Company Meeting

 

Introduction

A company being an artificial legal person, can only act through some human intermediary. The various provisions of the Act and rules empower members to do certain things. All decisions of the company are taken in meetings.

 

General

a) Requisites of a Valid Meeting: It must be duly convened, legally constituted and properly conducted.

b) Notice of Meeting Must be Proper and Adequate: For general meetings at least 21 clear days notice must be given to every member and auditor of the company. It must specify the date, time and place of meeting.

c) Chairman of the Meeting: Every meeting is presided over by the chairman who is to conduct the proceedings of the meeting properly. The chairman is either the chairman of the board or elected for every meeting. His main role is to maintain order and decorum in the meeting.

d) Quorum: The quorum is generally laid down in the articles. In the absence of any provision in the articles, the quorum is 5 members for public and 2 members for private company. The articles can not provide for a smaller quorum.

e) Voting: To ascertain the sense of the house the chairman of the meeting can use any of the following:

i. Acclamation (By cheering or clapping)

ii. Voice vote

iii. Division

iv. Show of hands

v. Ballot (which can be open or secret)

vi. Poll (According to the number of shares held by a member. A proxy can only vote on a poll, unless the articles may provide otherwise, say permitting a proxy to vote on a show of hands also)

 

f) Agenda: Every general meeting has an agenda to be sent to every member. An agenda is the statement of business to be conducted in a meeting.

 

g) Minutes: The decisions taken in a meeting are recorded as minutes of the meeting. These minutes shall be evidence of the proceedings recorded therein.

 

Kinds of Meetings

The kinds of meetings of a company are shown below:

company meeting

 

Statutory Meeting

a) Object: The main purpose is to enable the members to know at an early date the financial position and prospects of the company and also to provide them an opportunity of discussion on various matters arising out of promotion and formation of a company.

b) When Held: Only Once in the life time of the company. It is to be held within a period of not less than one month but not more than six months from the date the company is entitled to commence business. This is the first meeting of the shareholders.

c) Not Required to be Held: A private company is not required to hold a statutory meeting. This meeting is also not required to be held by a public company not having share capital or has unlimited liability or a government company.

d) Notice: At least 21 days notice is to be given.

e) Statutory Report: Is presented in this meeting. Its contents include, total shares allotted, total amount of cash received, an abstract of receipts and payments, details of contract, directors, brokerage and commission.

f) In case of default: Penalty is Rs. 5000 and is also a ground for winding up.

 

 

Annual General Meeting (AGM)

a) Which company to hold: Every company either public or private.

b) When to be held: Every calender year, i.e. once annually.

c) Gap between two AGM:

i. First AGM: May be held within 18 months from the date of incorporation.

First AGM must be held not later than 9 months from the date of closing of financial year.

ii. Subsequent AGM: There must be one meeting held in each calendar year.

The gap between two AGMs must not be more than 15 months. This period can be extended to 18 months by the Registrar. Meeting must be held not later than 6 months from the close of the financial year.

iii. Extension of time: Registrar can give extension time upto a maximum of 3 months.

iv. Business to be transacted: Ordinary business like consideration of annual accounts, declaration of dividend, appointment of directors and auditors or any special business may be transacted.

v. Notice: 21 days.

vi. Default: Central government can give directions as it thinks expedient. Penalty provided is Rs. 50,000 or in case of continuing default Rs. 2500 per day.

 

Extraordinary General Meeting (EGM)

All general meetings other than the AGM shall be EGMs. Some of the points relating to EGM are:

 

a) When to be convened: For transacting some urgent or special business that may arise between two AGMs, e.g. removal of a director/auditor.

b) Business to be transacted: All business transacted in EGM is called special business and accompanied by an ‘Explanatory Statement’.

c) Who may call: An EGM may be called by:

i. The board on its own.

ii. The directors on requisition, if the requisitionists are the holders of 1/10 of total voting power.

iii. The requisitionists themselves, if the board does not call the meeting within 45 days of the deposit of a valid requisition. Meeting must be held within 3 months of the date of deposit of requisition.

iv. The Tribunal (NCLT).

 

d) An institutional shareholder can requisition an EGM.45

 

e) All reasonable expenses incurred by the requisitionists by reason of the failure of the board to call a meeting shall be repaid to the requisitionist by the company.

 

Board Meeting

a) When to hold: Atleast once in every three calendar months and 4 meetings every year.46

b) Notice: To be given to every director in writing. No form or period of notice is laid down. Usually a week’s notice is sufficient. The notice must state, the date, time and place of meetings.

c) Quorum: 1/3 of the total strength or two, whichever is higher.

d) Passing of resolution by circulation is permissible.

 

 

 

 

 

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