General Meeting

GENERAL MEETINGS

Under company form of business there can be two kinds of meetings

  • Meetings of Board of Directors (Known as BOD Meetings)
  • Meetings of Members, shareholders or different stakeholders (known as General Meetings)

General Meetings can be 2 types:

  • Annual General Meeting (AGM)
  • Extra Ordinary General Meeting (EGM)
    • of Members (Normal EGM)
    • of other class of stakeholders (Class Meeting)

Why General Meetings are required?
In company form of business, real owners are the members of the company. But members appoint directors (collectively known as BOD) to manage business of company on their behalf. For this purpose directors are provided with lots of powers to take general and special decisions. Therefore it is important to keep check on the working of directors so that directors shall not misuse their powers for their personal benefits. There are many provisions under Company Laws in this regard but 2 major ways to keep check on the workings of BOD are:

  • BOD can take some major decisions only with the consent of members
  • Every year BOD shall place some reports in front of members on the working and position of company, so that members can assess whether company is being managed by BOD properly or not.

For both of the above reasons (along with other reasons) BOD are required to call general meetings from time to time.

Provisions related to calling and holding of different general meetings are specified under company laws Secretarial Standards on General Meetings issued by ICSI.

Secretarial Standard on General Meetings of companies:
According to Section 118(10), every company shall observe secretarial standards with respect to general and Board meetings specified by the ICSI and approved as such by the Central Government.

ICSI issued Secretarial Standard 2 (SS-2) on General Meetings of companies on 23rd April 2015 and are effective from 1st July 2015. SS-2 shall only apply to general meetings in respect of which notices are issued on or after 1st July, 2015.

The objective of secretarial standard is to promote good corporate governance. This Standard is applicable to all types of General Meetings of all companies incorporated under the Act except OPC and class or classes of companies which are exempted by the Central Government through notification.

Scope of Secretarial Standard: Secretarial Standard is in conformity with the provisions of Companies Act and any Rules and Regulations framed thereunder. However, if due to subsequent changes in the Act or Rules, a particular Standard or any part thereof becomes inconsistent with the Act or Rules, the provisions of the Act or Rules shall prevail.

ANNUAL GENERAL MEETING (AGM) [Section 96]

What is Annual General Meeting (AGM)?
AGM is a meeting of members of the company. Under Companies Act, 2013, every company (other than One Person Company) is required to hold only one Annual General Meeting in every calendar year (except in the year of incorporation of the company). It means a company cannot hold more than one AGM in any calendar year.

 Basic motive of AGM is to give an opportunity to all members of the company to know about and discuss the annual working of company.

In AGM, along with other businesses like declaration of dividend, BOD of company places

  • BOD’s report and
  • Auditors report

which help members to learn about the working and financial positions of the company.

Which businesses can be transacted in AGM?
In AGM, company is allowed to transact any business (means a company is allowed to take decisions on any matter) notice of which have been previously given to members. Further, following businesses are considered as ordinary businesses if transacted at an AGM:

  1. the consideration of financial statements and the reports of the Board of Directors and auditors;
  2. the declaration of any dividend;
  3. the appointment of directors in place of those retiring;
  4. the appointment of, and the fixing of the remuneration of, the auditors;

Any business, other than 4 businesses stated above, shall be considered as special business if transacted at any AGM.

Note

  • In an AGM, members are allowed to discuss any matter related to company or company’s business. But only those matters can be resolved in AGM which are stated in the notice of that AGM.

Statutory provisions related to AGM

Annual general meeting [Section 96 of Companies Act, 2013 – Notified] [Section 166 of Companies Act, 1956 – repealed]

Section 96(1) – Requirements to hold AGM

Statutory requirement to hold AGM every year

Every company other than OPC shall hold AGM in each year. Here year means calendar year.
It means OPC is not req

uired to hold AGM

Time gap between two AGM

The time gap between two AGM shall not exceed 15 months

When to hold AGM during the year

In case of 1st AGM
First AGM of every company shall be held within a period of nine months from the date of closing of the first financial year of the company. Therefore it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation

In case of subsequent AGM
AGM, other than first AGM, of every company shall be held within a period of six months from the date of closing of the relevant financial year of the company.

Notice of AGM

Notice of meeting shall specify that the concerned meeting is AGM otherwise that meeting shall not be considered as AGM.

Extension of time to conduct AGM

Registrar may extend the time within which any annual general meeting shall be held.
Extension shall not be granted by ROC for a period exceeding three months.
No extension shall be granted by ROC in case of first AGM.

Section 96(2) – Day, Time and Place of AGM

Day of AGM

AGM may be called on any day that is not a National Holiday.
“National Holiday” means and includes a day declared as National Holiday by the Central Government.

Time of AGM

AGM shall be called during business hours, that is, between 9 a.m. and 6 p.m.

Place of AGM

AGM 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.
Provided that 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 advance.

Power of CG to exempt

Central Government may exempt any company from the provisions of related to day/time/place of AGM

Note

  •  In case of Government company, the Central Government may approve such other place for holding AGM, if the place is other than registered office.
  • In case of Section 8 company, the time, date and place of each AGM are decided upon before-hand by the Board having regard to the directions, if any, given in this regard by such company in the general meeting. (Exemption notification dated 5th June 2015).

Points to Note

  • According to Section 96(1), 1st AGM shall be held:
    • Within 9 months from the closure of first financial year
  • According to Section 96(1), AGM, other than 1st AGM, shall be held on earliest of the following:
    • Last day of calendar year (1 AGM every year)
    • 15 months from previous AGM (time gap b/w 2 AGM shall not exceed 15 months)
    • 6 months from the closure of F.Y
  • Financial Year
    • in relation to any company or body corporate, means the period ending on the 31st day of March every year
    • in relation to any company or body corporate which has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year

Examples on holding of 1st AGM

  • Suppose a company is incorporated in Jan 2013. Now according to Companies Act, 2013, the 1st financial year of company is closed on 31st March 2014. Therefore the last day on which 1st AGM of company shall be held is 31st Dec, 2014. It should be noted that here company is not required to hold AGM in calendar year 2013.
  • Suppose a company is incorporated in 31st Dec 2013. Now according to Companies Act, 2013, in this case also the 1st financial year of company is closed on 31st March 2014. Therefore the last day on which 1st AGM of company shall be held is 31st Dec, 2014. It should be noted that here company is not required to hold AGM in calendar year 2014.
  • Suppose a company is incorporated on 1st April 2014. Now according to Companies Act, 2013, the 1st financial year of company is closed on 31st March 2015. Therefore the last day on which 1st AGM of company shall be held is 31st Dec, 2015. It should be noted that here company is not required to hold AGM in calendar year 2014.

Examples on holding of AGM other than 1st AGM

  • If 1st AGM of a company was held on 31th Dec 2014, next AGM shall be held on earliest of the following:
    • 31st Dec, 2015 (1 AGM in every year)
    • 31th March, 2016 (within 15 months from previous AGM)
    • 30th Sep, 2015 (6 months from the closure of F.Y)
  • If 1st AGM of a company was held on 31th Aug 2014, next AGM shall be held on earliest of the following:
    • 31st Dec, 2015 (1 AGM in every year)
    • 30th Nov, 2015 (within 15 months from previous AGM)
    • 30th Sep, 2015 (6 months from the closure of F.Y)

Power of Tribunal to call AGM [Section 97]

  1. If any default is made in holding the AGM of a company under section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an AGM of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:
    Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
  1. An AGM held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an AGM of the company under this Act.

Punishment for default in complying with provisions of sections 96 to 98 [Section 99]
If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or in complying with any directions of the Tribunal,

  • the company and every officer of the company who is in default shall be punishable
    • with fine which may extend to Rs. 1 lakh and
    • in the case of a continuing default, with a further fine which may extend to Rs. 5000 for every day during which such default continues.

Application for calling or obtaining a direction to call annual general meeting [Rule 74 of NCLT Rules]

  1. An application under section 97 for calling or obtaining a direction to call the annual general meeting of the company shall be made by any member of the company in Form No. NCLT. 1.
  2. A copy of the application shall be served on the Registrar of Companies on or before the date of hearing.

Every listed entities, under Regulation 30 of SEBI (LODR) Regulation, 2015, is required to disclose the proceedings of annual & extraordinary general meeting to the Stock Exchange where its securities are listed within 24 hours of the event.

Extraordinary General Meeting

What is Extraordinary General Meeting (EGM)?
According to Regulation 42 of Table F of Schedule 1 to Companies Act, 2013, all general meetings (meeting of members) other than annual general meeting (AGM) shall be called extraordinary general meeting.

Why company call Extraordinary General Meeting (EGM)?
Company calls EGM to take consent or approval of members on such emergency matters which may come into existence after the holding of one AGM and which shall not be postponed till next AGM.

Who can call EGM?

  • Board of Directors
    • suo motu (on their own when required) or
    • on receiving valid requisition from the members of company
  • Members (if BOD does not call EGM on their valid requisition)
  • Tribunal

Calling of extraordinary general meeting [Section 100 of Companies Act, 2013]
Calling of EGM Suo Motu by Board of Directors [Section 100(1)]
The Board may, whenever it deems fit, call an extraordinary general meeting of the company.

Provided that an extraordinary general meeting of the company, other than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India. (Effective from 9 Feb 2018)

Calling of EGM by Board of Directors on the request of Members [Section 100(2)]
The Board shall within 21 days from the date of receipt of a valid requisition from members in this regard proceed to call an EGM on a day not later than 45 days from the date of receipt of such requisition.

Valid requisition means requisition made by —

(a) in the case of a company having a share capital,

    • such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of the paid-up share capital of the company carrying voting rights;

(b)  in the case of a company not having a share capital,

  • such number of members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power

According to Section 100(3) of Companies Act, 2013, the requisition to call EGM

  • shall set out the matters for the consideration in EGM and
  • shall be signed by the requisitionists and
  • shall be sent to the registered office of the company.

Calling of EGM by Members [Section 100(4)]
If the Board does not,

  • within 21 days from the date of receipt of a valid requisition in regard,

proceed to call a EGM

  • on a day not later than 45 days from the date of receipt of such requisition,

the meeting may be called and held by the requisitonists themselves

  • within a period of 3 months from the date of the requisition.

According to Section 100(5) of Companies Act, 2013, an EGM called by the requisitionists shall be called and held in the same manner in which the meeting is called and held by the Board.

Further according to Section 100(6), any reasonable expenses incurred by the requisitionists in calling EGM shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuneration payable to such of the directors who were in default in calling the meeting.

Procedure for Calling of Extraordinary general meeting by Members [Rule 17 of Companies (Management and Administration) Rules, 2014]

  • The members may request convening of an extraordinary general meeting in accordance with section 100(4), by providing such requisition in writing or through electronic mode at least clear 21 days prior to the proposed date of such extraordinary general meeting.
  • The notice shall specify the place, date, day and hour of the meeting and shall contain the business to be transacted at the meeting. EGM shall be convened at registered office or in the same city or town where registered office is situated and such meeting should be convened on any day except national holiday.
  • If the resolution is to be proposed as a special resolution, the notice shall be given as required by section 114(2).
  • The notice shall be signed by all the requisitionists or by any requisitionists duly authorised in writing by all other requisitionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.
  • No explanatory statement need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.
  • The notice of the meeting shall be given to those members whose names appear in the Register of members of the company within 3 days on which the requistionists deposit with the Company a valid requisition for calling an extraordinary general meeting.
  • Where the meeting is not convened, the requisitionists shall have a right to receive list of members together with their registered address and number of shares held. Company is bound to give such list made as on 21st day from the date of receipt of valid requisition together with such changes, if any, before the expiry of the 45 days from the date of receipt of a valid requisition.
  • The notice of the meeting shall be given by speed post or registered post or through electronic mode.
  • As per Para 1.2.4 of SS-2 a Meeting called by the requisitionists shall be convened only on a working day.

Power of Tribunal to call meetings of members, etc. [Section 98]
If for any reason it is impracticable

  • to call a meeting of a company in any manner in which meetings of the company may be called, or
  • to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company,

the Tribunal may,

  • either suo motu or
  • on the application of any director or
  • on the application of any member of the company who would be entitled to vote at the meeting,—
    • order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and
    • give such ancillary or consequential directions as the Tribunal thinks expedient and
    • direct that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

Punishment for default in complying with provisions of sections 96 to 98 [Section 99]
If any default is made in holding a meeting of the company in accordance with section 98 or in complying with any directions of the Tribunal,

  • the company and every officer of the company who is in default shall be punishable
    • with fine which may extend to Rs. 1 lakh and
    • in the case of a continuing default, with a further fine which may extend to Rs. 5000 for every day during which such default continues.

Application for obtaining an order for calling of general meeting (other than Annual General Meeting) [Rule 75]

1.       An application under section 98 for obtaining an order for calling of a general meeting (other than Annual General Meeting) shall be made by any director or member of the company in Form No. NCLT. 1

2.       A copy of the application shall be served on the Registrar of Companies on or before the date of hearing.

Notice of Meeting

For calling any General Meeting, Company is required to inform the concerned members and stakeholders who are entitled to attend meeting according to the provisions of Company Laws and Articles of Association of company.

Company has to provide this information by serving proper notice of the meeting.

A notice is said to be proper if

  • notice is properly served within the time specified by Company Laws
  • notice contains all relevant matters
    • as specified by company laws and
    • which may enable members to understand the meaning, scope and implications of the items of businesses to be transacted in the meeting so that members or concerned stakeholders may take proper decisions.

While preparing and sending notice of general meeting, company shall take care of following:

  • authority to give notice
  • length of notice
  • content of notice
  • persons entitled to receive notice
  • service of notice/mode of sending notice (physical/electronic)

Authority to give notice of General Meeting
Generally, Board of Directors of the company is authorized to give notice of the General Meetings. If a person (secretary, manager, any director etc.) gives notice of general meeting without authority of Board of Directors or AOA or provisions of Company Laws, such notice is NULL and VOID, and the meeting on the basis of such notice shall also be null and void.

But it should be noted that such unauthorized notice can become valid if, before meeting, the act of such person is rectified by BOD by passing proper resolution.

Notice of meeting [Section 101 of Companies Act, 2013 - Notified]

Length of Notice [Section 101(1)]
A general meeting of a company may be called by giving not less than clear twenty-one days’ notice either in writing or through electronic mode.
In case of section 8 company, 14 days’ clear notice is required instead of 21 days.

Meaning of ‘Clear 21 Days’
The day of sending notice and the day of meeting shall be excluded while counting 21 days. It means there shall be clear 21 days gap between the day on which notice is sent and the day on which meeting is to be conducted.

Where a notice of general meeting is sent by post, it shall be deemed to be served at the expiration of 48 hours after the letter containing the same is posted (Rule 35(6) of the Companies (Incorporation) Rules, 2014).

Notice at Shorter Length [1st Proviso to Section 101(1)]
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—

  • in the case of an annual general meeting,
    • by not less than 95% of the members entitled to vote thereat; and
  • in the case of any other general meeting, by members of the company—
    • holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than 95% of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
    • having, if the company has no share capital, not less than 95% of the total voting power exercisable at that meeting

 Provided further that 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. (Effective from 9 Feb 2018)

Content of Notice [Section 101(2)]
Every notice of a meeting shall specify the

  • place,
  • date,
  • day and
  • the hour of the meeting

and shall contain

  • a statement of the business to be transacted at such meeting.

Further, according to Section 105(2), in every notice calling a meeting of a company

  • which has a share capital, or
  • the articles of which provide for voting by proxy at the meeting,

there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy (one or more as allowed), to attend and vote instead of himself, and that a proxy need not be a member.

Notice shall contain complete particulars of the venue of the Meeting including route map and prominent land mark for easy location. (SS 1.2.4)

Persons entitled to receive notice of General Meeting [Section 101(3)]

The notice of every meeting of the company shall be given to—

  • every member of the company, legal representative of any deceased member or the assignee of an insolvent member;
  • the auditor or auditors of the company; and
  • every director of the company.

Secretarial Standard on entitlement to receive notice:
Para 1.2.1 of SS-2 provides that where the company has received intimation of death of a Member, the Notice of Meeting shall be sent as under:

  • where securities are held singly, to the Nominee of the single holder;
  • where securities are held by more than one person jointly and any joint holder dies, to the surviving first joint holder;
  • 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.
    • In case of insolvency of a Member, the Notice shall be sent to the assignee of the insolvent Member.
    • In case the Member is a company or body corporate which is being wound up, Notice shall be sent to the liquidator.

Consequences of failure to give notice
If notice of any general meeting is not received by any member or any person entitled to receive such notice and such mistake is deliberate on the part of the company or BOD of company, the meeting pursuant to such notice shall be invalid and all the proceedings in such meeting shall also be invalid.

But, according to Section 101(4),

  • any accidental omission (not deliberate) to give notice to, or
  • the non-receipt of such notice due to any reason out of the hands of company (like postal delay) by,

any member or other person who is entitled to such notice for any meeting

  • shall not invalidate the proceedings of the meeting.

Statement to be annexed to notice [Section 102]
Statement to be annexed to the notice if the business to be transacted in the meeting is special business [Section 102(1)]
A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting, namely:—

(a) the nature of concern or interest, financial or otherwise, if any, of—

  • every director and the manager, if any;
  • every other key managerial personnel; and
  • relatives of the persons mentioned in sub-clauses (i) and (ii);

(b)  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.
Further, 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
    • every other key managerial personnel

of the first mentioned company

shall,

  • if the extent of such shareholding is not less than 2% of the paid-up share capital of that company,

also be set out in the statement. [Proviso to Section 102(2)]

Further, Para 1.2.10 of SS-2 requires that notice shall be accompanied, by an attendance slip and a Proxy form with clear instructions for filling, stamping, signing and/or depositing the Proxy form.

Consequences of non-disclosure or insufficient disclosure of facts in any statement [Section 102(4)]
If due to non-disclosure or insufficient disclosures of facts in the statement (required to be annexed to the notice), any benefit accrues to

  • any promoter, director, manager or other key managerial personnel or their relatives, either directly or indirectly,

such person shall hold such benefit in trust for the company, and shall be liable to compensate the company to the extent of the benefit received by him.

Default in complying with the provisions of Section 102
If any default is made in complying with the provisions of section 102,

  • every promoter, director, manager or other key managerial personnel who is in default

shall be punishable with fine

  • which may extend to fifty thousand rupees or
  • five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives,

whichever is more.

Which business is Special Business?
According to Section 102(2), all the businesses to be transacted in any General Meeting may be divided into 2 categories:

  • Ordinary Business
  • Special Business

Ordinary Business
In case of AGM-
Following 4 businesses are considered as ordinary business only if transacted at AGM

  • the consideration of financial statements and the reports of the Board of Directors and auditors;
  • the declaration of any dividend;
  • the appointment of directors in place of those retiring;
  • the appointment of, and the fixing of the remuneration of, the auditors;

In case of EGM

  • No business shall be considered as ordinary business

Special Business
In case of AGM

  • All businesses other than 4 ordinary businesses specified above

In case of EGM

  • All businesses shall be considered as special businesses

Service of Notice [Section 20]
A document (including notice) may be served on any member by sending it to him

  • by post or
  • by registered post or
  • by speed post or
  • by courier or
  • by delivering at his office or address, or
  • by such electronic or other mode as may be prescribed.

Provided that 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.

Notice of Meeting through Electronic Mode [Rule 18 of Companies (Management and Administration) Rules 2014
According to Rule 18(1), a company may give notice through electronic mode.
Electronic mode shall mean any communication sent by a company through its authorized 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.

According to Rule 18(2), a notice may be sent through e-mail

  • as a text or
  • as an attachment to e-mail or
  • as a notification providing electronic link or Uniform Resource Locator (URL) for accessing such notice.

Conditions for sending notice through Email [Rule 18(3)]

  1. The e-mail shall be addressed to the person entitled to receive such e-mail as per the records of the company or as provided by the depository.
    Company shall provide an advance opportunity at least once in a financial year, to the member to register his e-mail address (if email id is not recorded) and changes therein (in case of new/fresh email id)
  1. The subject line in e-mail shall state the
  • name of the company,
  • notice of the type of meeting,
  • place and the date on which the meeting is scheduled.
  1. If notice is sent in the form of a non-editable attachment to e-mail, such attachment shall be in the Portable Document Format (PDF) or in a non-editable format together with a ‘link or instructions’ for recipient for downloading relevant version of the software.
  2. When notice or notifications of availability of notice are sent by e-mail, the company should ensure that it uses a system
    • which produces
      • confirmation of the total number of recipients e-mailed and
      • a record of each recipient to whom the notice has been sent and copy of such record, and
      • any notices of any failed transmissions and subsequent re-sending shall be retained by or on behalf of the company as ‘‘proof of sending’’.
  3. The company’s obligation shall be satisfied when it transmits the e-mail and the company shall not be held responsible for a failure in transmission beyond its control.
  4. If a member entitled to receive notice fails to provide or update relevant e-mail address to the company, or to the depository participant as the case may be, the company shall not be in default for not delivering notice via e-mail.
  5. The company may send e-mail through in-house facility or its registrar and transfer agent or authorise any third party agency providing bulk e-mail facility.
  6. The notice made available on the electronic link or URL has to be readable, and the recipient should be able to obtain and retain copies and the company shall give the complete Uniform Resource Locator or address of the website and full details of how to access the document or information.
  7. The notice of the general meeting of the company shall be simultaneously placed on the website of the company if any and on the website as may be notified by the Central Government.
    Explanation.- For the purpose of this rule, it is hereby declared that the extra ordinary general meeting shall be held at a place within India. (omitted by The Companies (Management and Administration) . Second Amendment Rules, 2018.)

 

Secretarial Standard on issuance of notice:
Para 1.2.2 of SS-2 provides that 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.

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:

  •  if the company provides the facility of e-voting ;
  • if the item of business is being transacted through postal ballot;

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.

Notice shall be sent to Members by registered post or speed post or email if the Meeting is called by the requisitionists themselves and where the Board had not proceeded to call the Meeting.

Quorum for meetings

Quorum for meetings [Section 103 of Companies Act, 2013]
Quorum is the presence of minimum required number of members for valid commencement of meeting and for the transaction of business in that meeting.

Minimum number of members required for forming quorum [Section 103(1)]
Unless the AOA of the company provide for a larger number,—

  1. in case of a public company,—
  • five (5) members personally present if the number of members as on the date of meeting is not more than one thousand (1000);
  • fifteen (15) members personally present if the number of members as on the date of meeting is more than one thousand (1000) but up to five thousand (5000);
  • thirty (30) members personally present if the number of members as on the date of the meeting exceeds five thousand (5000);

    2. in the case of a private company,
    • two (2) members personally present,

shall be the quorum for a meeting of the company.

Note:

  • AOA of a company may provide for higher number of members for creating quorum.
  • Only ‘members personally present’ shall be considered as quorum. Proxies shall be excluded.
  • Representative of any other member body corporate or government shall be considered for the purpose of quorum. Further, if 2 or more body corporate members are represented by single individual, than presence of all the body corporate members shall be considered.
  • If all the members (who are entitled to attend the meeting) are present, meeting shall be valid even if the requirement of quorum is not satisfied as per AOA of company.
  • In case of class meeting, it is possible that only 1 person is holding all the shares/stake (like in case of meeting of preference shareholders). In such case presence of such person alone is considered as valid quorum.
  • When default is made in holding an AGM/EGM, the Tribunal may direct that one member present in person or by proxy shall be deemed to constitute a meeting.
  • Generally, preference shareholders are not be considered for the purpose of quorum, unless and until they are allowed to vote in the meeting according to the provisions of company laws
  • In my opinion, joint shareholders shall be considered as 1 for the purpose of quorum unless and until contrary is provided by AOA (Companies Act, 2013 is silent in this regard)
  • Members who have voted by remote e-voting have the right to attend the General Meeting and accordingly their presence shall be, counted for the purpose of quorum.
  • A member who is not entitled to vote on any particular item of business being a related party, if present, shall be counted for the purpose of quorum.
  • Thus, in case of a public company having not more than 1000 members with a quorum requirement of five members, an authorized representative of five bodies corporate cannot form a quorum by himself but can do so if at least one more member is personally present.

Example
Following persons were present at the time of commencement of AGM:

  • Mr. A, representative of President of India
  • Mr. B and Mr. C, preference shareholders
  • Mr. D, representing PQR Ltd. and XYZ Ltd.
  • Mr. E,  member
  • Mr. F, Mr. G, Mr. H, proxies of members

Check whether quorum was present or not in case of public company where the number of members as on the date of meeting is not more than 1000?

If no quorum is present [Section 103(2)]
Meeting without proper quorum is invalid and all proceedings of such meeting shall be null and void. Therefore according to Section 103(2), if the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company—

  • the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or
  • the meeting, if called by requisitionists under section 100, shall stand cancelled

Notice of adjourned meeting
In case

  • of an adjourned meeting or
  • of a change of day, time or place of adjourned meeting,

the company shall give not less than three (3) days’ notice to the members

  • either individually or
  • by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.

According to SS2 Para 15.2 if a Meeting is adjourned sine-die or for a period of thirty days or more, a Notice of the adjourned Meeting shall be given in accordance with the provisions contained hereinabove relating to Notice.

If no quorum is present in the adjourned meeting also
If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum (which shall not be less than 2).

Points to be noted:

  • Para 3.1 of SS-2 requires that quorum shall be present not only at the time of commencement of the Meeting but also while transacting business.
  • A director who is not a member of a company cannot propose or second a resolution and his presence cannot be counted for the purpose of quorum.
  • A quorum will always be presumed, unless it is questioned at the meeting or the records show that quorum was not, in fact, present. The Chairman should check that quorum is present.
  • A single member cannot form quorum even if he holds almost all the shares which carry voting right or carries proxies for all other members (except where law provides so).
  • The Department of Company Affairs (now MCA) is of the view that preference shareholders cannot, be counted as members for determining quorum except in respect of items of business, if any, where they have right to vote under the Act.
  • According to Para-15 of SS-2, at an adjourned Meeting, only the unfinished business of the original meeting shall be considered. Any Resolution passed at an adjourned Meeting would be deemed to have been passed on the date of the adjourned Meeting and not on any earlier date.

Proxies

In the contest of General Meeting, proxy is a person who is authorized by a member to attend and vote at general meeting on his/her behalf.

Proxies [Section 105 of Companies Act, 2013]

Power of a member to appoint proxy
A member (who is entitled to attend and vote at a meeting of the company)

  • of a company having share capital (whether authorized by AOA or not) and
  • of a company not having share capital (if authorized by AOA)

shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf.

Disabilities of Proxy at General Meeting

  • A proxy shall not have the right to speak at such meeting
  • A proxy shall not be entitled to vote except on a poll. It means a proxy can’t vote on show of hands.
  • A proxy is not counted for the purpose of quorum.

Note:

  • Proxy may or may not be a member of the company (In case of Section 8 companies proxy shall be the member of the company).

Notice of General Meeting shall state that members are entitled to appoint proxy
In every notice calling a meeting of a company

  • which has a share capital, or
  • the articles of which provide for voting by proxy at the meeting,

there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member.
If default is made in complying with this requirement, every officer of the company who is in default shall be liable to penalty of five thousand rupees (Rs. 5000).

Provisions related to instrument appointing proxy

  1. Proxy Instrument (form) shall be in writing and signed by member
    The instrument appointing a proxy shall—
  • be in writing; and
  • be signed by
      • the appointer or
      • his attorney duly authorised in writing

If the appointer is a body corporate, instrument appointing the proxy shall

  • be under its seal or
  • be signed by an officer or an attorney duly authorised by it.

2. Proxy Instrument (form) shall be valid if in the Form No. MGT.11
An instrument appointing a proxy, if in the Form No. MGT.11, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company.

3. Proxy Instrument (form) shall be deposited with company at least 48 hours before meeting; Company can’t specify longer period
Any provision contained in the articles of a company

  • which specifies or requires a longer period than 48 hours before a meeting of the company,
    • for depositing with the company
      • any instrument appointing a proxy,

shall have effect as if a period of 48 hours had been specified in or required by such provision for such deposit.

Company not allowed to send invitation at its own expense to the members for appointing a person as proxy
If for the purpose of any meeting of a company,

  • invitations
    • to appoint as proxy a person or one of a number of persons specified in the invitations
  • are issued at the company’s expense to any member,

than every officer of the company

  • who issues the invitation as aforesaid or authorises or permits their issue, shall be liable to a penalty of Rs. 50,000.

But an officer shall not be liable 

  • by reason only of the issue to a member
    • at his request in writing
      • of a form of appointment naming the proxy, or
      • of a list of persons willing to act as proxies,

if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

Right of Members to inspect the proxies lodged
Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled

  • during the period beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting,

to inspect the proxies lodged,

  • at any time during the business hours of the company,
  • if not less than 3 days’ notice in writing of the intention so to inspect is given to the company.

Provisions of Companies (Management and Administration) Rules, 2014 related to ‘Proxies’ [Rule 19]

  1. A member of a company registered under section 8 shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company.
  2. A person can act as proxy on behalf of members
  • not exceeding 50 in number and
  • holding in the aggregate not more than ten percent (10%) of the total share capital of the company carrying voting rights.
    Where one member holds more than ten percent (10%) of the total share capital
    But where single member holds more than ten percent (10%) of the total share capital of the Company carrying voting rights, he/she may appoint a single person as proxy and such person shall not act as proxy for any other person or shareholder.
  1. The appointment of proxy shall be in the Form No. MGT.11.

Revocation of Proxies (on the basis of old case laws)

  • The relationship between the proxy and the person appointing him is that of an agent and principal, therefore proxy can be revoked by the member at any time.
  • Further proxy is automatically revoked by the death or insolvency of the member.
  • The vote given by a proxy is valid notwithstanding its revocation if no intimation in writing of the revocation is received at the office of the company or by the chairman of the meeting before the vote is given.
  • If after appointment of proxy, the member himself attends the meeting, it amounts to automatic revocation of proxy. But once the proxy has voted, it cannot be revoked.
  • If one shareholder makes out two proxies in respect of the same shares, the proxy bearing the later date will be valid as against the earlier proxy.
  • If the proxies have the same dates, both the proxies would be ineffective. But where one proxy is lodged before and the other after the expiry of the date fixed for lodging proxies, the former shall be accepted.

Provisions of Secretarial Standards related to proxies (Para 6)

  • An instrument of Proxy duly filled, stamped and signed, is valid only for the Meeting to which it relates including any adjournment thereof.
  • An instrument of Proxy is valid only if it is properly stamped as per the applicable law. Unstamped or inadequately stamped Proxies or Proxies upon which the stamps have not been cancelled are invalid.
  • Proxy-holder shall prove his identity at the time of attending the Meeting.
  • An authorized representative of a body corporate or of the President of India or of the Governor of a State, holding shares in a company, may appoint a Proxy under his signature.
  • A Proxy form which does not state the name of the Proxy shall not be considered valid.
  • Undated proxy shall not be considered valid.
  • If a Proxy had been appointed for the original meeting and such meeting is adjourned, any Proxy given for the adjourned Meeting revokes the Proxy given for the original Meeting.
  • A proxy later in date revokes any Proxy/Proxies dated prior to such Proxy.
  • A Proxy is valid until written notice of revocation has been received by the company before the commencement of the Meeting or adjourned Meeting, as the case may be.
  • All Proxies received by the company shall be recorded chronologically in a register kept for that purpose. In case any Proxy entered in the register is rejected, the reasons therefor shall be entered in the ‘remarks’ column

Question of ICSI Book on Proxy

Question:
Annual General Meeting of a Public Company was scheduled to be held on 15.12.2015. Mr. A, a shareholder, issued two Proxies in respect of the shares held by him in favor of Mr. ‘X’ and Mr. ‘Y’. The proxy in favor of ‘Y’ was lodged on 12.12.2015 and the one in favor of Mr. X was lodged on 15.12.2015. The company rejected the proxy in favor of Mr. Y as the proxy in favor of Mr. Y was of dated 12.12.2015 and thus in favor of Mr. X was of dated 15.12.2015. Is the rejection by the company in order?

Question:
The Chairman of the meeting of a public company received a Proxy 54 hours before the time fixed for the start of the meeting. He refused to accept the Proxy on the ground that the Articles of the company provided that a Proxy must be filed 60 hours before the start of the meeting. Decide, under the provisions of the Companies Act, 2013 whether the Proxy holder can compel the Chairman to admit the Proxy?

Question:
Mr. A, a member of XYZ Limited, appoints Mr. B as his proxy to attend the general meeting of the company. Later he (Mr. A) also attends the meeting. Both Mr. A (the member) and Mr. B (the proxy) voted on a particular resolution in the meeting. Mr. A’s vote was declared invalid by the chairman stating that since he has appointed the proxy and Mr. B’s vote has been considered as valid. Mr. A objects to the decision of the Chairman. Decide, under the provisions of the Companies Act, 2013 whether Mr. A’s objection shall be taxable.

 

Representation of President and Governors in meetings [Section 112 of Companies Act, 2013]
The President of India or the Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his representative at any meeting of the company or at any meeting of any class of members of the company.

A person so appointed shall, for the purposes of this Act, be deemed to be a member of such a company and shall be entitled to exercise the same rights and powers, including the right to vote by proxy and postal ballot, as the President or, as the case may be, the Governor could exercise as a member of the company.

Representation of corporations at meeting of companies and of creditors [Section 113 of Companies Act, 2013]
A body corporate (whether a company or not), may, —

  1. if it is a member of a company within the meaning of this Act,
  • by resolution of its Board of Directors or other governing body,
    • authorise such person as it thinks fit to act as its representative
      • at any meeting of the company, or
      • at any meeting of any class of members of the company;

2. if it is a creditor, including a holder of debentures, of a company within the meaning of this Act,

  • by resolution of its directors or other governing body,
    • authorize such person as it thinks fit to act as its representative
      • at any meeting of any creditors of the company

A person so authorised shall be entitled to exercise the same rights and powers, including the right to vote by proxy and by postal ballot, on behalf of the body corporate which he represents as that body could exercise if it were an individual member, creditor or holder of debentures of the company.

Voting in the General Meeting

Ways in which voting can be done on any resolution in General Meetings
Basically there can be 4 ways in which voting can take place on resolutions in General Meeting:

  • Voting by show of hands
  • Voting by electronic modes (e-voting)
  • Voting by Poll
  • Voting through Postal Ballot

Restriction on voting rights [Section 106 of Companies Act, 2013]

  1. Notwithstanding anything contained in this Act, the AOA of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name
  • on which any calls or other sums presently payable by him have not been paid, or
  • in regard to which the company has exercised any right of lien.
  1. A company shall not, except on the grounds specified in sub-section (1), prohibit any member from exercising his voting right on any other ground.
  2. On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

Note: In case of private company – Section 106 shall apply, unless otherwise specified in respective sections or the articles of the company provide otherwise.  – Notification dated 5th june, 2015.

Voting by show of hands [Section 107 of Companies Act, 2013]
At any general meeting, a resolution put to the vote of the meeting shall, unless

  • a poll is demanded under section 109 or
  • the voting is carried out electronically,

be decided on a show of hands.

Chairman’s declaration of result and an entry in the minute books related to voting shall be conclusive

  • A declaration by the Chairman of the meeting of the passing of a resolution (or otherwise) by show of hands and
  • an entry to that effect in the books containing the minutes of the meeting of the company

shall be conclusive evidence of the fact of passing of such resolution (or otherwise).

In case of private company – Section 107 shall apply, unless otherwise specified in respective sections or the articles of the company provide otherwise.  – Notification dated 5th june, 2015.

Voting through electronic means [Section 108 of Companies Act, 2013]
The Central Government may prescribe the class or classes of companies and manner in which a member may exercise his right to vote by the electronic means.

Voting through electronic means [Rule 20]
Companies required to provide e-voting facility

  • Every listed company or
  • a company having not less than 1000 shareholders,

shall provide to its members facility to exercise their right to vote at general meetings by electronic means.

Nidhi Companies are not required to provide the facility to vote by electronic means.

Provisions related to notice of meeting in case of e-voting

  1. The notices of the meeting shall be sent to all the members, auditors of the company, or directors either –
  • by registered post or speed post ; or
  • through electronic means like registered e-mail id;
  • through courier service;
  1. The notice shall also be placed on the website of the company forthwith after it is sent to the members;
  2. The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means;
  3. the notice of the meeting shall clearly state –
    • that the company is providing facility for voting by electronic means and the business may be transacted through such voting;
    • that the facility for voting, either through electronic voting system or ballot or polling paper shall also be made available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting;
    • that the members who have cast their vote by remote-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again;
  1. The notice shall clearly
  • indicate the process and manner for voting by electronic means;
  • indicate the time schedule including the time period during which the votes may be cast by remote e-voting;
  • provide the details about the login lD;
  • specify the process and manner for generating or receiving the password and for casting of vote in a secure manner.

6. Public Notice
The company shall cause a public notice by way of an advertisement to be published, immediately on completion of despatch of notices for the meeting but at least 21 days before the date of general meeting, at

  • least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and
  • at least once in English language in an English newspaper having country-wide circulation, and specifying in the said advertisement, inter alia,. the following manners namely :-
    • statement that the business maybe transacted through voting by electronic means;
    • the date and time of commencement of remote e-voting;
    • the date and time of end of remote e-voting;
    • cut-off date;
    • the manner in which persons who have acquired shares and become members of the company after the dispatch of notice may obtain the login ID and password;
  • the statement that –
    • remote e-voting shall not be allowed beyond the said date and time;
    • the manner in which the company shall provide for voting by members present at the meeting; and
    • a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again in the meeting; and
    • a person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting;
  • website address of the company, if any, and of the agency where notice of the meeting is displayed; and
  • name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means:
    Provided that the public notice shall be placed on the website of the company, if any, and of the agency;
  1. the facility for remote e-voting shall remain open for not less than 3 days and shall close at 5.00 p.m. on the date Preceding the date of the general meeting;
  2. During the period when facility for remote e-voting is provided, the members of the company, holding shares either in physical form or in dematerialised form, as on the cut-off date, may opt for remote e-voting:
    Provided that once the vote on a resolution is cast by the member, he shall not be allowed to change it subsequently or cast the vote again:
    Provided further that a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again;
  3. At the end of the remote e-voting period, the facility shall forthwith be blocked:
    Provided that if a company opts to provide the same electronic voting system as used during remote e-voting during the general meeting, the said facility shall be in operation till all the resolutions are considered and voted upon in the meeting and may be used for voting only by the members attending the meeting and who have not exercised their right to vote through remote e-voting.
  4. The Board of Directors shall appoint one or more scrutiniser, who may be Chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an Advocate, or any other person who is not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinise the voting and remote e-voting process in a fair and transparent manner:
    Provided that the scrutiniser so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the electronic voting system;
  5. The scrutiniser shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority;
  6. The Chairman shall, at the general meeting, at the end of discussion on the resolutions on which voting is to be held, allow voting, with the assistance of scrutiniser, by use of ballot or polling paper or by using an electronic voting system for all those members who are present at the general meeting but have not cast their votes by availing the remote e-voting facility.
  7. The scrutiniser shall, immediately after the conclusion of voting at the general meeting, first count the votes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the company and make, not later than 3 days of conclusion of the meeting, a consolidated scrutiniser’s report of the total votes cast in favor or against, if any, to the Chairman or a person authorised by him in writing who shall countersign the same:
    Provided that the Chairman or a person authorised by him in writing shall declare the result of the voting forthwith;
    Explanation.- lt is hereby clarified that the manner in which members have cast their votes, that is affirming or negating the resolution, shall remain secret and not available to the Chairman, Scrutiniser or any other person till the votes are cast in the meeting.
  8. For the purpose of ensuring that members who have cast their votes through remote e-voting do not vote again at the general meeting, the scrutiniser shall have access, after the closure of period for remote e-voting and before the start of general meeting, to details relating to members such as their names, folios, number of shares held and such other information that the scrutiniser may require, who have cast votes through remote e-voting but not the manner in which they have cast their votes.
  9. The scrutiniser shall maintain a register either manually or electronically to record the assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the members, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights;
  10. The register and all other papers relating to voting by electronic means shall remain in the safe custody of the scruitniser until the Chairman considers, approves and signs the minutes and thereafter, the scrutiniser shall hand over the register and other related papers to the company.
  11. The results declared along with the report of the scrutiniser shall be placed on the website of the company, if any, and on the website of the agency immediately after the result is declared by the Chairman:
    Provided that in case of companies whose equity shares are listed on a recognised stock exchange, the company shall, simultaneously, forward the results to the concemed stock exchange or exchanges where its equity shares are listed and such stock exchange or exchanges shall place the results on its or their website.
  12. A resolution proposed to be considered through voting by electronic means shall not be withdrawn.

Voting by Poll

According to Section 106(3), on a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

Demand for poll [Section 109]
When and who can demand poll
Before or on the declaration of the result of the voting on any resolution on show of hands, a poll

  • may be ordered to be taken by the Chairman of the meeting on his own motion, and
  • shall be ordered to be taken by the Chairman on a demand made in that behalf,—
  1. in the case a company having a share capital,
    • by the members present in person or by proxy, where allowed, and
      • having not less than one-tenth of the total voting power or
      • holding shares on which an aggregate sum of not less than 5 lakh rupees or such higher amount as may be prescribed has been paid-up; and
  2. in the case of any other company,
  • by any member or members present in person or by proxy, where allowed, and
    • having not less than one-tenth of the total voting power.

When and who can withdraw poll
The demand for a poll may be withdrawn at any time by the persons who made the demand.

When poll shall be taken
A poll demanded for

  • adjournment of the meeting or
  • appointment of Chairman of the meeting

shall be taken forthwith.

A poll demanded

  • on any question other than adjournment of the meeting or appointment of Chairman

shall be taken at such time, not being later than 48 hours from the time when the demand was made, as the Chairman of the meeting may direct.

Appointment of Scrutinizer(s) for Poll
Where a poll is to be taken, the Chairman of the meeting shall appoint such number of persons, as he deems necessary, to scrutinise the poll process and votes given on the poll and to report thereon to him in the manner as may be prescribed.

Power of Chairman to regulate the manner in which the poll shall be taken
Subject to the provisions of this section, the Chairman of the meeting shall have power to regulate the manner in which the poll shall be taken.

Result of Poll shall be conclusive
The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken.

Manner in which the Chairman of meeting shall get the poll process scrutinised and report thereon
[Rule 21 of Companies (Management and Administration) Rules, 2014]

The Chairman of a meeting shall ensure that-

  • The Scrutinizers are provided with the Register of Members, specimen signatures of the members, Attendance Register and Register of Proxies.
  • The Scrutinizers are provided with all the documents received by the Company pursuant to sections 105 (details of proxies), 112 (details of representatives of President and Governor) and section 113 (details of representatives of Body Corporates).
  • The Scrutinizers shall arrange for polling papers and distribute them to the members and proxies present at the meeting; in case of joint shareholders, the polling paper shall be given to the first named holder or in his absence to the joint holder attending the meeting as appearing in the chronological order in the folio
  • Polling paper shall be in Form No. MGT.12.
  • The Scrutinizers shall keep a record of the polling papers received in response to poll, by initialing it.
  • The Scrutinizers shall lock and seal an empty polling box in the presence of the members and proxies.
  • The Scrutinizers shall open the Polling box in the presence of two persons as witnesses after the voting process is over.
  • In case of ambiguity about the validity of a proxy, the Scrutinizers shall decide the validity in consultation with the Chairman. The Scrutinizers shall ensure that if a member who has appointed a proxy has voted in person, the proxy’s vote shall be disregarded.
  • The Scrutinizers shall count the votes cast on poll and prepare a report thereon addressed to the Chairman.
  • The Scrutinizers’ report shall state total votes cast, valid votes, votes in favour and against the resolution including the details of invalid polling papers and votes comprised therein.
  • The Scrutinizers shall submit the Report to the Chairman who shall counter-sign the same.
  • The Chairman shall declare the result of Voting on poll. The result may either be announced by him or a person authorized by him in writing.

Report on Poll by scrutinizers to Chairman within 7 days
|The scrutinizers appointed for the poll, shall submit a report to the Chairman of the meeting in Form No. MGT.13 and the report shall be signed by the scrutinizer and, in case there is more than one scrutinizer by all the scrutinizer, and the same shall be submitted by them to the Chairman of the meeting within 7 days from the date the poll is taken.

Voting through Postal ballot
Postal ballot [Section 110 of Companies Act, 2013]
Notwithstanding anything contained in this Act, a company—

  • shall, in respect of such items of business as notified by the Central Government; and
  • may, in respect of any item of business (other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting),

transact by means of postal ballot, in such manner as may be prescribed, instead of transacting such business at a general meeting.

Provided that any item of business required to be transacted by means of postal ballot under clause (a), may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section. [by Companies (Amendment)Act,2017 :- Effective From 09th February 2018]

If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf.

Items of business to be transacted through postal ballot only [Rule 22(16) of Companies (Management and Administration) Rules, 2014]
Following items of business shall be transacted only by means of voting through a postal ballot-

  1. alteration of the objects clause (main objects in case of existing companies) of the memorandum;
  2. alteration of articles of association in relation to insertion or removal of provisions which are required to be included in the articles of a company in order to constitute it a private company [under clause (68) of section 2];
  3. change in place of registered office outside the local limits of any city, town or village;
  4. change in objects for which a company has raised money from public through prospectus and still has any unutilized amount out of the money so raised;
  5. issue of shares with differential rights as to voting or dividend or otherwise;
  6. variation in the rights attached to a class of shares or debentures or other securities;
  7. buy-back of shares;
  8. election of a small shareholders’ director;
  9. sale of the whole or substantially the whole of an undertaking of a company;
  10. giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186 (exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is more)

Provided that any aforesaid items of business under this sub-rule, required to be transacted by means of postal ballot, may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section

Companies not required to transact any matter through postal ballot

  • One Person Company and
  • other companies having members upto 200

are not required to transact any business through postal ballot

Procedure to be followed for conducting business through postal ballot [Rule 22 of Companies (Management and Administration) Rules, 2014]
Notice to shareholders along with a draft resolution
Where a company is required or decides to pass any resolution by way of postal ballot, it shall send a notice to all the shareholders, along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a postal ballot because postal ballot means voting by post or through electronic means within a period of 30 days from the date of dispatch of the notice.

The notice shall be sent either

  1. by Registered Post or speed post, or
  2. through electronic means like registered e-mail id or
  3. through courier service

for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period of 30 days.

The notice of the postal ballot shall also be placed on the website of the company forthwith after the notice is sent to the members and such notice shall remain on such website till the last date for receipt of the postal ballots from the members.

Advertisement in Newspaper
An advertisement shall be published

  • at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and
  • at least once in English language in an English newspaper having a wide circulation in that district,

about having dispatched the ballot papers and specifying therein, inter alia, the following matters, namely:-

  • a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;
  • the date of completion of dispatch of notices;
  • the date of commencement of voting;
  • the date of end of voting;
  • the statement that any postal ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date;
  • a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and
  • contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

Appointment of scrutinizer
The Board of directors shall appoint one scrutinizer, who is not in employment of the company and who, in the opinion of the Board can conduct the postal ballot voting process in a fair and transparent manner.

The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.
The scrutinizer shall maintain a register either manually or electronically to record their assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the shareholder, number of shares held by them, nominal value of such shares, whether the shares have differential voting rights, if any, details of postal ballots which are received in defaced or mutilated form and postal ballot forms which are in valid.

Resolution passed through postal ballot shall be deemed to be passed at General Meeting
If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot including voting by electronic means, it shall be deemed to have been duly passed at a general meeting convened in that behalf.
Note:

  • The scrutinizer shall submit his report as soon as possible after the last date of receipt of postal ballots but not later than 7 days
  • The assent or dissent received after 30 days from the date of issue of notice shall be treated as if reply from the member has not been received.
  • Postal ballot received back from the shareholders shall be kept in the safe custody of the scrutinizer and after the receipt of assent or dissent of the shareholder in writing on a postal ballot, no person shall deface or destroy the ballot paper or declare the identity of the shareholder.
  • The postal ballot and all other papers relating to postal ballot including voting by electronic means, shall be under the safe custody of the scrutinizer till the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the ballot papers and other related papers or register to the company who shall preserve such ballot papers and other related papers or register safely.
  • The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.

The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandis to this rule in respect of the voting by electronic means.

Chairman of meetings [Section 104 of Companies Act, 2013]

  1. Unless the articles (AOA) of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands.
  2. If a poll is demanded on the election of the Chairman,
    • it shall be taken forthwith in accordance with the provisions of this Act and
    • the Chairman elected on a show of hands under sub-section (1) shall continue to be the Chairman of the meeting until some other person is elected as Chairman as a result of the poll, and such other person shall be the Chairman for the rest of the meeting.

Secretarial Standard on appointment and role of Chairman:

  • The Chairman of the Board shall take the chair and conduct the Meeting.
  • If the Chairman is not present within fifteen minutes after the time appointed for holding the Meeting, or if he is unwilling to act as Chairman of the Meeting, or if no Director has been so designated, the Directors present at the Meeting shall elect one of themselves to be the Chairman of the Meeting.
  • If no Director is present within fifteen Minutes after the time appointed for holding the Meeting, or if no Director is willing to take the chair, the Members present shall elect, on a show of hands, one of themselves to be the Chairman of the Meeting, unless otherwise provided in the Articles.
  • If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of the Act and the Chairman elected on a show of hands shall continue to be the Chairman of the Meeting until some other person is elected as Chairman as a result of the poll, and such other person shall be the Chairman for the rest of the Meeting.
  • The Chairman shall ensure that the Meeting is duly constituted in accordance with the Act and the Articles or any other applicable laws, before it proceeds to transact business.
  • The Chairman shall then conduct the Meeting in a fair and impartial manner and ensure that only such business as has been set out in the Notice is transacted. The Chairman shall regulate the manner in which voting is conducted at the Meeting keeping in view the provisions of the Act.
  • Chairman shall explain the objective and implications of the Resolutions before they are put to vote at the Meeting.

Resolutions requiring special notice [Section 115 of Companies Act, 2013]
Where, by any provision contained in this Act or in the articles of a company, special notice is required of any resolution, notice of the intention to move such resolution shall be given to the company by such number of members

  • holding not less than 1% of total voting power or
  • holding shares on which such aggregate sum not exceeding Rs. 5 lakh (as may be prescribed), has been paid-up

and the company shall give its members notice of the resolution in such manner as may be prescribed.

Provisions related to Special Notice [Rule 23 of Companies (Management and Administration) Rules, 2014]

  1.  A special notice required to be given to the company shall be signed, either individually or   collectively by such number of members
    • holding not less than 1% of total voting power or
    • holding shares on which an aggregate sum of not less than five lakh rupees has been paid up on the date of the notice.
  2. The notice shall be sent by members to the company not earlier than three months but at least 14 days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.
  3. The company shall immediately after receipt of the notice, give its members notice of the resolution at least 7 days before the meeting , exclusive of the day of dispatch of notice and day of the meeting , in the same manner as it gives notice of any general meetings.
  4. Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, the notice shall be published
    • in English language in English newspaper and
    • in vernacular language in a vernacular newspaper,
      both having wide circulation in the State where the registered office of the Company is situated and such notice shall also be posted on the website, if any, of the Company.
  5. The notice shall be published at least 7 days before the meeting, exclusive of the day of publication of the notice and day of the meeting.

Resolutions passed at adjourned meeting [Section 116 of Companies Act, 2013]
Where a resolution is passed at an adjourned meeting of —

  • a company; or
  • the holders of any class of shares in a company; or
  • the Board of Directors of a company,

the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.

Resolutions and agreements to be filed [Section 117 of Companies Act, 2013]
Matters or agreements required to be filled with ROC within 30 days
A copy of following resolutions or any agreements (together with the explanatory statement annexed to the notice calling the meeting in which the resolution is proposed), shall be filed with the Registrar within 30 days of the passing or making thereof and with such fees as may be prescribed:

  1. special resolutions;
  2. any resolution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;
  3.  resolutions passed by a company according consent to the exercise by its Board of Directors of any of the powers under clause (a) and clause (c) of sub-section (1) of section 180;
  4. resolutions requiring a company to be wound up voluntarily passed in pursuance of section 59 of the Insolvency and Bankruptcy Code, 2016;
  5. resolutions passed in pursuance of sub-section (3) of section 179; and
  6. any other resolution or agreement as may be prescribed and placed in the public domain.

Matters covered under Section 180(1)(a) and Section 180(1)(c)

  • to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings;
  • to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves;

Resolutions passed Board of Directors of a company at meetings of the Board in pursuance of Section 179(3), namely:—

  1. to make calls on shareholders in respect of money unpaid on their shares;
  2. to authorise buy-back of securities under section 68;
  3. to issue securities, including debentures, whether in or outside India;
  4. to borrow monies;
  5. to invest the funds of the company;
  6. to grant loans or give guarantee or provide security in respect of loans;
  7. to approve financial statement and the Board’s report;
  8. to diversify the business of the company;
  9. to approve amalgamation, merger or reconstruction;
  10. to take over a company or acquire a controlling or substantial stake in another company;
  11. any other matter which may be prescribed

For the purpose of Section 179(3)(k) of the Act, following matters has been prescribed by Central Government through Companies (Meetings of Board and its Powers) Rules, 2014

  1. to make political contributions;
  2. to appoint or remove key managerial personnel (KMP);
  3. to appoint internal auditors and secretarial auditor;

Punishment for failure to file the resolution or the agreement
If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein,

  • such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of Rs. 500 for each day after the first during which such failure continues, subject to a maximum of Rs. 25 Lakhs and
  • every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of Rs. 50,000 and in case of continuing failure, with further penalty of Rs. 500 for each day after the first during which such failure continues, subject to a maximum of Rs. 5 Lakh.

Copy of certain resolutions to be embodied in or annexed to every copy of AOA

  • Copy of every resolution which has the effect of altering the articles and
  • copy of every agreement referred above

shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.

According to Rule 24 of Companies (Management and Administration) Rules, 2014
A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any, shall be filed with the Registrar in Form No. MGT.14 along with the fee.

Minutes of Meeting

Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot [Section 118 of Companies Act, 2013]
Minutes to be prepared, signed and kept in books of minutes within 30 days
Every company shall cause minutes of

  • the proceedings of every general meeting and
  • every resolution passed by postal ballot and
  • every meeting of its Board of Directors or of every committee of the Board,

to be prepared and signed in such manner as may be prescribed and kept within thirty (30) days of the

  • conclusion of every such meeting concerned, or
  • passing of resolution by postal ballot

in books kept for that purpose with their pages consecutively numbered.

Note:

  • The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
  • All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.

In the case of a meeting of the Board of Directors or of a committee of the Board
In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain—

  1. the names of the directors present at the meeting; and
  2. in the case of each resolution passed at the meeting,
    • the names of the directors, if any, dissenting from, or not concurring with the resolution.

Matters not to be included in the minutes
There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting,—

  • is or could reasonably be regarded as defamatory of any person; or
  • is irrelevant or immaterial to the proceedings; or
  • is detrimental to the interests of the company.

Note:

  • The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified above.

Minutes are evidence of proceedings
The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.

Minutes signifies the validity of the meeting and proceedings in the meetings
Where the minutes have been kept in accordance with this section then, until the contrary is proved,

  • the meeting shall be deemed to have been duly called and held, and
  • all proceedings thereat to have duly taken place, and
  • the resolutions passed by postal ballot to have been duly passed and
  • in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.

Mandatory observation of secretarial standards
Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India.

Penalty in case of default in complying with the provisions of this section
If any default is made in complying with the provisions of this section in respect of any meeting,

  • the company shall be liable to a penalty of twenty-five thousand rupees and
  • every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

Punishment if a person is found guilty of tampering with the minutes
If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable

  • with imprisonment for a term which may extend to two years and
  • with fine
    • which shall not be less than twenty-five thousand rupees but
    • which may extend to one lakh rupees.

Minutes of proceedings of general meeting, meeting of Board of Directors and other meetings and resolutions passed by postal ballot [Rule 25 of Companies (Management and Administration) Rules, 2014]
Separate Minute Book for each type of Meeting
A distinct minute book shall be maintained for each type of meeting namely:-

  1. general meetings of the members;
  2. meetings of the creditors
  3. meetings of the Board; and
  4. meetings of each of the committees of the Board.

Note:

  • Resolutions passed by postal ballot shall be recorded in the minute book of general meetings as if it has been deemed to be passed in the general meeting.

Minutes of proceedings shall be entered in the books within 30 days
The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

In case of every resolution passed by postal ballot,

  • a brief report on the postal ballot conducted including
    • the resolution proposed,
    • the result of the voting thereon and
    • the summary of the scrutinizer’s report

shall be entered in the minutes book of general meetings along with the date of such entry within thirty days from the date of passing of resolution.

Each page of every such book shall be initialed or signed
Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed –

  • in the case of minutes of proceedings of a meeting of the Board or of a committee thereof,
    • by the chairman of the said meeting or the chairman of the next succeeding meeting;
  • in the case of minutes of proceedings of a general meeting,
    • by the chairman of the same meeting within the aforesaid period of thirty days or
    • in the event of the death or inability of that chairman within that period,
      • by a director duly authorised by the Board for the purpose;
    • in case of every resolution passed by postal ballot,
      • by the chairman of the Board within the aforesaid period of thirty days or
      • in the event of there being no chairman of the Board or the death or inability of that chairman within that period,
        • by a director duly authorized by the Board for the purpose.

Preservation of minute books of general meetings and board/committee meetings
The minute books of the meetings shall be preserved permanently and shall be kept

  • at the registered office of the company or
  • at such other place as may be approved by the Board

If minute books are kept at the registered office of the company than they shall be kept in the custody of

  • the company secretary or
  • any director duly authorised by the board

Leave a Comment