Corporate Law Meetings

Requisites of a Valid Meeting

The following are the requisites of a valid meeting :

1. A meeting should be convened by proper authority. 2. It must be convened by a proper notice served in the prescribed manner to all persons entitled to receive such notice.
3. It must be convened to transact lawful business as per its agenda.
4. It must be presided by properly elected chairperson.
5. It must have a proper quorum.
6. It must be conducted by following lawful procedure. 7. Proper resolutions must be passed for transacting business of the meeting.
8. The minutes of the proceedings must be properly recorded.

What is meant by Annual General Meeting of a Company? What are the legal provisions of companies Act, 2013 regarding it?

Or

What are the legal provisions for holding of annual general meeting? What business is transacted at such meeting?

Meaning of Annual General Meeting: Annual General Meeting is a regular meeting of the members of a company which is hold annually. This meeting provides an opportunity to the members of the company to review working of the company and express their views on the management of the company. The purpose of calling the meeting is to transact the ordinary business of the company.

Legal provisions Regarding AGM 

Following are some of the important provisions regarding calling and holding annual general meeting :

(1) To be held each year : Every company other than a OPC shall in each year (i.e. calendar year) hold (in addition to any other meetings) a general meeting as its annual general meeting. The company shall specify in the notice calling it that the meeting is an annual general meeting. [Section 96(1)]

(2) Time for holding first AGM : The first annual general meeting of a company must be held within 9 months from the date of closing of the first financial year of the company. However, it is not necessary for the company to hold any annual general meeting in the year of its incorporation.

(3) Time for subsequent annual general meetings : Every company shall in each of the subsequent year, hold its AGM within a period of 6 months form the date of closing of the financial year of the company.

(4) Gap between two AGMs : The gap (interval) between any two annual general meetings must not be more than a period of 15 months except where the Registrar grants the extension. There should be one annual general meeting in every calendar year. In has been neld that the annual general meeting must be called, whether or not the annual accounts are ready for consideration at the meeting. A company is required to hold its annual general meeting even if it did not function at all in the year.

(5) Extension of Time : The time for holding the first annual meeting cannot be extended by the Registrar. However, the Registrar may (for any special reason) extend the time for holding any annual general meeting by a period not exceeding 3 months. The company must hold its AGM within this extended time.

(6) Authority to convene the Annual General Meeting : The power to convene the Annual General Meeting vests with the Board of Directors. Individual directors have no such power. Secretary cannot issue any notice For the Annual General Meeting without the authority of the Board.

(7) Time and Day for Meeting : The annual general meeting must be held on any day which is not a National holiday during business hours, that is, between 9 a.m. and 6 p.m. Here National Holiday means and includes a day declared as National Holiday by the Central Government.

(8) Place of the Meeting : Company must call the annual general meeting either at the registered office ofthe company or at some other place within the city in which the registered office of the company is situated. [Section 96(2)]

(9) Notice Requirement : Company must give at least 21 days’ written notice or through electronic mode to call an annual general meeting of the shareholders. Annual general meeting may be held with a shorter notice if the consent in writing or through electronic mode is given by not less than 95% of the members entitled to vote at the meeting. [Section. 101]

(10) Statement of the business to be transacted at AGM : Every notice of an annual general meeting shall contain a statement of the business to be transacted at such meeting.

The statement of business to be transacted at an annual general meeting shall essentially contain the four items of ordinary business. These are as follows :

(i) The consideration of financial statements and the reports of the Board of directors and auditors.
(ii) The declaration of dividends.
(iii) The appointment of directors -in place of those who are retiring.
(iv) The appointment arid fixing of the remuneration of auditors of the company.

Moreover, if the company intends to transact any item of special business, those items of business shall also be described under the head ‘special business’. The special business should be included in the notice, and an explanatory statement of material facts as to each of those items shall also be annexed with the notice of the annual general meeting.

(Il) Annexure to the notice : Every notice of an annual general meeting must be accompanied by the following :
(i) A copy of financial statements for the financial year.
(ii) Report of the Board of directors.
(iii) Report of the auditors.
(iv) In case meeting has to consider any item of special business, and explanatory statement of material facts with respect to each item of special business. (v) Proxy instrument in blank.
(vi) Attendance slip in blank.

(12) Default in holding the Annual General Meeting : If default is made in holding an annual general meeting, the Tribunal may, on the application of any member of the company, call or direct the calling of the annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient in relation to the calling, holding and conducting of the meeting. The directions that may be given include that only if one member of the company is present in person or by proxy that shall be deemed to constitute the meeting. [Section 97(1)] A general meeting held in pursuance of directions of the Tribunal shall be deemed to be an annual general meeting of the company. [Section 97(2)]

Punishment : Sometimes default is made in holding an annual general meeting of the company in accordance with Section 96 or in complying with any directions (under Section 97) of the Tribunal. In such a case, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh. In the case of a continuing default they shall be liable for a further fine which may extend to 5,000 for every day after the first during which such default continues. [Section 99]

Q. 23. Explain the provisions of Companies Act, 2013 with regard to holding of Extra-ordinary General Meeting of a company.

Ans. Extra-Ordinary General Meeting (E.G.M.) : Sometimes, the Board of directors feels that certain decisions cannot be postponed till the conclusion of the next annual general meeting. In such a case, the Board of directors may call an extraordinary general meeting (EGM) and get its approval on the decisions and grab the business opportunity available to the company. Sometimes, an extraordinary general meeting is also called on the requisition of members of the company. The meeting of creditors are also called and held whenever need arises.  Regulation 42 of the Table F provides “all general meetings other than annual general meetings shall be called extra-ordinary general meetings.”

It may be pointed out that the provisions with respect to extraordinary general meeting do not apply to a OPC (One Person Company). In case of OPC, it is sufficient, if a resolution to be passed at an extraordinary general meeting, is communicated by the member to the company and entered in the minutes-book required to be maintained (under Section 1 1 8) and signed and dated by the member. Such date shall be deemed to be the date of the meeting for all’ the purpose under this Act.

Business of Extraordinary General Meeting

Extraordinary general meetings are called for transacting some special business that cannot be postponed till the next annual general meeting. Therefore, ail business that are transacted at such meetings are special business. Any business other than ordinary business is called specialbusiness. Examples of some special business are as follows :  (1) Alteration of any of the clauses of the memorandum.
(2) Alteration of the clauses of articles of the company.
(3) Reconstitution of the Board of directors.

When and By Whom EGM may be called

Extraordinary general meeting may be called under the following circumstances :

(1) By the Board : When the directors have to transact some immediate and emergent business for which they cannot wait till the next annual general meeting, i.e. the board of directors of a company may call this meeting whenever it thinks the need of it:

(2) By the Board on the Requisition : The board of directors may also call an extraordinary general meeting on the requisition of given number of members. The given number of members is :

(a) In the case of a company having share capital, member or members holding not less than 1/10 of the paid up share capital of the company carrying voting rights regarding the matter of requisition.

(b) In the case of a company not having share capital, member or members holding at least 1/10 of the total voting power of all the members regarding that matter.

Matters, for the consideration of which the meeting is called shall be stated in the requisition and those matters alone shall be considered at the meeting. Requisition must be duly signed by the requisitionists and deposited at the registered office of the company.

Board of Directors must proceed to call a meeting for the consideration of the matters notified by the requisitionists within 21 days of the deposit of requisition at the registered office of the ‘company. The meeting must be held by the directors on a day not later than 45 days from the date of the deposit of the requisition.  (3) By the Requisitionist: On default of the directors to call the meeting within 45 dav of deposit of the requisition, the meeting may be called by the requisitionists themselves within 3 months of the date of deposit of the requisition. Requisitionists shall not be allowed to hold the meeting after the expiry of three months from the date of deposit of the requisition except a meeting which was duly convened within three months of the requisition but was adjourned to some other day which falls after the expiry of the said three months.

Requisitionists shall call the meeting in the same manner as nearly as possible in which meetings are called by the Board of Directors. Notice of such meeting shall be given in the same manner as for the regular meetings. If the registered office is not made available to them, they may hold the meeting anywhere else. Requisitionists shall be entitled to claim all the expenses of calling the meeting from the company. The company shall be entitled to indemnify itself and to deduct the expenses of calling the meeting out of the fees or remuneration of those directors who were in default. Resolution, properly passed at the meeting called by the requisitionists, shall be binding upon the company.

(4) By the Tribunal ; The Tribunal may also. under certain circumstances call, hold and conduct the meeting of a company [Section 98]

(a) When it is impracticable to call a meeting of the company in a manner in which meetings of the company may be called, or

(b) When it is not possible to hold or conduct the meeting of the company in the manner prescribed by the Act or the Articles of Association of the company.

Tribunal may also give directions modifying or supplementing the operation of the provisions of the Act or the Articles of Association in relation to the calling, holding or conducting of the meeting. It may also direct the company that even one member of the company present in person or by proxy shall be deemed to constitute a meeting.

The Tribunal may order for the calling, holding and conducting of such a meeting either (a) of its own motion, or (b) on the application of any director of the company, or (c) or any member of the company who would be entitled to vote at the meeting,

Notice of EGM

Provisions regarding notice of an extraordinary general meeting are the same as in case of any other general meeting of a company. A brief statement of these provisions are as follows :

l. An extraordinary general meeting may be called by giving at least 21 days’ clear notice.

2. Such a meeting may be called by giving a shorter notice that specified if consent is given in writing for electronic mode by not less than 95 percent of the paid-up share capital of-the members entitled to vote at such meeting of the company.

3. Notice must be in writing.

4. It must state the place, day and hour of the meeting. [Section. 101]

5. It must contain a statement of special business because at an extraordinary general meeting only special business may be transacted’ [Section. 101]

6. The notice must be accompanied by an explanatory statement Of material facts with respect to each item of business to be conducted at the I meeting. [Section. 102]

In case, an extra-ordinary general meeting is called on the requisition  of members, the members’ resolution is circulated.