A company is a legal entity consisting of a group of individuals for operating a business. In order to manage the company, certain radical decisions have to be taken. These decisions are taken in meetings of the company. The Companies Act, 1956 has several provisions regarding meetings. It is important for Companies to comply with these provisions.
Kinds of Meetings
Annual General Meetings(AGM) [1]
Every company is required to conduct an AGM every year, except in the case of one person company[2].
Notice of the Meeting
A notice of at least 21 days should be given for the meeting. In some circumstances, meeting by short notice can also be called.
Place and time for Conducting Meeting
AGM should be conducted between 9 A.M. to 6 P.M. i.e. business hours. It should not be conducted on national holidays. Meeting has to be placed in the registered office of the company. It can also be placed in any other place in the city where the office is registered.
Due Date of Meeting
The first AGM should be held within 9 months from the closing of the first financial year. Subsequent AGM should be held within 6 months from the closing of the financial year. The time gap between two AGM should not be more than 15 months.
Tribunal Power to Call Meeting
On application by any member of the company, Tribunal has the power to call AGM and give such directions as it thinks fit.
Punishment for not holding AGM
A company, who fails to hold an AGM within the stipulated timeline provided in the clauses, shall be liable to pay fine which can extend to 1 lakh, and if further default continues, Rs. 5000 for each day until the default continues.
Extraordinary General Meeting
All general meetings except AGM, are EGM. Special business matters are discussed in EGM. The calling of EGM can be done by[3]-
- BY THE BOARD: The Board can call EGM whenever it seems fit.
- BY BOARD ON REQUISITION- The Board can call EGM when it receives requisition from the following number of members-
- When the company has a share capital- Members holding not less than 1/10th of the paid-up share capital of the company on that date, carry the right of voting.
- When the company does not have share capital- Members holding not less than 1/10th of the total voting power of all the members, have on that particular date a right to vote.
3. BY REQUISITIONISTS- If the Board did not call the meeting within the prescribed period, then the requisitionists themselves can call the meeting.In such case, the meeting should be held within 3 months from the date of requisition.
4. By THE TRIBUNAL- The Tribunal can call EGM either on its own motion, or by an application of any director[4].
Statutory Meeting
This is the first general meeting of the company. It is held only once throughout the life of the company. It is held after the public company starts its business. Whether a company is limited by shares or limited by guarantee, it is required to hold a meeting of shareholders within 6 months of the starting of the business of the company.
Board Meeting
Section 173 of the Companies Act, 2013 provides for the Board Meetings.
First Board Meeting
The First Board Meeting should be held within 30 days of the incorporation of the business of the company.
Time and Due Date
Minimum 4 meetings should be held in a year and the time between two such meetings should not exceed 120 days.
Mode of Meeting
The meeting can be conducted by video conferencing. However, there are some matters which cannot be discussed through audio-video means.
Notice of Meeting
At least 7 days’ notice is to be given to every director at his registered address through post or by electronic mode. In case the directors are not present in the meeting, decision/decisions of the meeting should be circulated to each and every director.
Quorum of Meeting
At least 1/3rd of total directors, or two- whichever is highest, should be present at the meeting to form a quorum.
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Meeting of Audit Committee
Section 177 provides for the audit committee meetings. It consists of the Board of Directors of listed companies and the companies which are prescribed under the Companies Act, 2013. It consists of at least three directors with independent directors forming a majority. The members of the Audit Committee should have enough knowledge to understand financial statements which are put before the committee. Meetings of the Audit Committee should be held at least 4 times in a year. The meetings are headed by the Chairman .Quorum will be formed when one Chairman and minimum one other member is present in the meeting. Secretary of the meetings will be the Group’s Chief Financial Officer. Board Members and Chief Executive Officer (CEO) are entitled to attend meetings of the Audit Committee. Preparation of Schedule of Annual General Meeting is done by the Audit Committee. The schedule prepared should consist of the main motive which is to be decided and discussed. Financial Statements and Reports related to resolution or issue which will be discussed in the meeting should be given to members at least before 24 hours of the meeting. Minutes of the meeting should be noted and signed by the Chairman and Secretary.
Procedure of Meeting
Notice[5]
A notice of the meeting is to be given to every member of the company in a manner which is prescribed in Companies Act, 2013. If the company accidentally fails to give notice to any member, the meeting held in such case is not to be considered as invalid.
If the company is calling an Annual General Meeting, then the ordinary business will be discussed, and if it is an Extraordinary General Meeting, then special business shall be discussed. Annual General Meeting requires notice of 21 days, whereas Extraordinary General Meeting requires a notice of 14 days.
Contents of Notice
The notice should consist of the following things-
- Date, day, time and place of meeting
- Business which will be discussed
- The date on which notice is served.
Quorum
Quorum denotes the minimum number of members required to constitute a valid meeting. Unless the company’s articles state otherwise, 5 members in case of public company, and 2 members in case of a private company should be the quorum for the meeting. If the quorum is not fulfilled within half an hour of the scheduled time, the meeting shall be adjourned to the same day of the next week.
If at the adjourned meeting, the quorum is not filled within half an hour, the members present there will form a quorum for that meeting.
Chairman
Every meeting is headed by the chairperson .He starts the discussion in the meeting and ends it. It is his duty to ensure smooth functioning of the meeting. He has the right to vote in the meeting [6].
Duties of Chairman
- He should ensure that notice of the meeting is given to everyone, quorum is formed, and all procedures are followed.
- He should see that provisions related to meeting in articles are properly followed.
- He should act impartially in the meeting.
- He has the power of adjourning the meeting in the case of indiscipline, but this power should be used in good faith.
- He should cast his vote in the interest of the company.
Resolution
Resolution means the decision which is taken at the meeting. Once the motion has been put in the meeting and members have voted in favour of it, it is called resolution. There are three types of resolution-
- Ordinary Resolution- Ordinary Resolution is that in which there is a simple majority. Voting can be done by show of hands, or electronically, or by a poll. Cases in which ordinary resolution is required are:- alteration of authorised capital, dividend declaration, election of directors,etc.
- Special Resolution- A special resolution is that which is passed by 75% of majority. Voting can be done by show of hands, or electronically, or on a poll or by proxy. Intention of special resolution should be mentioned in notice of the general meeting.
- Resolution requiring special notice- There are some matters for which special notice is given. They are to be discussed in general meetings only when special notice is given to members regarding this.
Voting
When any decision is taken in a meeting, it is done by voting. Every member, limited by company shares, and hold equity share shall have the right to vote on all matters in the meeting[7]. There are certain requirements for voting in different meetings of the company[8]. This process of voting is headed by the Chairman.
Adjournment and Minutes [9]-
When matters are discussed and the meeting comes to end, the meeting is said to be Adjourned. These discussions, decisions are recorded, which are known as minutes of the meeting. Minutes are the gist of the meeting. It contains points such as the members who attended the meeting, members who failed to attend the meeting, decisions taken, amendments, manner of voting,etc.
Report
Every public listed company has to prepare a report for every annual general meeting, and that report is required to be filed to the Registrar within 30 days of the meeting[10].
Conclusion
Company is a legal entity which is formed by its members. Every decision of the company is taken by members of the company through its different meetings. Decision related to ordinary business or special business are taken by different procedures. For this, there are various provisions in Companies Act, 2013 for holding meetings and its procedure so that decisions can be taken carefully and effectively.
REFERENCES
[1]Sakshi Sethi, Meetings under Company Act,2013 (lawtimesjournal, 2020).
[2] The Company Act, 2013,s.96.
[3] The Companies Act, 2013,s.100.
[4] Company Law, Taxmann (22nd edn., 2019).
[5] The Companies Act, 2013,s.101.
[6]Sakshi Sethi, Meetings under Company Act, 2013 (lawtimesjournal, 2020).
[7] The Companies Act,2013,s.50(2). Â
[8]The Companies Act, 2013,ss. 105-110.
[9]The Companies Act, 2013,s.118.
[10]The Companies Act, 2013,s.121.
BY AKSHITA KHANDELWAL | S.S.JAIN SUBODH LAW COLLEGE, MANSAROVAR, JAIPUR