board of directors must call an

extraordinary general meeting if required to do so by the following number of

members:

On the date of making the demand for an EGM, the strength of members shouldbe at least one-tenths of such of the voting rights in regard to the matter sought to

be discussed at the meeting ; or

If the company has no share capital, the members representing not less than one-

tenths of the total voting rights on that date in regard to the said matter. Contd.


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..Extraordinary General Meeting

The requisition must state the objects of the meetings and must be signed by the

requisitioning members. The requisition must be deposited at the company's

registered office and the directors should within 21 days, move to call a meetingand the meeting should actually be held within 45 days from the date of

submission of the requisition.

3. By the Requisitionists. If the directors fail to call and hold the meeting as

aforesaid, the requisitionists or any of them fulfilling the requirements stated

above, as the case may be, may themselves proceed to call the EGM within 3

months from the date of the requisition, and claim the necessary expenses from

the company. The company can make good this sum from the directors-in-default.

4. By the National Company Law Tribunal. If for any reason, it is impracticable to

call a meeting of a company, other than an annual general meeting, or to hold or

conduct the meeting of the company, the NCLT may, either i) on its own motion, or

ii) on the application of any director of the company, or of any member of thecompany, who would be entitled to vote at the meeting, order a meeting to be

called and conducted as the Tribunal deems fit, and may also give such other

ancillary and consequential directions as it thinks fit expedient. A meeting so called

and conducted shall be deemed to be a meeting of the company duly called and

conducted.


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Class Meetings

Class meetings are meetings which are held by the holders of aparticular class of shares (i.e., where the share capital of a companyis divided into different classes of shares), e.g., preferenceshareholders. Such meetings are normally called when it isproposed to alter, vary or affect the rights of that particular class ofshareholders. At such meetings, these members discuss the prosand cons of the proposal and vote accordingly Class meetings areheld to pass resolutions, which will bind only the members of theshareholders class concerned, and therefore only members of thatclass can attend and vote. Unless the articles of the company or acontract binding on the persons concerned otherwise provides, allprovisions pertaining to calling of a general meeting and its conductdo apply to class meetings in the same way as they apply withrespect to general meetings of the members. However, allresolutions in a class meeting are required to be passed as specialresolutions.


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Other Meetings

Meeting of Debenture Holders. A company issuing debentures through its

articles may provide for the holding of meetings of the debenture

holders. At such meetings, generally matters pertaining to the variation in

terms of security provided by the company against the debentures or to

alteration of their rights are discussed. All matters connected with the

holding, conduct and proceedings of the meetings of the debenture

holders are normally specified in the Debenture Trust Deed. The decisionsat the meeting made by the prescribed majority are valid and lawful and

binding upon the minority.

Meetings of Creditors. Sometimes, a company, as a running concern, has

to make certain arrangements with its creditors. Hence, meetings of

creditors may be called for this purpose. Similarly, in case of winding up ofa company, a meeting of creditors and contributories is held to ascertain

the total amount due by the company and also to appoint a liquidator to

wind up the affairs of the company.


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REQUISITES OF A VALID MEETING

The following conditions must be satisfied for a meeting to becalled a valid meeting:

1. It must be duly convened. The persons calling the meeting mustbe authorized to do so. The proper authority in this regard is theBoard of directors, members, or the National Company Law

Tribunal.2. Proper and adequate notice must have been given to all those

entitled to attend.

3. The meeting must be legally constituted. There must be a properauthority in the chair. The rules of quorum must be maintainedand the relevant provisions of the Act and the articles of

association must be duly complied with.4. The business at the meeting must be validly transacted. The

meeting must be conducted in accordance with the regulationsgoverning the meetings.


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PROXY

A member may appoint another person to attend and vote at a meeting

on his behalf. Such other person is known as Proxy. The term is alsoapplied to the instrument by which the appointment to act on his behalf is

made by the member. In case of a company having a share capital and in

the case of any other company, if the articles so authorise, any member of

a company entitled to attend and vote at a meeting of the company shall

be entitled to appoint another person (whether a member or not) as hisproxy to attend and vote instead of himself. [Section 176]

The member appointing a proxy must deposit with the company a proxy

form at the time of the meeting or prior to it giving details of the proxy

appointed. However, any provision in the articles which requires a period

longer than forty-eight hours before the meeting for depositing with thecompany any proxy form appointing a proxy, shall have the effect as if a

period of 48 hours had been specified in such provision.

A proxy is not entitled to vote except on a poll. Therefore, a proxy cannot

vote on show of hands. The proxy is automatically revoked by the death or

insolvency of the member.


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QUORUM

The term 'quorum' means the specified minimum number of qualified persons

whose presence is necessary for transacting legally binding business at a meeting.

A meeting without the quorum is invalid and decisions taken at such a meeting arenot binding. the quorum for the Board meeting shall be one-third of its total

strength, or two directors whichever is higher, while the quorum for any General

meeting shall be five members personally present in case of public company, and

two members personally present in the case of private company unless the articles

of a company provide otherwise. [Section 174]

It has been held by the courts that unless the articles otherwise provide, a quorum

needs to be present only when the meeting commenced, and it was immaterial

that there was no quorum at the time when the vote was taken. Further, unless

the articles provide otherwise, if within half an hour from the time appointed for

holding a meeting of the company, a quorum is not present in the person, the

meeting :-

if called upon the requisition of members, shall stand dissolved;

in any other case, it shall stand adjourned to the same day in the next week, at the

same time and place, or to such other day and time as the Board may determine.

If at the adjourned meeting also, the quorum is not present within half-an-hour

from the time appointed for holding the meeting, the members present shall

constitute a quorum.


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ROLE OF CHAIRPERSON IN CONDUCTING A MEETING

The chairperson is there to preside over a meeting.

Generally, the chairperson of the Board of directors alsohappens to be the chairperson of the meeting. Unless thearticles otherwise provide, the members present in personat the meeting elect one of themselves to be thechairperson thereof on a show of the hands. If there is nochairperson, or s/he is not present within 15 minutes afterthe appointed time of the meeting or is unwilling to act aschairperson of the meeting, the directors present may electone among themselves to chair the meeting. If, however nodirector is willing to act as the chairperson or if no directoris present within 15 minutes after the appointed time of themeeting, the members present should choose one amongthemselves to chair the meeting. If, after the election of a

chairperson on a show of hands, poll is demanded andtaken and a different person is elected as chairperson, thenthat person will head the meeting from that point.


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Duties of the Chairman

Without a chairperson, a meeting is incomplete. The chairperson is the

regulator of the meeting. The duties of the chair include the following:1. The chairperson must ensure that the meeting is properly convened and

constituted i.e., the proper notice has been given, and that the requiredquorum is present, etc.

2. S/He must ensure that the relevant provisions of the Act and the Articles ofAssociation are observed.

3. S/He must ensure that business is taken in the order set out in the agenda,and no business which is not mentioned in the agenda is taken up unlessagreed to by the members.

4. S/He must impartially regulate the proceedings of the meeting and maintaindiscipline at the meeting.

5. The chairperson has the power to adjourn the meeting in case of indisciplineat the meeting. S/He must exercise his/her powers of adjournment of the

meeting, should s/he in good faith feel that such a step is necessary.6. S/He must exercise his/her power to order a poll correctly and must order it

to be taken when demanded properly.

7. S/He must exercise his/her casting vote bona fide in the interest of thecompany.


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Thanks for yourattention!

(vi) meetings of a company

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