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Corporate Gathering: A Guide To Company Meetings Under The Companies Act 2013

A company may be generally defined as a gathering, assembly, or coming together of several persons for transacting any lawful business. There must be at least two persons to form a valid meeting. In exceptional circumstances, there may only be one person to form such a meeting. The term meeting has been defined by Lord Coleridge, in the case of Sharp vs. Dawes (1876) as the gathering or coming together of more than one person for any lawful transaction.

A meeting holds a crucial value in our life in decision making. It gives opportunity to all participants to express their opinions. This is a democratic process wherein a notice of the meeting is sent to all attendees with the date, time and agenda of the meeting. A meeting helps to control the affairs of a company.

It enlightens the shareholders regarding the affairs of the company. If there are any mistakes made by directors, then shareholders have the right to rectify such mistakes through such meetings. All measures regarding management, i.e. appointment of a director whether he's going to be re-elected or not taken by shareholders in such meetings. The Companies Act 2013 provides various provisions regarding meetings.

Requisites of meeting
Any meeting becomes valid when it is duly convened, properly constituted and properly conducted.
  1. Meeting to be properly convened
    It means that every meeting must have been convened by the proper authority who has the right to do so. The proper authority to convene a meeting is the Board of Directors, shareholders and the tribunals they notice of. Such a meeting must be given to all those members who are entitled to attend.

Proper Authority To Convene A Meeting:
  1. Board of Directors: The article of association of a company generally powers the Board of Directors to call meetings. Notice of the meetings given by the secretary without the sanction of the Directors of the company is invalid. However, directors may rectify the notice before the meeting.
  2. Shareholders: In certain circumstances when the board of directors fails to call an Extraordinary meeting, then shareholders may convene such a meeting.
  3. Tribunals: Section 98 of the Companies Act 2013 empowers tribunals to convene a meeting when members of the company fail to do so. In the case of Indian SPG Mills Limited vs Lieutenant General Madan[1], a person was not holding the qualification share of a director, was appointed as chairman and some directors had transferred shares to enable him to fulfil the requirements. This was alleged by a section of shareholders to be invalid. It was held that it was impracticable to hold a meeting in these circumstances. Here, the court could intervene. In re Lothian Jute Mills Limited[2], Tribunals can call a meeting on its motion section 97 empowers the tribunal to call an annual general meeting on the application of any members of the company.

Proper and adequate notice (Sec 101)
It is the second requirement of a general meeting of the company. The notice should be given to all members of the company and deliberate omission to give notice to a single member may invalidate the meeting. However, section 101(4) states that it is not applicable in accidental omission to give notice to a member. Every notice shall be given to members before 21 days of the meeting. Every notice shall specify the place, date, day, and hour of the meeting.

Place of meeting: Every meeting must be held at the registered office of the company or other place in the same city, town or village.

Date of meeting: The date of the meeting must not fall on a public holiday.
  1. Hour of meeting:
    The meeting shall be called during business hours of the company. Along with this, notice shall consist of the agenda of the meeting as well as state that the member is entitled to appoint a proxy who need not be a member. Notice also consists of a proxy form.
  2. Meetings to be legally constituted
    A meeting is considered legally constituted when it fulfils the requirement of quorum and chairman of the meeting.
Chairman of meeting (sec. 104)
The appointment of the chairman of a meeting is usually regulated by the article of association but where the article of association remains silent on it, then the members personally present in the meeting shall elect one of themselves as Chairman.

Power of Chairman:
  • To maintain order and decorum: The chairman ensures a healthy environment in the meeting, that is to prevent the use of improper language and disorderly behaviour of a member even if he can expel such members from the meeting.
  • To decide the priority of a speaker: When two or more speakers express their opinion at the same time, then he can use his power to decide the priority of the member.
  • To adjourn a meeting: The chairman can adjourn a meeting under certain circumstances for example when attendance falls quorum. The meeting adopts the motion of adjourn although if the majority of members vote against the adjournment, then the Chairman cannot adjourn the meeting except by quorum and provision prescribed under company law.
  • To enjoy a casting vote: Although the chairman has the right to cast a vote as a member. In case of a tie, a chairman can cast a vote as a casting vote to prevent this situation of time.
A chairman is also responsible for seeing that all members are getting equal opportunity to express their opinions, maintain the decorum of meeting cast, and vote in the interest of the company.

Quorum (Sec 103)
Quorum means a minimum number of members present at a meeting to start the proceeding as required by law. Section 103 states that unless the articles provide the minimum number of meetings, five members are required in the case of a public company, and two members in the case of a private company for a meeting.

If within half an hour from the commencement of the meeting, a quorum is not present, the meeting shall be considered dissolved if it was called upon requisition, but in other cases, the meeting will adjourn to reassemble on the same day in the next week, and if at assembled the meeting quorum is not present within half an hour, as many Members as are present shall constitute the quorum.

In such cases a question of the validity of the meetings arises, in the case of Sharp vs Dawes, there were several shareholders in a company. A meeting was called to make a call. Only one shareholder attended the meeting. He, however, called the proxies of other shareholders. He proposed the resolution and passed it accordingly. That meeting was held invalid by the court as it did not fall within the Meaning of meeting.

Meetings to be properly conducted
A meeting is considered to be properly conducted when a proper discussion of the proposed resolution and voting accordingly takes place. The proceedings of the meetings shall also be recorded.

Methods to find the sense of general meeting
In a general meeting, it is not necessary that every time any resolution to obtain approval anonymously. When there is a difference in the opinion of the members present at the meeting, then the chairman adopts some methods to know the sense of the meeting.
  • By accumulation: When members present at their meetings use clapping, cheering or applause to express their view on the approval or disapproval of a motion, it is adopted when there is either almost approval or disapproval of the motion. This method can be used when there is a difference in the opinion of the members.
  • By a voice vote: In this case, the chairman puts a proposition before the members present at the meeting. Members who favour such a proposition say yes and no who don't like it. The chairman decides by hearing such voices. If a member is dissatisfied with the decision of the Chairman on the grounds of a voice vote may demand a vote by showing a hand.
  • By division: Under this method, the Chairman requests the Members to divide themselves into two sections one is in favour of the motion, and the other who are against the motion. The chairman decides to count the number of such members.
  • By show of hand: Under this method, the chairman asks members to raise their right hand who support the proposal resolution, numbers are noted accordingly and after these observations Chairman decides whether the resolution will be passed or not.
  • By ballot: This method maintains secrecy among members regarding their views on the proposed resolution. All members record their vote on a valid paper and deposit it in the box. The counting of ballot papers revealed the results.
  • By poll: In a company meeting, voting by poll is held according to the number of shares held by members. There may be several proxies who can vote only by polls and by show of hands. In a company meeting, it is quite possible that some Members remain silent without saying yes or no, or they may not take part in the voting. They will not be counted on either side.
  • Voting using electronic mode: The Central Government may prescribe rules for companies to conduct voting using electronic mode.

Voting rights

In a company usually two types of shareholders i.e. equity and preferential shareholders. Section 47(1) states that every equity shareholder has the right to vote on every resolution placed in a general meeting subject to voting by poll. The voting rights shall be in proportion to his share in the paid-up equity share capital of the company. Section 47(2) states the voting rights preferential shareholders shall have the right to right to vote on such resolution, please before the meeting which is directly to his preference share.

Voting by proxy (sec 105)
A member may vote either in person or by proxy in a meeting. The process of voting by proxy has become very popular because of the involuntary of shareholders to be personally present at meetings. A proxy has limited power to vote only on a poll. He does not have the right to speak on resolution. A proxy is a representative of shareholders who act according to the instructions of shareholders. A proxy cannot act in contrast to the instruction of a shareholder a single proxy may act four many members but not exceeding 50 at a time.

When the motion passed before the members present in the meeting got the vote in favour, it became a resolution.

It can be divided into two parts:
  1. Ordinary resolution
    When a motion is passed by a simple majority of the members voting at a general meeting, known as an ordinary resolution, in general, when the votes cast in favour of the motion exceed the votes against it, it becomes an ordinary resolution. The ordinary resolution is required in certain circumstances such as alteration of authorised capital, declaration of dividend, election of director, etc.
  2. Special resolution
    When a motion is passed by the three-fourth majority of shareholders present and entitled to vote, known as the special majority, it is necessary that the intention to propose a special resolution should have been specified in the notice calling a general meeting. A vote may be cast by proxy/ postal ballot in such a meeting.

Types of Company meeting
Annual general meeting
Companies are bound to call at least one meeting of shareholders in a year. The first annual general meeting of a company must be held within nine months from the date of closing of its first financial year meeting will be required for the year of incorporation. Thereafter, at least one meeting must be held every year. The time interval between two AGMs should not exceed 15 months, if a company fails to hold the meeting.

There may be two consequences, firstly any member of the company applies to the tribunal for calling such meetings under section 97, and the Tribunals will give direction to the company to hold meetings. This power is exclusively wasted in the tribunal and the court cannot exercise it under any circumstances. Secondly, the failure to hold an annual general meeting may be resulted, in an offence punishable with fines.

The penalty is imposed upon the company and officials who are involved in such default. It is an important event since it allows all shareholders to come together and review the working of companies and make decisions accordingly.

Extraordinary General Meeting
Clause 42 of Table F (Schedule 1) provides that all General Meetings except Annual General Meetings shall be considered Extraordinary General Meetings. The board may call an extraordinary general meeting whenever it thinks fit and an extraordinary General meeting may be called upon requisition also. The requisition must set out the matter of consideration of the meeting, and no other business can be done in such a meeting.

When a requisition is submitted at the registered office of the company, the directors must move to call a meeting within 21 days. A meeting must be held within 45 days from the date of requisition. If the director fails to hold a meeting requisitionists may themselves proceed to call such a meeting and claim all necessary expenses from the company.

Board meeting
It is a crucial event for a company where the Board of Directors makes decisions related to the management of the company. The frequency of board meetings depends on the needs of the effective decision but board meetings are held regularly to ensure effective governance within a company, meetings are regulated by the company's bylaws and provisions prescribed under the Companies Act, 2013.

The meeting is an essential event in any organizational entity to ensure the legality, integrity and efficiency of the decision-making process. It allows all members of the companies to participate in decision-making. It protects the interests of shareholders from being harmed. Meetings should follow all procedures set out in the article of association of the company and provisions Prescribed under the Companies Act 2013.

  • Company Law, Avatar Singh, Seventeenth Edition, 2018, Page 367-394
  • The Companies Act, 2013

  1. AIR 1953 Calcutta 355; 56 CWN 398
  2. (1950) 55 CWN 646 (Cal.)

Award Winning Article Is Written By: Mr.Ravi Ranjan Paswan
Awarded certificate of Excellence
Authentication No: MR409131284435-31-0324

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