Taxmann's Drafting Pleadings & Appearances (Drafting/DPA) | CRACKER

Chapter 5 Drafting and conveyancing relating to various deeds and documents-II

Chapter 6 Drafting and conveyancing relating to various deeds and documents-III

Chapter 7 Drafting and conveyancing relating to various deeds and agreements-IV

Chapter-wise Marks Distribution

Note: J: June; D: December

Previous Exams Trend Analysis

I-10 PREVIOUS EXAMS TREND ANALYSIS

Chapter-wise Comparison with Study Material

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SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA AND MINUTES OF COMPANY’S MEETINGS RESOLUTION CHAPTER

COLLECTIVE DECISION MAKING PROCESS IN COMPANIES

Q1: “A Company is an artificial judicial person created by Law”. Comment. (June 2019, 5 Marks)

Ans.: A company is incorporated under Companies Act, 2013. It is an artificial judicial person created by law having its own entity distinct from its members. Following are the landmark judgments:-

In the case of Salomon vs. Salomon and Company Limited (1897) A.C. 22, the principle of the separate legal entity of a company was recognized by the House of Lords. It was held that once the company is incorporated, it becomes a separate entity in the eyes of law independent of a company from Mr. Salomon.

In the case of Re. Kondoli Tea Co. Ltd., (1886) ILR 13 Cal. 43, the Calcutta High Court recognised the principle of separate legal entity much earlier than the decision in Salomon’s case.

Certain persons transferred a Tea Estate to a company and claimed exemptions from ad valorem duty on the ground that they themselves were also the shareholders in the company. It was nothing but a transfer from them in one name to themselves under another name. While rejecting this plea, Calcutta High Court observed:

“The company was a separate person, a separate body altogether from the shareholders and the transfer was as much a conveyance, a transfer of the property, as if the shareholders had been totally different persons.”

Thus a company being an artificial judicial person, it is capable of acting in its own name, entering into contracts. owning and holding property in its own name, sue and to be sued in its name. However, it expresses its will or takes its decisions through natural persons i.e. directors or members.

3.2 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

Q2: ‘Corporate decision making process has to be collective as per law’. Comment. (December 2019, 5 Marks)

Ans.: A company is a separate legal entity. It is an artificial judicial person created by Law. It acts though its directors and members by passing resolutions at validly held meetings.

A Meeting has been defined in the case of In Re. Associated Color Laboratories Ltd. (1970) 12 D.L.R. as “Coming together of two or more persons face to face so as to be in each other’s presence or company”

Decisions of the Board of Directors

The will of the Board of Directors is expressed through Resolutions at meetings of the Board or those passed by circulation. General Meetings of the members provide a forum for them to express their will with regard to the management of the affairs of the company. The primary purpose of a Meeting is to ensure that a company gives reasonable and fair opportunity to those entitled to participate in the meeting to take decisions as per the prescribed procedures.

The meetings of a company under the Companies Act, 2013 can be classified as under:

Meetings of the Directors and their Committees

Meetings of Members which can further be classifies as:-

Annual General Meetings (AGM)

Extraordinary General Meetings (EGM) Class Meetings.

The following resolutions can be passed at general meetings or through postal ballots:

Ordinary Resolutions: Resolution by majority of ≥51%

Special Resolutions: Resolution by majority of ≥75%

Q3: Bank was authorised by its Articles to issue bonds. The directors issued bond to ‘A’ without the requisite resolution. A filed a suit for recovery of the money against the company. The company resisted the suit on the ground that there was no resolution passed. Will ‘A’ succeed? (June 2019, 4 Marks)

Ans.: Meaning: According to the doctrine of indoor management, a person entering into a transaction with the company needed to satisfy that his proposed transaction is not inconsistent with the articles and memorandum of the company. He is not bound to see the internal irregularities of the

company and if there are any internal irregularities, the company will be liable to honour its part of the contract. This doctrine was laid down in the case of:

Royal British Bank v. Turquand (1856) 6 E&B 327

The directors of the company borrowed some money from the plaintiff. The article of the company provides for the borrowing of money on bonds but there was a necessary condition that a resolution should be passed in general meeting. Now in this case shareholders claims that as there was no such resolution passed in general meeting so the company is not bound to pay the money. It was held that the company is bound to pay back the loan. As directors could borrow but subjected to the resolution, so the plaintiff had the right to infer that the necessary resolution must have been passed. It was held that

“Outsiders are bound to know the external position of the company, but are not bound to know its indoor management.”

Conclusion

In the present case, ‘A’ will succeed to recover his money as he was totally oblivious of the fact that a resolutions needs to be passed by the company before issuing of any bond. According to the doctrine of indoor management, A is well within its capacity to assume that all the necessary resolutions must have been passed by the directors of the company.

Q4: Two shareholders sued the directors of a company, alleging various fraudulent and illegal transactions, whereby the company’s property was misapplied. The transactions were, however, of such nature as the majority of shareholders had the power to confirm. Will such suit succeed? Why?

(June 2019, 4 Marks)

Ans.: A company is a legal entity separate from its shareholders. The Court will not interfere with the internal management of companies acting within their powers. Where an ordinary majority of members can ratify the act, the Court will not interfere. This simply means, if the majority can ratify an act, the minority cannot sue.

Foss v. Harbottle (1843) 2 Hare 461, 67 ER 189

In this case two shareholders commenced legal action against the promoters and directors of the company alleging that they had misapplied the company assets and had improperly mortgaged the company property. The Court rejected the two shareholders’ claim and held that a breach of duty by the directors of the company was a wrong done to the company for which it alone could sue. In other words, the proper plaintiff in that case was the company and not the two individual shareholders.

3.4 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

Conclusion

Thus the suit filed by two shareholders against the directors of a company for alleged fraudulent act causing losses to the company will not succeed because if the majority of shareholders had the power to confirm the act of the directors, in such case any suit against the directors will not survive.

Q5: Distinguish between the following; Ordinary Resolution and Special Resolution. (June 2019, 4 Marks)

Ans.: The following are the differences between Ordinary Resolution and Special Resolution:-

S No.

ORDINARY RESOLUTION SPECIAL RESOLUTION

1. An ordinary resolution is one which is passed in the company’s general meeting by a simple majority of votes.

A Special Resolution is one which is passed in the company’s general meeting by a special majority i.e. the favourable votes whether in person or by proxy, should not be less than three times the votes cast against the resolution by members so entitled.

2. All matters relating to the company’s business, except those which need to be settled by a special resolution, are settled by an ordinary resolution.

3. No notice is required to be given for moving an ordinary resolution.

A special resolution is meant to make decisions in important matters and protect the rights of company’s members.

A prior notice needs to be given for moving a special resolution in any meeting of the company and the notice should contain the intention to propose the resolution as special resolution should be mentioned speci cally.

4. Ordinary Resolution is one wherein simple majority is required to move the resolution at the general meeting.

5. Ordinary resolution requires the consent of at least 51% members, in favour of the resolution.

6. The copy of an ordinary resolution, signed by the of cer of the company should be led with the registrar only in certain cases.

Special Resolution means a resolution in which super majority is needed to pass the resolution at the general meeting.

Special resolution requires the consent of at least 75% members, in favour of the resolution.

A printed or handwritten copy of a special resolution, containing the signature of the of cer of the company must be led with the Registrar of Companies within 30 days.

7. Ordinary businesses are transacted at annual general meetings. Special businesses are transacted at Annual general meetings as well as extraordinary general meetings.

Q6: The directors of the company were authorised under the Articles of Association of Company to borrow ` 20000 without the consent of shareholders in general meeting. The directors themselves let ` 50000 to the company without such consent. Is the company held liable for ` 50000. (June 2019, 4 Marks)

Ans.: Doctrine of indoor management

According to the doctrine of indoor management, a person entering into a transaction with the company only needed to satisfy that his proposed transaction is not inconsistent with the articles and memorandum of the company. He is not bound to see the internal irregularities of the company and if there are any internal irregularities, the company will be liable to honour its part of the contract.

Exception to doctrine of indoor management

The doctrine of indoor management will not apply if the person dealing with the company has a slight knowledge about the lack of authority of the person who is acting on behalf of the company in this situation the doctrine will not apply.

Howard vs. Patent Ivory Company (1888) 38 Ch D 156, the article of the company empowered directors to borrow up to 1000 pounds only. However, they could extend the limit of 1000 pound by consent in general meeting. Without such permission, they took 3500 pounds from one of the directors who took debentures. Later on, the company refused to pay back. The court held that the company is only liable to pay back 1000 pounds because the director had noticed about the limit and condition.

Conclusion

This problem refers to the exception to doctrine of indoor management. In this case, the company is liable for only ` 20000 which was authorized by Article of Association. The company will not be held liable for ` 50000 as this amount was in excess of the borrowing capacity of the company under Articles of Association and the director of a company should be well informed of the internal affairs and capacity of the company.

3.6 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

Q7: Delegation of powers by Board of Directors. (December 2021, 4 Marks)

Ans.: Subject to the provisions of the Articles of the company, the Board may delegate any of its powers to Committees with or without such restrictions and limits as may be imposed. According to First Proviso to sub-section (3) of section 179 of the Act, the Board may, by a Resolution passed at a Meeting, delegate certain powers to any Committee of Directors, the Managing Director, the Manager or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, on such conditions as it may specify.

For delegation of powers, a board resolution must be passed at meeting of Board of Directors. A list of such powers is given in Annexure IF.

Q8: Mention the practical aspects while drafting resolutions both for board and general meeting. (June 2021, 4 Marks)

Ans.: The following points should be remembered while drafting resolutions, both for Board and general meetings:

a. All essential facts are included in the resolution e.g. the resolution for re-appointment of a managing director should indicate that the re-appointment is subject to the approval of the Central Government if approval of the Central Government is required and should also cover the period of appointment, terms and conditions of such appointment.

b. Surplus and meaningless words or phrases should not be included in resolutions.

c Resolutions must indicate the relevant provisions or sections of the Act and the Rules pursuant to which they are being passed.

d. If a resolution is one which requires the approval of the Central Government or confirmation of the National Company Law Tribunal/Court, this must be stated in the resolution.

e. A resolution must indicate when it will become effective.

f A resolution must confine itself to one subject matter and two distinct matters should not be covered in one resolution.

g. A resolution should be crisp, concise and precise and should be flexible enough to take care of eventualities.

(Note: This list is inclusive and not exhaustive)

SECRETARIAL STANDARD ON BOARD MEETINGS (SS-1)

Q9: Describe the applicability of Secretarial Standard-1 under the Companies Act, 2013, issued by The Institute of Company Secretaries of India on Meeting of Board of Directors. (June 2019, 4 Marks), (December 2020, 4 Marks) OR

‘Every company is required to observe Secretarial Standard-1 (SS-1)’. Comment and illustrate the class of companies which are exempted to observe SS-1. (December 2022, 4 Marks)

Ans.: Secretarial Standard-1 issued by The Institute of Company Secretaries of India is applicable on meeting of Board of Directors as well as Meetings of Committees of the Board as given below:-

Applicability of Secretarial Standard-1 on meeting of Board of Directors: Secretarial Standard-1 prescribes a set of principles for convening and conducting meetings of the Board of Directors. According to section 118(10) of the Companies Act, 2013, every company is required to observe Secretarial Standard-1 except:

(

(

i) One Person Companies (OPC) having only one Director on its Board and

ii) Such other class or class of companies which are exempted by Central Government through Notification. E.g. companies licensed under Section 8 of the Companies Act, 2013.

Exemptions shall be applicable to a Section 8 company provided it has not committed a default in filing its Financial Statements or Annual Return with the Registrar of Companies.

Applicability of Secretarial Standard-1 on Meetings of Committees of the Board: SS-1 is also applicable to the Meetings of Committees of the Board. At present, Companies Act, 2013 provides for the constitution of following mandatory committees of the Board based on the certain thresholds:

Audit Committee

Nomination and Remuneration Committee

Corporate Social Responsibility (CSR) Committee

Stakeholders Relationship Committee

In case any other committee of the Board is constituted voluntarily or pursuant to any other statute or regulations etc., the company may comply with SS-1 with respect to meetings of such committee as a good governance practice.

3.8 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

Q10: Comment on applicability of Secretarial Standard (SS) under the following circumstances:

(

a) One Person Company (OPC) default to filing financial statements u/s 137 and annual return u/s 92 of the Companies Act, 2013.

(

b) Private Company having two directors default in submitting financial statements u/s 137 and annual return u/s 92 of the said Act.

(

c) Entity u/s 8 of the Companies Act, 2013 default in filing financial statement u/s 137 of the said Act.

(

d) Entity u/s 8 of the Companies Act, 2013, default in filing annual return u/s 92 of the said Act. (June 2021, 1 Mark each)

Ans.: Applicability of Secretarial standards in the following cases:—

(

a) SS-1 is applicable to all companies incorporated under the Act except One Person Company (OPC) in which there is only one Director on its Board.

(

b) Section 118(10) of the Companies Act, 2013, provides that every company shall observe Secretarial Standards with respect to general and board meeting specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved as such by the Central Government. Thus Secretarial standards are applicable on a private company having two directors.

(

c) In terms of sub-section (10) of Section 118 of the Act, every company is required to observe SS-1. Such class or class of companies which are exempted by Central Government through Notification e.g. companies licensed under Section 8 of the Companies Act, 2013, however, this exemptions shall be applicable to a Section 8 company provided it has not committed a default in filing its Financial Statements with the Registrar of Companies.

(

d) In terms of sub-section (10) of Section 118 of the Act, every company is required to observe SS-1. Such class or class of companies which are exempted by Central Government through Notification e.g. companies licensed under section 8 of the Companies Act, 2013, however, this exemptions shall be applicable to a Section 8 company provided it has not committed a default in filing its Annual Return with the Registrar of Companies.

Q11: What are the provisions regarding quorum for the meeting of Board of Directors under Companies Act, 2013. Can article provide for the different quorum than the Companies Act, 2013?

(June 2019, 4 Marks)

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.9

Ans.: According to Section 174 of the Companies Act, 2013, following shall be the Quorum for meetings of Board:-

The quorum for a meeting of the Board of Directors of a company shall be one third of its total strength or two directors, whichever is higher. Participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section.

The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company and for no other purpose.

Where at any time the number of interested directors exceeds or is equal to two thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time.

Where a meeting of the Board could not be held for want of quorum, then, unless the articles of the company otherwise provide, the meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.

The Companies Act, 2013 does not provide cap on higher number of quorum. As per Secretarial Standard- 1, Articles of Association may provide for higher number of directors for quorum.

Q12: What is a Resolution by Circulation as per section 175 of the Companies Act, 2013 ? (December 2020, 4 Marks)

Ans.: ‘Passing the Resolution by Circulation’ is an alternative method for urgent matters instead of convening the Physical Board Meeting. Resolution shall be considered as passed when approved by the majority of Directors. Resolutions passed by circulation are deemed to be passed at a duly convened Meeting of the Board and have equal authority.

As per the provisions of section 175 of Companies Act, 2013:

i No resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the case may be, at

3.10 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

their addresses registered with the company in India by hand delivery or by post or by courier, or through such electronic means as may be prescribed and has been approved by a majority of the directors or members, who are entitled to vote on the resolution:

Provided that, where not less than one-third of the total number of directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.

ii A resolution under sub-section (i) shall be noted at a subsequent meeting of the Board or the committee thereof, as the case may be, and made part of the minutes of such meeting.

Q13: When an urgent resolution by circulation can be initiated? (December 2019, 4 Marks)

Ans.: Companies Act, 2013 as well as Secretarial Standard 1 on Meetings of the Board of Directors lists certain items of business which shall not be passed by circulation and shall be placed before the Board at its Meeting. However, other business that requires urgent decisions can be approved by means of resolutions passed by circulation.

Resolutions passed by circulation are deemed to be passed at a duly convened meeting of the board and have equal authority.

Procedure for Resolutions passed by circulation

The chairman of the board or in his absence, the Managing Director or in their absence, any Director other than an Interested Director, shall decide whether the approval of the board for a particular business shall be obtained by means of a resolution by circulation. Where not less than one-third of the total number of directors for the time being require the resolution under circulation to be decided at a meeting, the chairman shall put the resolution for consideration at a meeting of the board.

A resolution proposed to be passed by circulation shall be sent in draft, together with the necessary papers, to all the directors.

Each business proposed to be passed by way of Resolution by circulation shall be explained by a note setting out the details of the proposal.

Q14: What are the powers of Board of Directors of a Company that can be exercised only in a full fledged Board Meeting under the provisions of the Companies Act, 2013. (December 2020, 4 Marks)

Ans.: Following are the powers of the Board to be exercised at Board Meetings as prescribed under the Act:-

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.11

a. To make calls on shareholders in respect of money unpaid on their shares.

b To authorise buy-back of securities under section 68 of the Act.

c To issue securities, including debentures, whether in or outside India.

d. To borrow monies.

e. To invest the funds of the company.

f. To grant loans or give guarantee or provide security in respect of loans.

g To approve nancial statement and the Board’s report.

h To diversify the business of the company.

i To approve amalgamation, merger or reconstruction.

j. To take over a company or acquire a controlling or substantial stake in another company.

k Any other matter which may be prescribed, which at present are as follows:

a. To make political contributions.

b To appoint or remove key managerial personnel (KMP).

c To appoint internal auditors and Secretarial Auditor.

Q15: Describe the specific contents that minutes of a meeting must contain under the provisions of the Companies Act, 2013. (December 2020, 4 Marks)

Ans.: Following are the speci c contents of minutes of a meeting:-

(

a) The Record of election, if any, of the Chairman of the Meeting.

(

b) The fact that certain registers, documents, the Auditor’s Report and Secretarial Audit Report, as prescribed under the Act were available for inspection.

(

c) The Record of presence of Quorum.

(

d) The number of Members present in person including representatives.

(

e) The number of Proxies and the number of shares represented by them.

(

f) The presence of the Chairmen of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee or their authorised representatives.

(

g) The presence if any, of the Secretarial Auditor, the Auditors, or their authorised representatives, the Court/Tribunal appointed observers or scrutinisers.

3.12 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

(

h) Summary of the opening reMarks of the Chairman.

(

i) Summary of the clari cations provided on various Agenda Items.

(Note: This list is inclusive and not exhaustive)

Q16: XYZ Ltd. wishes to convey Meeting of Board of Directors through Electronic mode. Draft a suitable Notice for the same. Assume other information.

(June 2019, 5 Marks) Or

Draft a specimen notice of a board meeting Assume facts.

(June 2021, 4 Marks)

Ans.: XYZ Ltd.

Address: xyzltd@gmail.com

CIN: www.xyz.com

August/03/2020

To, Mr. Ram Aggarwal, Director, New Delhi.

Dear Sir,

1. NOTICE is hereby given that the 2nd meeting of the Board of Directors of the company will be held on Tuesday, 11th day of August 2020 at 11 a.m. at the registered office of the company.

2. The Agenda of the business to be transacted at the Meeting is enclosed.

3. You may attend the Meeting through electronic Mode, the details of which are enclosed. In case you desire to participate through such mode, please send a confirmation via email in this regard to Mr. Raman Singh, Company Secretary of the company at ramansingh@xyzltd.com within 2 days to enable making necessary arrangements. Kindly make it convenient to attend the Meeting.

Yours faithfully, For XYZ Limited (Signature)

Raman Singh Company Secretary

ramansingh@xyzltd.com.

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.13

Q17. Draft a specimen Board Resolution of appointment of Ripudaman Singh as an Independent Director of M/s. Rudraksh Ltd. (December 2020)

Ans.: “RESOLVED THAT pursuant to the provisions of sections 149, 150(2), 152 and any other applicable provisions of the Companies Act, 2013 and the rules made there under read with Schedule IV to the Companies Act, 2013, approval of the Company be and is hereby accorded for appointment of Mr. Ripudaman Singh (DIN No.......), as an Independent Director of the Company to hold the of ce for a period of 3 years i.e. up to ......, .... AND THAT by virtue of sub-section (13) of section 149 of the Companies Act, 2013 he shall not be liable to retire by rotation.”

By Order of the Board of Directors

For M/s. Rudraksh Ltd.

(Signature)

Place: ........ ………. Name

Date: ………. Director/Company Secretary

Q18: Write down the required important practical aspects, while drafting agenda and notes thereon. (December 2019, 5 Marks)

Ans.: Following are the important practical aspects while drafting agenda and notes thereon:

1. Agenda have to be written with special care which not only requires good drafting skills but also an understanding of commercial considerations and the business environment. For the purpose divide the agenda into two parts: - the first part containing usual or routine items and the second part containing other items which can be bifurcated as:

a Items for approval.

b Items for information/noting.

2. For each item of the agenda an explanatory note should be annexed providing details like introduction, proposal, with recommendations of the management, provisions of Law, decisions to be taken and interest, if any, of any Directors. The explanatory note may be drafted under the following heads:

a Background (or Introduction)

b Proposal, with recommendations of the management

c Provisions of Law

d. Decisions to be taken

e. Interest, if any, of any Directors.

3.14 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

3. As a good governance practice, the agenda item should be initiated by the concerned department (Head of Department or other authorised person) and approved by the competent authority as may be decided by the Board.

4. The Company Secretary should refer to the Agenda of previous Meetings, to see whether any items had been deferred and should consider whether such items are to be included for discussion at the ensuing Meeting.

5. The Company Secretary should also refer to the Minutes of the Meeting held during the corresponding period of the previous year to see whether there are any recurring periodic items. The Company Secretary should finalise the Agenda in consultation with the Chairman or in his absence the Managing Director or Whole-time Director.

6. The Company Secretary should maintain and refer folder of notes, documents to ensure that all items which require the decision of the Board are included in the Agenda.

7. A separate Agenda item number should be given for items which are brought forward for discussion from a previous meeting.

Q19: Draft a Resolution for appointment of ‘David’ as Company Secretary pursuant to Section 203 of The Companies Act, 2013.

(June 2019, 5 Marks)

Ans.: The Chairman advised the Board that it is proposed to appoint Mr. David who holds the prescribed qualifications as Company Secretary of the company; Mr. David has given his consent to act as Company Secretary, if appointed. The Board agreed with the same and passed the following Resolution:

“RESOLVED THAT pursuant to Section 203 of the Companies Act, 2013 and Rule 8 and Rule 8A of Companies appointment & remuneration of Managerial Personnel Rules, 2014 and other applicable provision if any, of the Companies Act, 2013; Mr. David, holding the prescribed qualification under Section 2(24) of the Companies Act, 2013, be and is hereby appointed as Company Secretary of the company w.e.f April/1/2020, on the terms specified in the draft agreement placed on the table, a copy of which was initialled by the Chairman for the purpose of identification.”

“RESOLVED FURTHER THAT, Mr. David, Company Secretary, shall perform the duties which are required to be performed by a secretary under the Companies Act, 2013 and any other duties assigned to him by the Board or the Chief Executive Officer.”

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.15

“RESOLVED FURTHER THAT, Mr. X, Director be and is hereby authorised to sign and file the necessary forms/documents with the Registrar of companies and make entries, as appropriate, in the registers of the company.”

Q19A: Draft a special resolution of delisting of Securities. Assume facts, if required. (December 2022, 4 Marks)

Ans.: Special Resolution for Delisting of Securities

Proposed by : Mr. .............................

Seconded by : Mr. .............................

The following Resolution having been proposed and seconded by the aforementioned two Members. Was put to vote as a Special Resolution:

“

RESOLVED that, subject to the provisions of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, Securities Contracts (Regulation) Act, 1956, and the Securities and Exchange of Board of India Act, 1992, and the rules framed thereunder and other applicable laws, rules and regulations and guidelines and subject to such other approvals, permissions and sanctions as may be necessary and subject to such conditions as may be prescribed by the Securities and Exchange Board of India and Stock Exchanges while granting such approvals, permissions and sanctions, which may be agreed to by the Board of Directors of the Company, which expression shall be deemed to include any Committee of the Board for the time being, exercising the powers conferred by the Board, the consent of the Company be and is hereby accorded to the Board to voluntarily de-list the equity shares of the Company from ........... ............................. (name of stock exchanges).

“RESOLVED FURTHER that the Board be and is hereby authorised to do all acts, deeds and things as it may in its absolute discretion deem necessary and appropriate to give effect to the above Resolution.” On a show of hands, the Chairman declared the aforesaid Special Resolution carried with the requisite majority.

Vote of Thanks

There being no other business to transact, the Meeting closed with a vote of thanks to the Chair.

Date : .................... ........................................

Place: ....................

CHAIRMAN (DIN...…)

Q20: Draft a specimen affidavit for issue of duplicate Share Certificate, as the original Share Certificate issued by the Company has lost. Assume data. (June 2019, 4 Marks)

3.16 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

Ans.:

AFFIDAVIT

(On stamp paper of ` 10 or above)

I, ABC S/o X, R/o __do hereby solemnly affirm and declare oath as under:

1. That I am a Shareholder of XYZ Ltd, holding 1000 Equity shares having Folio distinctive Nos. 18 to 1018 issued by the company.

2. That the said share certificates, covering the above said shares have been lost.

3. That the FIR has been registered in Saket Police Station. vide No. 54/2019 dated 3rd June 2019.

4. That I have not sold and/or transferred the said shares in favour of any other person or persons.

5. That I have not pledged, created any charge or encumbrance on said shares in favour of any person or persons.

6. That I have filed a request to the Company to issue duplicate certificate for the said shares.

VERIFICATION

I, the above named deponent, verify that the contents of paragraphs 1 to 6 of this affidavit are true to my Personal knowledge and belief.

Solemnly affirmed before me on this……… day of……… 2013 of……… (time) by the deponent.

Commissioner)

SECRETARIAL STANDARD ON GENERAL MEETINGS: (SS-2)

Q21: Describe Secretarial Standard - 2 as stipulated under the Companies Act, 2013 on the mode of delivery of Notice.

(June 2022, 5 Marks)

Ans.:

According to Secretarial Standards - 2 the mode of delivery of notice shall: Be sent by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means:

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.17

Be sent to Members by registered post or speed post or courier or e-mail and not by ordinary post in the following cases: if the company provides the facility of e-voting; if the item of business is being transacted through postal ballot.

If a particular mode of delivery is specified by member, notice shall be sent by that mode at the expense of the member as may be prescribed by the company.

Be sent to Members by registered post or speed post or e-mail if the Meeting is called by the requisitionists themselves where the Board had not proceeded to call the Meeting.

In case of companies having a website, if any, the Notice shall simultaneously be hosted on the website till the conclusion of the Meeting unless otherwise provided in the articles.

Q22: Minutes of the third Annual General Meeting of CJV Ltd. with agenda of adoption of accounts and declaration of dividend featured for consideration and decision. (June 2022, 4 Marks)

Ans.: MINUTES OF THE PROCEEDINGS OF THE 3rd ANNUAL GENERAL MEETING OF CJV Ltd. held on 3rd May 2020 at Registered office, CP, New Delhi, at 9 a.m.-3 p.m. The following were present:

1. Mr. W (in the Chair)

2. Mr. B (Director and Member)

3. Mr. C (Director)

4. Mr. D. (Director and Member)

5. Mr. E. (Director and Chairman of Audit Committee)

6. Mr. F (Company Secretary)

7. (Members present in person) [state number]

8. ....................representing ....................shares (Members present by Proxy)

9. Mr. G, Partner of M/s. ...................., Chartered Accountants, Auditors of the Company, was present.

Mr. H, Practising Company Secretary, Secretarial Auditor of the Company, was also present.

The Chairman delivered his speech. The business of the Meeting as per the Notice thereof was thereafter taken up item-wise.

Adoption of Consolidated and Standalone Financial Statements

The Chairman requested Mr. F to read the Ordinary Resolution for the adoption of the Financial Statements for the year ended 31st March, 2022 and Mr. F read out the Ordinary Resolution as follows:

3.18 SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA

“RESOLVED that the Financial Statements of the Company for the year ended 31st March, 2022, including Consolidated Financial Statements for the said financial year, along with the Reports of the Board of Directors and the Auditors, as circulated to the Members and laid before the Meeting, be and are hereby approved and adopted.”

After the above Resolution was proposed and seconded, but before it was put to vote, the Chairman invited Members (other than those present by Proxy) to make observations and comments, if any, on the Report and financial statements, as well as on the other Resolutions set out in the Notice convening the Meeting. Some Members made their observations and comments and raised queries on the Annual Report and Financial Statements and other items set out in the Notice and the Chairman answered their queries. Before putting the Resolution to vote, the Chairman reminded the Meeting that Proxies were not eligible to vote on a show of hands. Thereafter, the Chairman put the Resolution for the adoption of the Financial Statements, Consolidated Financial Statements and the Reports thereon to vote as an Ordinary Resolution. On a show of hands, the Chairman declared the aforesaid Ordinary Resolution carried by the requisite majority.

Declaration of Dividend

Mr. F read out the following Resolution:

“RESOLVED that the dividend @ Re.1 on the equity shares of Rs. 10 each, fully paid-up, be and is hereby declared for payment, to those Members whose names appear on the Company’s Register of Members on 31st March 2022. ”.

The Resolution was proposed by Mr... and seconded by Mr.., and was put to vote as an Ordinary Resolution.

On a show of hands, the Chairman declared the aforesaid Ordinary Resolution carried unanimously.

Q23: ABC Ltd. called an Annual General Meeting on 28th December, 1998. As the quorum was not present on that day, the meeting was adjourned to 4th January, 1999 on which date the meeting was duly held. No other AGM was held in 1999. Can the company be prosecuted for not holding AGM every year? (June 2019, 4 Marks)

Ans.: Section 96 of the Companies Act, 2013 deals with Annual General Meeting. It should be held once in each calendar year.

First annual general meeting of the company should be held within 9 months from the closing of the first financial year. Hence it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation.

SECRETARIAL PRACTICE IN DRAFTING NOTICE, AGENDA 3.19

Subsequent annual general meeting of the company should be held within 6 months from the date of closing of the relevant financial year. The gap between two annual general meetings shall not exceed 15 months.

Meenakshi Mill Company Ltd. v. Assistant Registrar of Joint Stock Companies AIR 1938

In this case, the company failed to call an annual general meeting. The Company had called general meeting in December, 1934 which was adjourned and held on March 1935. It was pleaded by the company that since the general meeting called on 30th December, 1934, was adjourned to 31st March, 1935, and was held on that date, it follows that general meeting was held in 1934 and in 1935, and the general meeting held on the 28th January, 1936, was within 15 months of 31st March, 1935. It was held by the Court that the annual general meeting held in March 1935 was the adjourned meeting of 1934. There shall be a general meeting held once at least in every year, that is, one meeting per year, and as many meetings as there are years. 1935 is a separate year and distinct meeting should be held. The Company was convicted.

Conclusion

In the present case ABC Ltd. called an AGM on 28th December, 1998 and because of want of quorum, the meeting was adjourned and the meeting was held on 4th January 1999. The meeting held on 4th January, 1999 was the adjourned meeting of 1998. Thus, the company must hold meeting for the financial year 1999. If it is not doing so, company can be prosecuted for not holding AGM every year.

Q24: Draft a specimen notice by Requisitionists convening an Extraordinary General Meeting as per annexure VII in this regard under the Companies Act, 2013. (December 2019, 8 Marks)

Ans.: Following is the notice by Requisitionists convening an Extra-ordinary General Meeting:

NOTICE is hereby given that the persons named below, who are Members of ABC Ltd, having its registered office at ......., and who have requisitioned the convening of an Extraordinary General Meeting of the Company, hereby, in exercise of the powers and rights conferred by Section 100 of the Companies Act, 2013, give notice that the said requisitioned meetings shall be held on 3rd day of June 2019, at 2 p.m. at the registered office.

For considering and, if thought fit, passing the following Ordinary/Special Resolution:

REMOVAL OF MR. RAM (DIN: …) FROM THE POST OF DIRECTOR OF THE COMPANY

DRAFTING PLEADINGS & APPEARANCES (DRAFTING/DPA) | CRACKER

AUTHOR

PUBLISHER

DATE OF PUBLICATION

EDITION

ISBN NO

NO.OF PAGES BINDING TYPE

: Ritika Godhwani : TAXMANN : JANUARY 2023 : 5th Edition

: 9789356224759 : 394 :

DESCRIPTION

Rs. 550 USD 36

This book is prepared exclusively for the Professional Level of Company Secretary Examination requirement. It covers the questions (topic/sub-topic wise) & detailed answers strictly as per the syllabus of ICSI.

The Present Publication is the 5th Edition for CS-Professional | June/Dec. 2023 Exams. This book is authored by Adv. Ritika Godhwani, with the following noteworthy features:

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• Solved Paper: December 2022 | New Syllabus

•[Arrangement of Questions] Questions in each chapter are arranged 'sub-topic wise'

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