Meetings of the company

Meetings constitute an integral and important portion in the Companies Act, 1956. It
gives an opportunity for the shareholders to know about the state of affairs of the
company and also deliberate on various issues. There are different kinds of meetings that
have to be called upon by the company and statutory requirements have to be complied
with in calling, convening and conduct of the meetings.

Since a company is an artificial legal entity distinct from that of its members, the affairs
of the company is practically done by the Board of Directors. The Board of Directors in
carrying out the day-to-day affairs of the company has to perform the role within their
limited powers and the powers, which are granted to them. Certain powers can be
exercised by the board of their own and with the consent of the company at the general
meeting. The shareholders as owners of the company ratify the actions of the board at the
meetings of the company. The meetings of the shareholders serve as the focal point for
the shareholders to converge and give their decisions on the actions taken by thedirectors

Types of Meeting

Shareholder’s Debenture holders’

Meetings Meeting

1. Statutory Meeting
2. Annual General Meeting
3. Extra General Meeting
4. Class Meeting
Meeting of creditors:
For winding up,
For purposes other
Board Meeting than winding up

We will study only shareholders’ meeting.

 Requisites of a valid meeting of members
A meeting to be valid must satisfy the following conditions:
(i) It must be properly convened. This means that:
a. The meeting must have been convened by the proper authority. The proper
authority to convene the meeting is the Board of Directors, shareholders or
Company Law Board.
b. The proper and adequate notice must have been given to all those entitled
to attend.
(ii)It must be legally constituted. This means that:
a. The meeting should be chaired by the proper person
b. There should be proper quorum and
The provision of the Act and Articles must be complied.
(iii)It must be properly conducted.
 Statutory Meeting (Section 165)
Statutory meeting is a meeting of the shareholders held only once during the life time of
the company. Generally, it is the first general meeting of shareholders. The purpose of the
meeting is to enable the members of the company regarding the financial affairs of the
company immediately after the date of incorporation.
For which company Such meeting is mandatory: Every public company limited by
shares or limited by guarantee and having a share capital must hold a general meeting of
the members of the company, which may be called the statutory meeting.

Time Period: It is to be convened after not less than one month but within six months
from the date, on which the company is entitled to commence business (sub-section 1). A
meeting held prior to statutory period of one month is not a statutory meeting.
The notice for such a meeting must say that it is intended to be statutory meeting.
Private companies and Government companies are not required to hold such a
meeting. Therefore only public limited company with a share capital must hold the
statutory meeting within the prescribed time limit.

How the meeting is held:

1. A notice specifying the meeting to be a statutory meeting must be given at least 21
clear days before the meeting to all the members.
2. A statutory report has to be sent along with the notice of the meeting. However, if the
report is forwarded later, it shall be deemed to have been duly forwarded if it is so agreed
to by all the members entitled to attend and vote at the meeting.
3. The statutory report is required to be certified as correct by at least two directors, one
of whom shall be the managing director, where there is one.
4. The auditors of the company shall certify that part of the statutory report which relates
to the shares allotted, cash received in respect thereof and the receipts and payments and
the balance of cash in hand.
5. A copy of the above certified report should be sent to the Registrar also, after it has
been sent to the members [Section 165(5)].

Scope of the statutory meeting:

Sec. 165(7) of the Companies Act, 1956 allows members to discuss any matter relating to
the formation of the company or arising out of the statutory report, whether previous
notice has been given or not. However, no resolution may be passed of which notice has
not been given in accordance with the provisions of the Companies Act, 1956.

Adjournment of meeting
The statutory meeting may adjourn from time to time, and at any adjourned meeting, any
resolution of which notice has been given whether or after former meeting, may be
passed. The adjourned meeting shall have the same powers as an original meeting.
Default: If any default is made in filing the statutory report or in holding the statutory
meeting, every director or other officer of the company who is in default, shall be
punishable with fine which may extend to five thousand rupees [Section 165(9)]. Another
consequence of not holding the statutory meeting in time is that the court can under
Section 433(b) order the compulsory winding up of the defaulting company.

Statutory Report: The Directors are required to send a report to the members of the
company at least 21 days before the meeting. Even if the report is forwarded later than
required, it shall be deemed to have been duly forwarded, if all the members entitled to
attend and vote agree to it (sub-section 2). The eight particulars to be set out in the
statutory report are contained in sub-section (3) of Section 165. These are:

(a) the number of shares allotted, distinguishing fully or partly paid up, otherwise than for
cash and stating the extent to which the partly paid up shares have been paid and the
consideration for which they have been allotted;
(b) The total amount of cash received on account of shares allotted;
(c) an abstract of receipts and payments up to the date within 7 days of the date of report,
exhibiting under distinctive headings the receipts of the company from shares and
debentures and other sources, the payment made there out and particulars concerning the
balance remaining in hand and an account or estimate of the preliminary expenses of the
company, showing separately any commission or discount paid or to be paid on the issue
or sale of shares or debentures;
(d) The names addresses and occupations of the directors and auditors, manager and
secretary, if any and any changes therein, if occurred, since the date of the company’s
incorporation;
(e) The particulars of any contract or modifications thereof to be submitted to the meeting
for its approval;
(f) The extent of non-carrying of each underwriting contract together with the reason
therefore;
(g) The arrears due on calls from every director and manager; and
(h) Particulars of commission or brokerage paid or to be paid to any director for manager
in connection with the issue or sale of shares or debentures.

The report aforesaid must be certified as correct by at least two directors, one of whom
should be the managing director, if there be any. The auditors should also certify it to be
correct insofar as the report relates to shares allotted by the company, cash received in
respect thereof and receipts and payments on revenue as well as on capital account of the
company.
A copy of the above report should be sent to the Registrar also, after it has been sent to
the members [Section 165(5)].
 Annual General Meetings (Sec.166 read with Sec.210)

Meaning: Annual General Meeting (AGM) of a company as the name signifies is an

annual meeting of company.

Which company to hold AGM?

Section 166 provides that every company (whether public or private, having a share
capital or not, limited or unlimited) must hold annual general meeting in addition to any
other meetings at stipulated intervals. The notice calling the meeting will specify the
meeting as Annual General meeting.

Business to be transacted at the AGM:

The business to be transacted at an AGM may comprise of the following:
1. Ordinary business: any business which relates to following matters is called ordinary
business:
a) Consideration of accounts, balance sheet and the reports of the board of directors,
b) The declaration of dividend
c) The appointment of directors in place of those retiring
d) The appointment of auditors and fixation of their remuneration
2. Special business: any business other than ordinary business to be transacted at An
AGM is known as Special business.

Time period for holding AGM or Gap between Two AGM:

For deciding the time period within which a meeting should have been held, the
following point should be kept in mind.
(1) The meeting must be held in each calendar year;
(2) It must not be held later than 15 months from the date of previous annual meeting;
and
(3) It must not be held later than six months of date of balance sheet.
These three requirements are cumulative and separate. Failure to comply with any of
them constitutes an offence unless the Registrar of Companies has granted an extension
of time for holding the meeting (other than first AGM). The period of such extension is
limited to three months.
The following example will explain the position: The financial year of a company ends
on 31st December each year. The annual general meeting to adopt the accounts, etc. of
the year ending 31st December, 1991 was held on 29th June, 1992. Under Section 166(1)
the next annual general meeting need not be held until 29th September, 1993, but the
accounts would be those, up to 31st December, 1991 which is more than six months
before the date of the meeting. Therefore the last for holding that meeting would be 30th
June, 1993.
The first annual general meeting of a company may, however, be held within 18 months
of incorporation, and so long as the company hold its first annual general meeting within
that period, the company need not hold any general meeting in the year of incorporation
or in the following year [first proviso to Section 166 (1)].
Date, time and place:

Time of Meeting: Every annual general meeting must be called during business hours of
the company. However, the Central Government may exempt any class of company from
this provision. [Sec.166 (2)]

Day of Meeting: Every annual general meeting must be called on a day that is not a
public holiday [Sec.166 (2)]. However in the following cases an AGM may be held on a
public holiday:
a) If any day is declared by the Central Government to be a public holiday after the
issue of the notice convening such meeting.
b) Where a public company or its subsidiary has, by a resolution passed in one
AGM, fixed the time for its subsequent AGM and the day turns out to be a public
holiday.
c) Where a public company or its subsidiary has, by its Articles of Association, fixed
the time for its AGM and the day turns out to be a public holiday.
d) Where a private company which is not a subsidiary of a public company has by its
Articles or by resolution, fixed time of its AGM.

Place of the Meeting: Every Annual General Meeting of a company must be held either
at the registered address of the company or at some other place within the same city, town
or village in which the registered office of the company is situated. However, the Central
Government may exempt any class of companies from this provision. [Sec.166 (2)]

Default in holding annual general meeting: If an offence is committed by a company

by not holding an annual general meeting in accordance with Section 166, it will render
the company and every officer of the company who is in default, punishable with fine
which may extend to Rs. 50,000 and in the case of a continuing default with further fine
which may extend to Rs. 2,500 for every day after the first day which such default
continued, (Section 168).

Power of Central Government to call AGM:

The Central Government (company Law Board before amendment in 2002) may, not
withstanding any thing in this Act, or in the Articles of the company, on the application of
any member of the company, call or direct the calling of a general meeting of the
company and gives such ancillary or consequential directions as the Company Law Board
thinks expedient in relation to the calling, holding and conducting of the meeting. The
directions, which the Company Law Board may give, include a direction that one
member of the company present in person or by proxy shall be deemed to constitute a
meeting. A general meeting so held is deemed, subject to any directions of Company Law
Board, to be an annual general meeting of the company (Section 167).

Extraordinary general meeting (Section 169):

An extraordinary general meeting is any general meeting of a company other than the
statutory meeting or the annual general meeting or any adjournment thereof. Such a
meeting may held subject to the terms of the Articles of Association at any time the
directors think fit, and all business transacted at such meeting are called Special Business.
There are various matters in relation to administration of a company’s affairs, which can
be transacted only by resolutions of members in a general meeting. It is not always
possible or expedient for consideration of such matters to wait until the next annual
meeting. The Articles of Association of the company therefore make provisions for the
convention of general meeting other than the annual general meeting. Such meetings are
termed extraordinary general meetings’. (Regulation 47 of Table A).
An extraordinary general meeting may be convened:
1. By the Board of Directors on its own or on the requisition of members; or
2. By the requisitionists themselves on the failure of the Board to call the meeting;
3. By the Company Law Board (NCLT)
By the Board of Directors on its own: The Board of Directors may call a general
meeting of the members at any time by giving not less than 21 days clear notice.
By the Board of Directors on the requisition of members: The Board of Directors
must convene a general meeting upon the request or requisition under the conditions:
a) The requisition must be signed by a member holding at least 1/10 th of the paid up
share capital of the company, in the case of companies having a share capital; and
by members holding at least 1/10th of the total voting power in other cases.
b) The requisition must state the objects of the meeting.
c) The requisition must be deposited at the registered office of the company.
The Directors must, within 21 days of the receipt of a valid requisition, issue a 21 clear
days notice for the holding of the meeting on a date fixed within 45 days of the receipt of
the valid requisition.

By the requisitionists themselves: If the directors fail to issue the notice of the meeting
within 21 days from the date of the deposit of requisition(application) to convene the
meeting on a day not later than 45 days from the date of deposit of the requisition, the
meeting may be called:
(a) In the case of company having a share capital, by the requisitionists representing
either a majority in value of the paid up share capital held by all of them or not less than
one tenth of the paid up share capital of the company having the right of voting,
whichever is less; or
(b) In case of a company not having a share capital, by the requisitionists representing not
less than one-tenth of the total voting power of all the members of the company
[Section169(6)].
Such a meeting must be held within a period of three months from the date of the deposit
of requisition by the requisitionists or any of them. The meeting shall be called in the
same manner as nearly as possible that in which Board meeting are called [Section
169(7)].
By the Company Law Board: If for any reasons it is ‘impracticable' to call a meeting of
the company other than an annual general meeting in any manner in which the meeting of
that company may be called or hold or to conduct it in any manner prescribed by the Act
and the Articles, the Company Law Board, under Section 186, may, either on its own
motion (suo motu) or on the application of any director of the company or any member
thereof would be entitled to vote at the meeting, order a meeting to be called ,held and
conducted in such a manner as it thinks fit and give such directions as it thinks expedient
(Section 186)

Quorum: Quorum means the minimum number of members that must be present in order
to constitute a meeting and transact business thereat. Thus, quorum represents the number
of members on whose presence the meeting of a company can commence its
deliberations. Unless the articles provide for a larger number, five members, personally
present in the case of a public company and two in the case of any other company form
the quorum for a general meeting (Section 174).

Proxies: A proxy is an instrument in writing executed by a shareholder authorizing

another person to attend a meeting and to vote thereat on his behalf and in his absence.
The term is also applied to the person so appointed.

Resolution: The purpose of a meeting is to arrive at decisions and the sense of a meeting
is ascertained by voting upon proposals put to the meeting. A formal proposal put to the
meeting is resolution. A company expresses its will by the mean of resolutions.

There are only two kinds of resolutions under the Act, ordinary and special, and they are
defined in Section 189. Some writers classify resolutions into three types namely,
ordinary, special and resolutions requiring special notice.
Ordinary Resolution: This is resolution passed by a simple majority of those present in
person or by proxy where proxies are allowed and voting upon the resolution. Members
not participating in voting are not taken into account. As distinguished from a simple
majority, an absolute majority is a majority of all those entitled to vote whether they
attend or not.
Special Resolution: Apart from ordinary resolutions, various sections of the Act provide
that certain things can be done by a company with the authority of a special resolution
passed at a duly constituted general meeting. A special resolution is an artificial
conception of the Act, requiring a larger majority than an ordinary resolution. It has been
defined by Section 189(2) as follows:
“A resolution shall be a special resolution when:
(a) the intention to propose the resolution as a special resolution has been duly specified
in the notice calling the general meeting or other intimation given to the members of the
resolution;
(b) The notice required under the Act has been duly given of the general meeting; and
(c) The votes cast in favour of the resolution (whether on a show of hands, or on a poll as
the case may be are not less than three times the number of the votes, if any, cast against
the resolution by members so entitled and voting”;