Corporate Meetings

 “Meeting may be defined as gathering or assembling or getting together of a number of persons for transacting any lawful business.”

·         There must be at least two persons to constitute a meeting.

·         The business of the meeting is conducted in the form of resolutions proposed or passed.

Types of Company Meetings

Broadly, meetings in a company are of the following types:

A. Statutory Meeting:

A public company limited by shares or a guarantee company having share capital is required to hold a statutory meeting. Such a statutory meeting is held only once in the lifetime of the company. Such a meeting must be held within a period of not less than one month or within a period not more than six months from the date on which it is entitled to commence business i.e. it obtains certificate of commencement of business. In a statutory meeting, the following matters only can be discussed;

·         Floatation of shares / debentures by the company

·         Modification to contracts mentioned in the prospectus

The purpose of the meeting is to enable members to know all important matters pertaining to the formation of the company and its initial life history. The discussed include which shares have been taken up, what money have been received, what contracts have been entered into, what sums have been spent on preliminary expenses, etc.  the members of the company present at the meeting may discuss any other matter relating to the formation of the Company or arising out of the statutory report also, even if no prior notice has been given for such other discussions but no resolution can be passed of which notice have not been given in accordance with the provisions of the Act.

A notice of at least 21 days before the meeting must be given to members unless consent is accorded to a shorter notice by members, holding not less than 95% of voting rights in the company.

A statutory meeting may be adjourned from time to time by the members present at the meeting.

The Board of Directors must prepare and send to every member a report called the "Statutory Report" at least 21 days before the day on which the meeting is to be held. 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, and 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 the Registrar for registration immediately after copies have been sent to the members of the company.

A list of members showing their names, addresses and occupations together with the number of shares held by each member must be kept in readiness and produced at the commencement of the meeting and kept open for inspection during the meeting. 

If default is made in complying with the above provisions, every director or other officer of the company who is in default shall be punishable with fine up to Rs. 500. The Registrar or a contributory may file a petition for the winding up of the company if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting on or after 14 days after the last date on which the statutory meeting ought to have been held.

Contents of Statutory Report must provide the following particulars:-

 (a)The total number of shares allotted, distinguishing those fully or partly paid-up, otherwise than in cash, the extent to which partly paid shares are paid-up, and in both cases the consideration for which they were allotted.

(b) The total amount of cash received by the company in respect of all shares allotted, distinguishing as aforesaid.

(c) An abstract of the receipts and payments up to a date within 7 days of the date of the report and the balance of cash and bank accounts in hand, and an account of preliminary expenses.

(d) 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.

(e) The names, addresses and occupations of directors, auditors, manager and secretary, if any, of the company and the changes which have taken place in the names, addresses and occupations of the above since the date of incorporation.

(f) Particulars of any contracts to be submitted to the meeting for approval and modifications done or proposed.

(g) If the company has entered into any underwriting contracts, the extent, if any, to which they have not been carried out and the reasons for the failure.

(h) The arrears, if any, due on calls from every director and from the manager.

(i) The particulars of any commission or brokerage paid or to be paid, in connection with the issue or sale of shares or debentures to any director or to the manager.

B. Annual General Meeting:

Must be held by every type of company, public or private, limited by shares or by guarantee, with or without share capital or unlimited company, once a year. Every company must in each year hold an annual general meeting. Not more than 15 months must elapse between two annual general meetings. However, a company may hold its first annual general meeting within 18 months from the date of its incorporation. In such a case, it need not hold any annual general meeting in the year of its incorporation as well as in the following year only.

In the case there is any difficulty in holding any annual general meeting (except the first annual meeting), the Registrar may, for any special reasons shown, grant an extension of time for holding the meeting by a period not exceeding 3 months provided the application for the purpose is made before the due date of the annual general meeting. However, generally delay in the completion of the audit of the annual accounts of the company is not treated as "special reason" for granting extension of time for holding its annual general meeting. Generally, in such circumstances, an AGM is convened and held at the proper time. All matters other than  the accounts are discussed. All other resolutions are passed and the meeting is adjourned to a later date for discussing the final accounts of the company. However, the adjourned meeting must be held before the last day of holding the AGM. 

C. Extraordinary General Meeting:

Any general meeting of the company which is not an Annual General Meeting or a Statutory Meet­ing is called Extraordinary General Meeting. An Extraordinary General Meeting is held for dealing with some business of special or extraordinary na­ture and which is outside the scope of the Annual General Meeting.

This meeting is also held to trans­act some urgent business that cannot be deferred till the next Annual General Meeting. This meeting may be called by the Directors or requisitioned by the member’s according to Sec.169 of the Companies Act, 1956. The Board of Direc­tors can be compelled to hold.

Extraordinary Gen­eral Meeting upon request or requisition made for it, under the following conditions:

(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 requisition 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 requisition, are binding on the com­pany.

D. Meeting of the Board of Directors:

The management of the company is vested on the Board of Directors. Therefore, the Directors are to meet frequently to decide both policy and rou­tine matters.

The provisions regarding Board Meeting are:

1. Board Meeting must be held once in every three calendar months and at least four times in every year. This provision may be exempted by the Central Govt.

2. Notice of Board Meeting shall be given in writing to every director for the time being in India and at his usual address in India.

E. Class Meeting:

These meetings are held by a particular class of shareholders for the purpose of effecting variation in the Articles in respect of their rights and privileges or for conversion of one class into another.

The provision for variation must be contained in the Memorandum or Articles and this variation must not be prohibited by the terms of issue of shares of that particular class. Such resolutions are to be passed by three-fourth majority of the members of that class.

F. Meeting of Creditors:

These meetings are called when the company proposes to make a scheme of arrangement with its creditors. The Court may order a meeting of the creditors or a class of creditors on the application of the company or of liquidator in case of a com­pany being wound-up.

Such a meeting is held and conducted in such a manner as the Court directs. If arrangement is passed by a majority of three-fourth in value of creditors and the same is sanctioned by the Court, it is binding on all the creditors.

G. Meeting of Debenture Holders:

These meeting are called according to the rules and regulations of the Trust Deed or Debenture Bond. Such meetings are held from time to time where the interests of debenture holders are in­volved at the time of re-organisation, reconstruction, amalgamation or winding-up of the company. The rules regarding the appointment of Chairman, no­tice of the meeting, quorum etc. are contained in the Trust Deed.

H. Meeting of Creditors and Contributories:

These meetings are held when the company has gone into liquidation to ascertain the total amount due by the company to its creditors. The main purpose of these meetings is to obtain the approval of the creditors and contributories to the scheme of compromise or rearrangement to save the company from financial difficulties. Sometimes, the Court may also order for such a meeting to be held.

When a company desires to vary the rights of debenture-holders, such meetings are to be held ac­cording to the rules laid down in the Debenture Trust Deed. They are also held to enable the com­pany to issue new debentures or to vary the rate of interest payable to debenture-holders. The term “contributory” covers every person who is liable to contribute to the assets of the company when the company is being wound-up.

Resolutions:
Resolutions mean decisions taken at a meeting. A motion, with or without amendments is put to vote at a meeting. Once the motion is passed, it becomes a resolution. A valid resolution can be passed at a properly convened meeting with the required quorum.

Types of Resolutions:

1.      Ordinary resolution:

An ordinary resolution is one which can be passed by a simple majority. I.e. if the votes (including the casting vote, if any, of the chairman), at a general meeting cast by members entitled to vote in its favour are more than votes cast against it. Voting may be by way of a show of hands or by a poll provided 21 days’ notice has been given for the meeting.

 1.      Special Resolution:

A special resolution is one in regard to which is passed by a 75 % majority only i.e. the number of votes cast in favour of the resolution is at least three times the number of votes cast against it, either by a show of hands or on a poll in person or by proxy. The intention to propose a resolution as a special resolution must be specifically mentioned in the notice of the general meeting. Special resolutions are needed to decide on important matters of the company. Examples where special resolutions are required are:-

·         To alter the domicile clause of the memorandum from one State to another or to alter the objects clause of the memorandum.

·         To alter / change the name of the company with the approval of the central government

·         To alter the articles of association

·         To change the name of the company by omitting "Limited" or "Private Limited". The Central Government may allow a company with charitable objects to do so by special resolution under section 25 of the Companies Act, 1956.

2.      Resolution requiring Special Notice:

There are certain matters specified in the Companies Act, 1956 which may be discussed at a general meeting only if a special notice is given regarding the proposal to discuss these matters at a meeting. A special notice enables the members to be prepared on the matter to be discussed and gives them time to indicate their views on the resolution. In case special notice of resolution is required by the Companies Act, 1956 or by the articles of a company, the intention to propose such a resolution must be notified to the company at least 14 days before the meeting. The company must within 7 days before the meeting give the notice of the proposed resolution to its members. Notice of the resolution is required to be given in the same way in which notice of a meeting is given, or if that is not practicable, the company may give notice by advertisement in a newspaper having an appropriate circulation or in any other manner allowed by the articles, not less 7 days before the meeting.

The following matters requiring Special Notice before they are discussed before the meeting:-

·         To appoint at an annual general meeting appointing an auditor a person other than a retiring auditor.

·         To resolve at an annual general meeting that a retiring auditor shall not be reappointed.

·         To remove a director before the expiry of his period of office.

·         To appoint another director in place of removed director.

·         Where the articles of a company provide for the giving of a special notice for a resolution, in respect of any specified matter or matters.

A resolution requiring special notice may be passed either as an ordinary resolution (Simple majority) or as a special resolution (75 % majority).

 Requisites of a Valid Meetings:

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

1. It must be properly convened. The persons calling the meeting must be authorised to do so.
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 chairperson. The rules of quorum must be maintained and the provisions of the Companies Act, 1956 and the articles must be complied with.
4. The business at the meeting must be validly transacted. The meeting must be conducted in accordance with the regulations governing the meetings.

Notice:

A proper notice of the meetings must be given to the members of the company. The notice must be given 21 days before the date of the meeting. The period of 21 days excludes the day of service of the notice and also the day on which the meeting is to be held.

The length of the notice may be waived:

(a) in the case of an annual general meeting by the consent of all members;

(b) in the case of any other meeting by the consent of the holders of not less than 95% of the paid-up share capital or the total voting power where the company has no share capital.

Notice to whom:

The notice is required to be given to

(a)    all the members of the company who are entitled to vote on the matters which are proposed to be dealt with at the meeting ;

(b)   all the persons who are entitled to a share in consequences of the death and insolvency of a member ;

(c)    the auditor or auditors of the company. Deliberate omission to give notice of the meeting to members or to a single member will make the meeting invalid, but an accidental omission to give notice to or the non-receipt of notice by any member will not invalidate the proceedings at the meeting [Sec. 172 (3)].

Contents of Notice:

Every notice of a meeting is required to specify the place and the day and hours of the meeting and must contain a statement of the business to be transacted at the meeting. If the time of holding meeting and other essential particulars are not specified in the notice, the meeting will be invalid and all resolutions passed at the meeting will be of no effect.

The notice of general meeting must contain a statement of the business to be transacted at the general meeting of the company. The business to be transacted at a meeting may be general business or special business.

Section 173 provides (a) in the case of an annual general meeting, all business to be transacted at the meeting will be deemed special except the business relating to the consideration of accounts, Balance Sheet and reports of the Board of Directors and auditors, the declaration of dividends, the appointment of directors in the place of those retiring and the appointment of and the fixing of the remuneration of the auditors and(b) in the case of any other meeting, all business will be deemed special.

If any special business is to be transacted at an annual general meeting a statement to that effect must be annexed to the notice of the meeting. The statement must set out all material facts concerning each item of business including in particular the nature of the concern or interest therein of every director or other managerial personnel. Thus every notice calling a meeting is required to specify the business to be transacted at the meeting.

A notice of meeting must give a sufficiently full and frank disclosure to the members of the fact upon which they are asked to vote otherwise the resolution passed at the meeting will be invalid.

Quorum:
Quorum refers to the minimum number of members who must be present at a meeting in order to constitute a valid meeting. A meeting without the minimum quorum is invalid and decisions taken at such a meeting are not binding. The articles of a company may provide for a quorum without which a meeting will be construed to be invalid.

It has made a substantial departure from the erstwhile provisions. Previously 5 members personally present in case of a public company constituted a quorum. The section 103 stipulates graded requirements of quorum depending upon the number of shareholders. If the number of shareholders as on the date of the general meeting is less than 1000, then 5 members personally present will constitute a quorum. If the number of members of the company as on the date of the general meeting is between 1001 to 5000 then quorum requirement is 15 members personally present and in case the number of members is more than 5000, then quorum requirement is 30 members personally present.

In case of a private company however, the quorum requirement is the same i.e. two members personally present. 

Role of company secretary in convening the meetings

Functions & Duties of Company Secretary in relation to Annual General Meeting:

A)    Before the AGM :

1) Draft balance sheet & P&L A/c.

2) Check provisions of depreciation and transfer to reserves.

3) Draft notice, resolutions, explanatory notes (u/s.173).

4) Draft Directors Report (u/s.217).

5) Printing of Annual Report.

6) Convene Board Meeting for approval of accounts.

7) inform the Stock exchange, the date of AGM (if listed Co.).

8) Authentications of accounts (u/s.215).

9) Authorize the Chairman to sign Directors Report.

10) If a subsidiary Co., then compliance with Sec.212 should be observed.

11) For appt. or re-appt. of auditors, a certificate u/s.224 about the limits of auditor ships is to be obtained.

12) Send B/S and P&L A/c, Directors report, annual reports etc. for printing.

13) After the board meeting approves the accounts, inform stock exchange regarding dividend recommended, tax liability, provision for reserves etc.

14) Send annual reports 21 days before the AGM to all members & auditors.

15) Publish notice in the newspaper.

16) Take board resolution for closure of books. (Member’s register for dividend)

17) Advise the bankers to open a/c for dividend.

18) Register of shareholdings of directors to be kept for inspection of members.

19) If the explanatory statement refers to any documents, requiring approval of AGM, the documents must be readily available for inspection.

20) Registration & rejection of proxies.

21) Keep the members attendance register ready.

22) Make preparations for poll.

23) Prepare replays for possible queries.

24) Keep ready the following:-  MoA, AoA, Annual report, Chairman’s speech, Attendance register, Register of members & debenture holders, proxy register and

25) make available the necessary documents, for inspection at the appropriate time.

A)    During the AGM :

1) Take signatures in attendance registers, and verify with register of members.

2) Give seats to the proxies separately (can only vote, not to speak).

3) Secretary to read notice of the meeting and auditors report.

4) Assist the Chairman in every walks, in a poll and in ascertaining the ‘sense of the meeting’.

5) Give detailed notes on proceedings to prepare the minutes.

B)    After the AGM :

1)      Intimate Stock exchange, send chairman’s speech.

2)      Dispatch Dividend warrants within 30 days of the AGM.

1)      Obtain approval of RBI, if dividend is paid to NRIs.

2)      Prepare the minutes and get chairman’s approval.

3)      File copy of special resolution or other resolutions specified u/s.192 within 30 days in Form No.23, with the ROC.

4)      File within 30 days the B/S, P&L A/c, Auditors report, directors’ report etc., with the ROC (vide sec.220).

5)      Prepare and file Annual Returns within 60 days of the AGM with the ROC.

6)      Intimate the auditors about his appointment within 7 days, if he is not a retiring auditor.

7)      Advise the bank to transfer unpaid dividend to a separate account.

8)      Take follow-up action on all resolutions passed in the AGM.