Meetings of The Company
Meetings of The Company
Meetings of The Company
Meetings constitute an integral and important portion in the Companies Act, 1956. It
gives an opportunity for the shareholders to know about the state of affairs of the
company and also deliberate on various issues. There are different kinds of meetings that
have to be called upon by the company and statutory requirements have to be complied
with in calling, convening and conduct of the meetings.
Since a company is an artificial legal entity distinct from that of its members, the affairs
of the company is practically done by the Board of Directors. The Board of Directors in
carrying out the day-to-day affairs of the company has to perform the role within their
limited powers and the powers, which are granted to them. Certain powers can be
exercised by the board of their own and with the consent of the company at the general
meeting. The shareholders as owners of the company ratify the actions of the board at the
meetings of the company. The meetings of the shareholders serve as the focal point for
the shareholders to converge and give their decisions on the actions taken by thedirectors
Types of Meeting
1. Statutory Meeting
2. Annual General Meeting
3. Extra General Meeting
4. Class Meeting
Meeting of creditors:
For winding up,
For purposes other
Board Meeting than winding up
Time Period: It is to be convened after not less than one month but within six months
from the date, on which the company is entitled to commence business (sub-section 1). A
meeting held prior to statutory period of one month is not a statutory meeting.
The notice for such a meeting must say that it is intended to be statutory meeting.
Private companies and Government companies are not required to hold such a
meeting. Therefore only public limited company with a share capital must hold the
statutory meeting within the prescribed time limit.
Adjournment of meeting
The statutory meeting may adjourn from time to time, and at any adjourned meeting, any
resolution of which notice has been given whether or after former meeting, may be
passed. The adjourned meeting shall have the same powers as an original meeting.
Default: If any default is made in filing the statutory report or in holding the statutory
meeting, every director or other officer of the company who is in default, shall be
punishable with fine which may extend to five thousand rupees [Section 165(9)]. Another
consequence of not holding the statutory meeting in time is that the court can under
Section 433(b) order the compulsory winding up of the defaulting company.
Statutory Report: The Directors are required to send a report to the members of the
company at least 21 days before the meeting. Even if the report is forwarded later than
required, it shall be deemed to have been duly forwarded, if all the members entitled to
attend and vote agree to it (sub-section 2). The eight particulars to be set out in the
statutory report are contained in sub-section (3) of Section 165. These are:
(a) the number of shares allotted, distinguishing fully or partly paid up, otherwise than for
cash and stating the extent to which the partly paid up shares have been paid and the
consideration for which they have been allotted;
(b) The total amount of cash received on account of shares allotted;
(c) an abstract of receipts and payments up to the date within 7 days of the date of report,
exhibiting under distinctive headings the receipts of the company from shares and
debentures and other sources, the payment made there out and particulars concerning the
balance remaining in hand and an account or estimate of the preliminary expenses of the
company, showing separately any commission or discount paid or to be paid on the issue
or sale of shares or debentures;
(d) The names addresses and occupations of the directors and auditors, manager and
secretary, if any and any changes therein, if occurred, since the date of the company’s
incorporation;
(e) The particulars of any contract or modifications thereof to be submitted to the meeting
for its approval;
(f) The extent of non-carrying of each underwriting contract together with the reason
therefore;
(g) The arrears due on calls from every director and manager; and
(h) Particulars of commission or brokerage paid or to be paid to any director for manager
in connection with the issue or sale of shares or debentures.
The report aforesaid must be certified as correct by at least two directors, one of whom
should be the managing director, if there be any. The auditors should also certify it to be
correct insofar as the report relates to shares allotted by the company, cash received in
respect thereof and receipts and payments on revenue as well as on capital account of the
company.
A copy of the above report should be sent to the Registrar also, after it has been sent to
the members [Section 165(5)].
Annual General Meetings (Sec.166 read with Sec.210)
For deciding the time period within which a meeting should have been held, the
following point should be kept in mind.
(1) The meeting must be held in each calendar year;
(2) It must not be held later than 15 months from the date of previous annual meeting;
and
(3) It must not be held later than six months of date of balance sheet.
These three requirements are cumulative and separate. Failure to comply with any of
them constitutes an offence unless the Registrar of Companies has granted an extension
of time for holding the meeting (other than first AGM). The period of such extension is
limited to three months.
The following example will explain the position: The financial year of a company ends
on 31st December each year. The annual general meeting to adopt the accounts, etc. of
the year ending 31st December, 1991 was held on 29th June, 1992. Under Section 166(1)
the next annual general meeting need not be held until 29th September, 1993, but the
accounts would be those, up to 31st December, 1991 which is more than six months
before the date of the meeting. Therefore the last for holding that meeting would be 30th
June, 1993.
The first annual general meeting of a company may, however, be held within 18 months
of incorporation, and so long as the company hold its first annual general meeting within
that period, the company need not hold any general meeting in the year of incorporation
or in the following year [first proviso to Section 166 (1)].
Date, time and place:
Time of Meeting: Every annual general meeting must be called during business hours of
the company. However, the Central Government may exempt any class of company from
this provision. [Sec.166 (2)]
Day of Meeting: Every annual general meeting must be called on a day that is not a
public holiday [Sec.166 (2)]. However in the following cases an AGM may be held on a
public holiday:
a) If any day is declared by the Central Government to be a public holiday after the
issue of the notice convening such meeting.
b) Where a public company or its subsidiary has, by a resolution passed in one
AGM, fixed the time for its subsequent AGM and the day turns out to be a public
holiday.
c) Where a public company or its subsidiary has, by its Articles of Association, fixed
the time for its AGM and the day turns out to be a public holiday.
d) Where a private company which is not a subsidiary of a public company has by its
Articles or by resolution, fixed time of its AGM.
Place of the Meeting: Every Annual General Meeting of a company must be held either
at the registered address of the company or at some other place within the same city, town
or village in which the registered office of the company is situated. However, the Central
Government may exempt any class of companies from this provision. [Sec.166 (2)]
By the requisitionists themselves: If the directors fail to issue the notice of the meeting
within 21 days from the date of the deposit of requisition(application) to convene the
meeting on a day not later than 45 days from the date of deposit of the requisition, the
meeting may be called:
(a) In the case of company having a share capital, by the requisitionists representing
either a majority in value of the paid up share capital held by all of them or not less than
one tenth of the paid up share capital of the company having the right of voting,
whichever is less; or
(b) In case of a company not having a share capital, by the requisitionists representing not
less than one-tenth of the total voting power of all the members of the company
[Section169(6)].
Such a meeting must be held within a period of three months from the date of the deposit
of requisition by the requisitionists or any of them. The meeting shall be called in the
same manner as nearly as possible that in which Board meeting are called [Section
169(7)].
By the Company Law Board: If for any reasons it is ‘impracticable' to call a meeting of
the company other than an annual general meeting in any manner in which the meeting of
that company may be called or hold or to conduct it in any manner prescribed by the Act
and the Articles, the Company Law Board, under Section 186, may, either on its own
motion (suo motu) or on the application of any director of the company or any member
thereof would be entitled to vote at the meeting, order a meeting to be called ,held and
conducted in such a manner as it thinks fit and give such directions as it thinks expedient
(Section 186)
Quorum: Quorum means the minimum number of members that must be present in order
to constitute a meeting and transact business thereat. Thus, quorum represents the number
of members on whose presence the meeting of a company can commence its
deliberations. Unless the articles provide for a larger number, five members, personally
present in the case of a public company and two in the case of any other company form
the quorum for a general meeting (Section 174).
Resolution: The purpose of a meeting is to arrive at decisions and the sense of a meeting
is ascertained by voting upon proposals put to the meeting. A formal proposal put to the
meeting is resolution. A company expresses its will by the mean of resolutions.
There are only two kinds of resolutions under the Act, ordinary and special, and they are
defined in Section 189. Some writers classify resolutions into three types namely,
ordinary, special and resolutions requiring special notice.
Ordinary Resolution: This is resolution passed by a simple majority of those present in
person or by proxy where proxies are allowed and voting upon the resolution. Members
not participating in voting are not taken into account. As distinguished from a simple
majority, an absolute majority is a majority of all those entitled to vote whether they
attend or not.
Special Resolution: Apart from ordinary resolutions, various sections of the Act provide
that certain things can be done by a company with the authority of a special resolution
passed at a duly constituted general meeting. A special resolution is an artificial
conception of the Act, requiring a larger majority than an ordinary resolution. It has been
defined by Section 189(2) as follows:
“A resolution shall be a special resolution when:
(a) the intention to propose the resolution as a special resolution has been duly specified
in the notice calling the general meeting or other intimation given to the members of the
resolution;
(b) The notice required under the Act has been duly given of the general meeting; and
(c) The votes cast in favour of the resolution (whether on a show of hands, or on a poll as
the case may be are not less than three times the number of the votes, if any, cast against
the resolution by members so entitled and voting”;