16 Company Meetings-IGeneral
A meeting may be generally defined as a gathering or assembly, getting together of a number of persons for transacting any lawful business, for entertainment or the like. There must be at least two persons to constitute a meeting. However, in certain exceptional cases, even one person may constitute a valid meeting. 1 Company meetings must be convened and held in perfect compliance with the applicable provisions of the Companies Act, 2013 and the Rules framed thereunder.
Company meetings may be classified as :
1.Shareholders’ meetings :
(a)Statutory meeting,
(b)Annual General Meeting (AGM),
(c)Extraordinary General Meeting (EGM), and
(d)Class meetings.
2.Board meetings;
3.Meetings of the Committees of the Board;
4.Meetings of Debenture-holders;
5.Meetings of Creditors :
(a)for purposes other than winding-up, and
(b)for winding-up;
6.Meetings of contributories in winding-up.
1.These exceptional circumstances are discussed later.
Para 16.4
Every meeting, in order to be valid, must be duly convened, properly constituted and conducted.
This means that :
(i)the meeting must have been convened by the proper authority. The proper authority to convene the meeting is the Board of directors, shareholders or Tribunal; and
(ii)proper and adequate notice must have been given to all those entitled to attend.
The proper authorities to call the meetings are :
(
a) Board of Directors - The Articles of Association of a company normally empower the Board of directors to convene general meetings. However, Board of directors have this power at common law even if it is not expressly conferred on them. Notice of a meeting given by the Secretary without the sanction of the Board of directors is invalid.
(
b) Shareholders - The members of a company have, in certain circumstances, the right to insist on the calling of an extraordinary meeting [ For details, please see discussion under Para 17.3 ]
(c) Tribunal [Sections 97 and 98] - If for any reason there occurs a default in holding an AGM, then the Tribunal may, on a petition of any member, direct the calling of AGM (Section 97). In case of an Extraordinary General Meeting (EGM), Tribunal has been conferred with the similar powers. However, an EGM may be called or directed to be called not only on a petition of any member but also on a petition of any director or even suo motu. But, power to call an EGM can be exercised only where it has become impracticable to call, hold or conduct such meeting [Section 98].
A meeting called, held or conducted, as aforesaid, shall be deemed to be a meeting of the company duly called and conducted.
A notice of a company meeting in order to be valid must comply with :
(i)general rules in relation to notice, and (ii)rules as laid down in the Articles and the Companies Act.
16.4-2a GENERAL RULES - The following general rules should be observed while issuing notices of meetings :
(a)The notice may take any reasonable form which sufficiently conveys to the person, entitled to receive it, information enabling the person to attend the meeting and to take part in its deliberations.
(b)The notice must specify the date, time and place of the meeting.
(c)The notice must state the nature of the business to be transacted, that is, a complete agenda of the meeting should be forwarded with or as part of the notice.
(d)The notice must be served in the manner prescribed in the Articles read with the Companies Act.
SS-2, in this regard, contains the following provisions:
1.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 means2.
2.In case the Notice and accompanying documents are given by e-mail, these shall be sent at the Members’ e-mail addresses, registered with the company or provided by the depository, in the manner prescribed under the Act.
In case of the Directors, Auditors, Secretarial Auditors and others, if any, the Notice and accompanying documents shall be sent at the e-mail addresses provided by them to the company, if being sent by electronic means.
3.Notice shall be sent to Members by registered post or speed post or courier or e-mail and not by ordinary post in the following cases:
(a)if the company provides the facility of e-voting;
(b)if the item of business is being transacted through postal ballot;
4.If a Member requests for delivery of Notice through a particular mode, other than one of those listed above, he shall pay such fees as may be determined by the company in its Annual General Meeting and the Notice shall be sent to him in such mode.
5.In case Meeting is called by the requisitionists themselves where the Board had not proceeded to call the Meeting, the Notice shall be sent to Members by registered post or speed post or email.
6.In case of companies having a website, the Notice shall be hosted on the website also.
16.4-2b SERVICE BY POST - WHEN DEEMED EFFECTIVE [SECTION 20] - Service of notice of a meeting will be deemed to have been effected only when it is posted in a letter containing the same. The letter should carry the address noted in the register of members and the same should be substantially accurate though not literally the same. Liverpool Marine Insurance Co. v. Haughton [1874] 23 WR 93. A notice sent to all the members of the company on the register at the date of sending out is good, even though the register is subsequently rectified with retrospective effect to a day prior to that date - Sussex Brik Co. Re [1994] 1 Ch. 598.
Notice of a meeting sent by post shall be deemed to have been served on expiry of 48 hours from the time of posting thereof [Section 20 read along with Rule 35 of the Companies (Incorporation) Rules, 2014]. However, the presumption arises only 583
2.‘Electronic means’ means any communication sent by a company through its authorised and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the Member.
Para 16.4
where the letter has been properly addressed. There is no presumption as to its delivery where the letter itself has not been properly addressed - Inter Sales v. Reliance Industries Ltd. [1997] 35 CLA 370 (Cal.).
The presumption of service of notice shall, however, be rebuttable as there may be cases where the parties may collude with the postal authorities for procuring postal seals - R. Khemka v. Deccan Enterprises (P.) Ltd. [1998] 16 SCL 1 (AP). The Court, however, observed that the burden shall be on the party alleging that he did not receive the notice to rebut the presumption by adducing satisfactory evidence. It is not stated at which post office or box the letter has to be posted, presumably, it has to be posted at or near the place of the registered office of the company. The provisions in the section will not be satisfied if the posting is made deliberately at any far off place, with a view to delay delivery.
(a)The length of the notice must again be according to the provisions of the Articles read with the Companies Act.
(b)The notice must be served to all members at their registered addresses in India.
(
c)The notice must be clear, explicit and unconditional.
(d)Generally speaking, issue of notice is obligatory. But where meetings are fixed to be held on a specified day of each week or month, notice may take the form of reminders only or may be totally avoided - Barron v. Potter [1914] 1 Ch. 895 (Ch.D).
16.4-2c RULES UNDER THE COMPANIES ACT - The notice in order to be valid should be of proper length; should be given to all persons entitled to receive it; and should contain the date, time and place of the meeting and the nature of the business to be transacted thereat.
Sections 20, 96 and 101 and 102 contain provisions with regard to the aforesaid matters.
Length of notice - For general meeting of any kind (Annual or Extraordinary) at least 21 clear days’ notice must be given to members. Notice, as per section 20(2), may be sent by post or by registered post or by speed post or by courier3 or by delivering at his office or address, or by such electronic or other mode as may be prescribed. However, a member may request for delivery of any document through a particular mode, for which he shall pay such fees as may be determined by the company in its annual general meeting.
A general meeting may be called after giving shorter notice than that specified in this sub-section if consent, in writing or by electronic mode, is accorded thereto—
(i)in the case of an annual general meeting, by not less than ninety-five per cent of the members entitled to vote thereat; and
(ii)in the case of any other general meeting, by members of the company—
(a)holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than ninety-five per
3.For the purposes of this section, the term “courier” means a person or agency which delivers the document and provides proof of its delivery - Explanation to section 20.
(
cent of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
b)having, if the company has no share capital, not less than ninety-five per cent of the total voting power exercisable at that meeting: But, where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter.
Such a consent may be received before the meeting is held or after the resolutions are passed - Re Self-Help Private Industrial Estate Pvt. Ltd. [1972]; Re Parikh Engineering and Body Building Co. Ltd. [1975].
The number of days in each case shall be clear days. ‘Clear days’ means the days must be calculated excluding the day on which the notice is issued, 48 hours (i.e., two days) for postal transit [Sec. 20 read along with Rule 35 of the Companies (Incorporation) Rules, 2014] and the day on which the meeting is to be held.
The effect of this provision is that if notice of a general meeting is sent by post, it must be posted at such time as to give 21 clear days’ notice as required by section 101, plus 48 hours in addition. Each of the twenty-one days must be a full calendar day, so that notice can be said to be not less than 21 days’ notice - Bharat Kumar Dilwali v. Bharat Carbon Ribbon Mfg. Co. Ltd. [1973] 43 Comp. Cas. 197 (DB Delhi).4
Therefore, notice of a general meeting must be sent at least 25 days before the date of the meeting (where the service of notice is by post). If, for instance, a general meeting is to be held at 3 p.m. on 6th April, service of the notice of the meeting will be deemed to have been duly effected if it had been despatched by post at any time before 3 p.m. on 13th March. This will satisfy the requirement of 21 clear (full) days’ notice plus 48 hours for transmission by post.
The presumption of deemed delivery cannot be raised when at the time of posting, the post office was, within the knowledge of the company, on strike - Bredman v. Trinity Estate Plc [1989] BCLC 757 (Ch. D).
Publication of a notice in a newspaper - whether obligatory?
It is not obligatory to advertise notice in the newspapers. However, as a matter of abundant precaution, the company may advertise in the newspapers to avoid objection from such of the shareholders as reside outside India and who accidentally may not receive the notices served through post. Publication of a notice in newspaper is not a substitute for the requirement of section 20(2) in respect of sending a notice to every member.
Service of notice to joint shareholders - In case of joint shareholdings, the notice shall be deemed to have been duly served if the same has been served on the joint holder named first in the register of members.
Effect of shorter notice -Any resolution passed at such meeting shall not be effective unless consent is given in writing or by electronic mode— (i)in the case of an annual general meeting, by not less than ninety-five per cent of the members entitled to vote thereat; and
4.Also see Pioneer Motors (P.) Ltd. v. Municipal Council, Nagercoil AIR 1967 SC 684.
Para 16.4
COMPANY MEETINGS-I - GENERAL
(ii)in the case of any other general meeting, by members of the company—
(a)holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than ninety-five per cent of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
(b)having, if the company has no share capital, not less than ninety-five per cent of the total voting power exercisable at that meeting:
But, where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter.
A person who is present and who votes at the meeting, will not be entitled to challenge the resolution on the ground of an invalidity in the notice - In re, British Sugar Refining Co. [1857] 3 K & J 408.
Whom to be given - Section 101 states that notice of every meeting of the company must be sent to :
(
i)every member of the company;
(ii)the legal representative of a deceased member;
(iii)the assignee of an insolvent member;
(iv)the auditor(s) of the company; and
(v)every director of the company.
SS- 2 issued by ICSI on 23rd April, 2015 (Effective from 1.7.2015) mandates giving of notice to Secretarial Auditor, debenture trustee and wherever so required, to other persons also.
Query: As to which Secretarial Auditor is required to attend the AGM - the one for the last financial year whose Secretarial Audit Report has been annexed to the Board’s report or the one appointed for the current financial year in which AGM is being held?
Ans : The Clarification issued by ICSI vide Press Release dated 21.7.2015 (updated as on 26.8.2015), is as follows:
“The Secretarial Auditor for the last financial year whose Secretarial Audit Report has been annexed to the Board’s report is required to attend the AGM to give details about any qualifications/observations/comments or other remarks, if any, in his report and the explanations/comments given by the Board in their report and/or reply to the queries, if any, of the stakeholders on the compliance and governance aspects of the company.
It is advisable that the Secretarial Auditor appointed for the current financial year in which AGM is being held also attends the AGM”.
Where the company has received intimation of death of a Member, SS-2 requires that the Notice of Meeting shall be sent as under:
(a)where securities are held singly, to the Nominee of the single holder;
(b)where securities are held by more than one person jointly and any joint holder dies, to the surviving first joint holder;
(c)where securities are held by more than one person jointly and all the joint holders die, to the Nominee appointed by all the joint holders;
In the absence of a Nominee, the Notice shall be sent to the legal representative of the deceased Member.
SS-2 further provides that no business shall be transacted at a meeting if Notice in accordance with this Standard has not been given. However, any accidental omission to give notice to, or the non-receipt of such notice by, any member or other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting.
Where petitioner himself was a party to board meeting wherein date, place and agenda of general body meeting were fixed and company had proved by producing records that notice of said general meeting was sent to all shareholders by certificate of posting on correct address, petitioner could not complain that he had not received notice of meeting - Westfort Hi-Tech Hospital Ltd. v. V.S. Krishnan [2007] 76 SCL 185 (Ker.).
Contents of the notice - The notice must contain the following particulars :
1. Place, day and time of holding a general meeting Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate* [Section 96(2)].
However, annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance5
Further, the Central Government may exempt any class of companies from the provisions of this sub-section subject to such conditions as it may impose.
A meeting, other than the AGM, does not appear to be subject to the aforesaid provision.
However, a Meeting called by the requisitionists shall be held either at the registered 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.
SS-2 further requires the Notice to contain complete particulars of the venue of the Meeting including route map and prominent land mark for easy location. In case of companies having a website, the route map shall be hosted along with the Notice on the website.
2. Agenda - The notice should contain a statement of the business to be transacted at the meeting (called agenda). If special business is to be transacted, an explanatory statement** shall be annexed to the notice calling such meeting, namely:—
*In case of a Government company, AGM may be held at the registered office or such other place as the Central Government may approve in this behalf—Vide MCA Notification dated 5-6-2015.
**Articles of a private company may allow the company not to annex an explanatory statement— Vide MCA Notification dated 5-6-2015.
5.Inserted by the Companies (Amendment) Act, 2017.
Para 16.4 COMPANY MEETINGS-I - GENERAL
The nature of concern or interest, financial or otherwise, if any, of—
(i)every director and the manager, if any;
(ii)every other key managerial personnel; and
(iii)relatives of the persons mentioned in ( i) and (ii) above.
The statement should also contain any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.
Where any item of special business to be transacted at a meeting of the company relates to or affects any other company, the extent of shareholding interest in that other company of every promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned company shall, if the extent of such shareholding is not less than two per cent of the paid-up share capital of that company, also be set out in the statement.
SS- 2 provides that no items of business other than those specified in the Notice and those specifically permitted under the Act shall be taken up at the Meeting.
A Resolution shall be valid only if it is passed in respect of an item of business contained in the Notice convening the Meeting or it is specifically permitted under the Act.
Items specifically permitted under the Act which may be taken up for consideration at the Meeting are:
(a)Proposed Resolutions, the notice of which has been given by Members;
(b)Resolutions requiring special notice, if received with the intention to move;
(c)Candidature for Directorship, if any such notice has been received.
Where special notice is required of any Resolution and notice of the intention to move such Resolution is received by the company from the prescribed number of Members, such item of business shall be placed for consideration at the Meeting after giving Notice of the Resolution to Members in the manner prescribed under the Act.
Any amendment to the Notice, including the addition of any item of business, can be made provided the Notice of amendment is given to all persons entitled to receive the Notice of the Meeting at least twenty-one clear days before the Meeting.
3. Documents to accompany Notice
SS-2 requires that the Notice of the meeting shall be accompanied, by an attendance slip and a Proxy form with clear instructions for filling, stamping, signing and/or depositing the Proxy form.
4. Right of a member to appoint proxy - The notice should also state that a member is entitled to appoint a proxy who need not be a member [Section 105(2)].
Query: Can a member who has already cast his vote through remote e-voting appoint a proxy?
Ans: The Clarification issued by ICSI vide Press Release dated 21.7.2015 (updated as on 26.8.2015), is as follows:
“Yes, a member who has already cast his vote through remote e-voting can appoint a proxy to attend the Meeting instead of himself, but he cannot cast his vote”.
Documents accompanying the notice - The following documents should be annexed to the notice of the meeting :
(i) For AGM - audited financial statement of accounts, directors’ and auditors’ reports, proxy form, etc.; and
(ii) For EGM - explanatory statement, proxy form, etc.
Where any item of business refers to any document, which is to be considered at the meeting, the time and place where such document can be inspected shall be specified in the Explanatory statement [Section 101(3)].
Postponement or Cancellation of the Meeting
SS- 2 clarifies that a Meeting convened upon due Notice shall not be postponed or cancelled.
If, for reasons beyond the control of the Board, a Meeting cannot be held on the date originally fixed, the Board may reconvene the Meeting, to transact the same business as specified in the original Notice, after giving not less than three days intimation to the Members. The intimation shall be either sent individually in the prescribed manner or published in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and in an English newspaper in English language, both having a wide circulation in that district.
For a meeting to be legally constituted, there must be proper quorum6, a proper person in the chair and proper compliance with the relevant provisions of the Articles of Association of the Act.
‘Chairman’ is the person who has been designated or elected to preside over and conduct the proceedings of a meeting. He is usually a member of the body over which he is to preside. The rules and regulations of a constituted body usually designate a chairman to preside over meetings of that body. In the case of a company, the Articles usually designate the chairman of the Board of directors to preside over the general meetings of the company. Where the rules do not designate a chairman or the designated chairman is absent at the commencement of the meeting, the meeting itself elects a pro tem (temporary) chairman to preside over the meeting. If subsequently the designated chairman arrives, the temporary chairman vacates the chair.
Appointment of chairman - The first chairman of the company is generally named in the Articles. The Articles usually provide that the chairman of the Board of directors shall preside over the general meetings of the company in addition to presiding over Board meetings. However, it does not mean that the same person will
6.As per Regulation 44(i) of Table F, no business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business.
Para 16.5
COMPANY MEETINGS-I - GENERAL 590
remain chairman of the Board and preside over the meetings of the company from year to year. The Board may decide to elect a new chairman every year at the Board meetings held immediately after the annual general meeting.
Regulations 46 and 47 of Table F of the Companies Act, which are incorporated in the Articles of most companies, provide that if no chairman is designated beforehand or he is not present within 15 minutes of the appointed time of the meeting or is unwilling to act as chairman of the meeting, the directors present shall elect one amongst themselves to be chairman of the meeting. If, however, no director is willing to act as chairman or if no director is present within 15 minutes after the appointed time, the members present may elect one amongst themselves to be chairman of the meeting.
Section 104(1) of the Act provides that, unless the Articles otherwise provide, the members personally present at the meeting shall elect one amongst themselves to be chairman of the meeting on a show of hands.
Section 104(2) provides that, if a ‘poll’ is demanded on the election of chairman, it must be taken forthwith in accordance with the provisions of this Act, and the chairman elected on show of hands shall exercise all powers of the chairman till the poll is taken. If some other person is elected chairman on the results of the ‘poll’, he shall be chairman for the rest of the meeting*.
SS-2 contains similar provisions with respect to appointment of a chairman Role and Powers of chairman - Role and Powers of the chairman of a meeting are :
(a) To maintain order and decorum - The chairman has the power to maintain order and decorum at a meeting, i.e., to prevent the use of improper language and disorderly behaviour of members. If his directions are not obeyed, he may adjourn the meeting or have the offending member(s) expelled.
(b) To give ruling on points of order - Sometimes members raise points of order, i.e., questions relating to rules and regulations governing the meeting. The chairman has the power to give a ruling on the interpretation of the rules and his ruling will be binding on all members.
(
c) To decide priority of speakers - When more than one member express their desire to speak on the motion, the chairman has the power to decide the priority in which the members will be allowed to speak.
(
d) To maintain relevancy and order in debate - The Chairman has the power to stop discussion on a motion when it has continued for a sufficiently long time and discussion seems to be endless or when the discussion becomes irrelevant, that is, when it is not within the scope of the meeting or the motion under discussion.
(e)7 The Chairman shall explain the objective and implications of the Resolutions before they are put to vote at the Meeting: The Chairman shall provide a fair opportunity to Members who are entitled to vote to seek clarifications and/
*Articles of a private company may provide otherwise—Vide MCA Notification dated 5-6-2015. 7.As per SS- 2. This may also be called as a duty of the Chairman.
or offer comments related to any item of business and address the same, as warranted.
(f)8 In case of public companies, the Chairman shall not propose any Resolution in which he is deemed to be concerned or interested nor shall he conduct the proceedings for that item of business: If the Chairman is interested in any item of business, without prejudice to his Voting Rights on Resolutions, he shall entrust the conduct of the proceedings in respect of such item to any Dis-Interested Director or to a Member, with the consent of the Members present, and resume the Chair after that item of business has been transacted.
(g) To adjourn a meeting - The chairperson may, with the consent of any meeting at which a quorum is present and shall, if so directed by the meeting, adjourn the meeting from time to time and place to place [Reg. 49(i) of Table F].
If the meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting [Reg. 49(iii) of Table F].
Again, no business other than the business left unfinished can be taken up at an adjourned meeting [Reg. 49(ii) of Table F].
(h) To exercise a casting vote - Ordinarily, a chairman has only a deliberative vote, i.e., the right to cast a vote as a member. But if the rules expressly allow, the chairman can cast a second vote, known as casting vote, to break a tie, i.e., equality of affirmative and negative votes. The Articles of a company usually confer this right on the chairman of a company meeting.
Duties of chairman : Duties of a chairman include the following :
(a)To see that the meeting is properly convened and duly constituted.
(b)To see that the proceedings of the meeting are conducted according to rules and the business is discussed in the order set out in the agenda.
(c)The chairman must see that no discussion is allowed unless there is a specific motion before the meeting, properly moved and seconded and that the motion is within the scope of the meeting.
(d)To maintain order and decorum in the meeting.
(i)To exercise judicially his power of adjournment. 591
(e)To see that all members get equal opportunity to express their views. If necessary, he should fix time limit for speakers.
(f)He should see that the sense of the meeting is properly ascertained on each and every motion. He should put all motions and amendments to vote in the manner provided in the rules, supervise the counting of votes to ensure correct assessment of the opinion and declare the result of voting.
(g)If poll is demanded, to see that the poll is taken according to the provisions of the Act.
(h)To exercise his casting vote bona fide in the interest of the company.
8.As per SS- 2. This may also be called as a duty of the Chairman.
