Meetings Under Companies Act

The word “meeting” is not defined anywhere in the Companies Act. Ordinarily, a meeting may be defined as gathering, assembling or coming together of two or more persons (by previous notice or by mutual arrangement) for discussion and transaction of some lawful business. In this article we shall study different types of meetings under4 the Companies Act, 2013.

To constitute a valid meeting there must be at least two persons, because a meeting cannot be constituted by one person. But there are certain circumstances where one person can constitute a valid meeting, they are:

• Where one person holds all the shares of a particular class, he alone can constitute ‘ a meeting of that class;
• Where the meeting is called by an order of the Company Law Board, the Board may direct that one member of the company present in person or by proxy shall constitute a valid meeting.

A company meeting may be defined as a concurrence or coming together of at least a quorum of members in order to transact either ordinary or special business of the company. Company meetings play a significant role in decision making process. They provide an opportunity to shareholders to review the working of the company and take policy decisions, thereby controlling the Board of directors. The directors are duty-bound to follow the decisions taken at the general meeting of shareholders. Meetings constitute a very important aspect in the management and administration in the company form of organisation.

Different types of meetings under companies Act are:

• Statutory Meeting
• Annual General Meeting
• Extra-Ordinary General Meeting
• Board Meeting

Statutory Meeting:

Every public company having share capital must convene a general meeting of shareholders within a period of not less than one month and not more than six months after the date on which it is authorised to commence its business. This is the first meeting of the shareholders of the company and it is held once in the whole life of the company. There is no provision for statutory meeting in the Companies Act, 2013.

Objectives of Meeting:

• To comply with the provision of section 165 of the companies act 1956
• To approve the statutory report
• To inform the shareholders about the formation of company and made by the company.
• To inform the shareholders about preliminary expenses made by promoters before incorporation of company
• To inform the shareholders of any contract entered into by the company.
• Appoint office bearers.

Notice of the Meeting:

The directors are required to send a notice of the meeting to all the members of the company at least 21 days before the date of the meeting stating that it is the ‘statutory meeting’ of the company. If the notice convening this meeting does not name it as the “Statutory Meeting” it will not Amount to compliance with the provisions of this section.

Statutory Report:

The nature of business conducted at the statutory meeting involves consideration and adoption of the Statutory Report. The Statutory Report is drafted by Directors and certified as correct by at least two of them. A copy of the report must be sent to every member at least 21 days before the date of the meeting. A copy is also to be sent to the Registrar for registration

Procedure at the Meeting:

At the commencement of the meeting the Board shall place a list showing the name, addresses and occupation of the members of the company and the number of the shares held by them. During the continuance of the meeting the list shall remain open for inspection by members. The members present at the meeting may discuss any matter relating to the formation of the company or arising out of statutory report, whether previous notice has been given or not. The meeting cannot pass a resolution on any item or on a subject unless notice has been given according to the provisions of the Act.

Effect of Non-compliance:

• If default is made in complying with the provisions of Section 165, every director or other officer of the company who is in default will be liable to a fine which may extend to Rs. 500.
• If the statutory meeting is not held or the statutory report is not filed as per the provisions of Companies Act, the company may be compulsorily wound up under the orders of court.

The court may, however, give direction for the statutory report to be filed or a meeting to be held as the case may be and refuse to order the winding up of the company.

Annual General Meeting (AGM):

It is a meeting of shareholders which is held once in a year. The object of holding this meeting is to review the progress and prospects of the company and elect its office-bearers for the coming year. It is at this meeting ‘ that the director’s retire and seek re-election. The shareholders can place their views before the management and can seek clarifications on matters about which they are not satisfied. Thus, an annual general meeting is very important. Sections 96, 97, 99 and 121 deals with AGM.

The first annual general meeting shall be held within a period of 9 months from the closing of first financial year. If a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation. No extension by authority is possible.

The subsequent annual general meeting shall be held within a period of 15 months from the last AGM. Subsequent annual general meeting shall be held within a period of six months of closure of relevant financial year. Such meeting should be conducted every calendar year. The Registrar may, for any special reason shown, grant an extension of time for holding the subsequent AGM up to 3 months.

Every Annual General Meeting shall be called on a day, which is not a National Holiday. Every Annual General Meeting shall be called at a time during the business hours i.e., between 9 a.m. and 6 p.m. It may be noted that Annual General Meeting convened during business hours may continue even after business hours. Every Annual General Meeting 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 situated. 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.

Business transacted at an Annual General Meeting:

Both Ordinary Business and Special Business can be transacted at an Annual General Meeting.

Following matters are related with the Ordinary Business:

(a) The consideration of the accounts, balance sheet and the reports of the Board of Directors and Auditors;

(b) The declaration of dividend;

(c) The appointment of directors in the places of those retiring; and

(d) The appointment of and the fixing of remuneration of, the auditors.

Any business other than the above-mentioned business, which can be transacted at an Annual General Meeting, shall be deemed to be Special Business. It may be noted that in the case of Extra5ordinary General Meeting (EGM), all businesses are special businesses. [Section 102]

Extraordinary General Meeting:

Extraordinary meeting is a general meeting which is held between two Annual General Meetings. Extraordinary General Meeting is Called to discuss any particular matter of urgent importance to the company. This meeting is called for the consideration of any specific subject, decision of which cannot be postponed to the next Annual General Meeting.

To meet such emergencies, the companies can provide for holding of emergency meetings of the members, which are known as Extra5ordinary General Meetings. Regulation 42 of Table F provides that all general meetings, other than annual general meetings, shall be called as extra ordinary general meetings. All business which can be transacted at an E.G.M. shall be deemed special.

Following entities can call EGM:

• Directors (suo moto or on requisition)
• Requisitionists
• National Company Law Tribunal (NCLT)

By the Board of Directors:

Suo Moto:

The Board of Directors may, whenever it thinks fit, call an extra5ordinary general meeting. For this purpose, a resolution of the Board is required. Subject to the provisions in the articles, any general meeting of the company can be called only on the authority of a Board resolution. If the managing director, manager, secretary or other officer calls a meeting without the authority of the Board of Directors, it will not be effectual unless the Board ratifies the convening of the general meeting before it is held.

On Requisition of Members:

The members of the company may also request for an extraordinary general meeting to be conducted. A request for holding an extraordinary general meeting can be made by the members −

• Holding at least 10% of the company’s paid up share capital and having the right to vote on the context of the matter to be discussed at the meeting.
• Holding 10% of voting powers of the members in case the company has no capital.
• Preference shareholders can also call for a general meeting if the proposed resolution is going to affect their interest.
• If a member ceases to withdraw after the requisition is made, the withdrawal will not invalidate the requisition.
• The appointment of shares does not affect the rights of a member to make requisitions or vote at a meeting.

By the Requisitionists Themselves

In case the directors fail to call for the meeting within 21 days of a requisition for a meeting to be held within 45 days after the submission of the requisition, the following consequences may be called –

• In context of a company having a share capital, by the requisitionists who represent either a major value of the paid up share capital or not less than one tenth of the company’s total share capital.
• For a company not having a share capital, by the requisitionists holding at least one-tenth of the total voting power
• This kind of meetings must be called within three months from the date when the requisition is filed.
• These kinds of meetings should be held similar to board meetings.
• It is not necessary for the requisitionists to disclose the reasons for the resolution to be proposed at the meeting.

By the Company Law Board

If it is practically impossible to call a meeting other than an Annual General Meeting for any arbitrary reasons, the Company Law Board, under section 186, may order a meeting to be called, either of its own accord or by an application of any director of the company to the Company Law Board. A petition needs to be filed under section 186 of the Companies Act for the Company Law Board to call for a meeting.

Board Meetings:

The directors of a company exercise most of their powers in a joint meeting called the meeting of the Board. The board of directors is the supreme authority in a company and they have the powers to take all major actions and decisions for the company. The board is also responsible for managing the affairs of the whole company. For the effective functioning and management, it is imperative that board meetings be held at frequent intervals. For this, Section 173 of Companies Act, 2013 provides:

• In the case of a Public Limited Company, the first board meeting has to be held within the first 30 days, since the incorporation date. Additionally, a minimum of 4 board meetings must be held in a span of one year. Also, there cannot be a gap of more than 120 days between two meetings.
• In the case of small companies or one person company, at least two meetings must be conducted, one in each half of the financial year. Additionally, the gap between the two meetings must be at least 90 days. In a situation where the meeting is held at a short notice, at least one independent director must be attending the meeting.

Notice of Board Meeting:

The notice of Board Meeting refers to a document that is sent to all directors of the company. This document informs the members about the venue, date, time, and agenda of the meeting. All types of companies are required to give notice at least 7 days before the actual day of the meeting.

Quorum for the Board Meeting:

The quorum for the Board Meeting refers to the minimum number of members of the Board to conduct a valid Board Meeting. According to Section 174 of Companies Act, 2013, the minimum number of members of the board required for a meeting is 1/3rd of a total number of directors. At any rate, a minimum of two directors must be present. However, in the case of One Person Company, the rules of Section 174, do not apply.

Participation in Board Meeting:

All directors are encouraged to actively attend board meetings and in case that’s not possible at least attend the meetings through a video conference. This is so that all directors can take part in the decision-making process.

Notice of Board Meeting:

The notice of the meeting shall be sent to all the directors in accordance with the provisions of sub-section (3) of section 173 of the Act.

Minutes of Meeting:

The draft minutes of the meeting shall be circulated among all the directors within fifteen days of the meeting either in writing or in electronic mode as may be decided by the Board. Every director who attended the meeting, through video Conferencing shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed. After completion of the meeting, the minutes shall be entered in the minute book. The minutes shall be signed by the Chairman. The attendance register shall be deemed to have been signed by the Directors participating through Electronic Mode, if their attendance is recorded by the Chairman or the Company Secretary in the Attendance Register and the Minutes of the Meeting.

The recording of attendance of Meetings through Electronic Mode shall be preserved for a period of at least eight financial years and may be destroyed thereafter with the approval of the Board. Minutes of all Meetings shall be preserved permanently.

Business at Board Meetings:

• To issue shares and debentures.
• make calls on shares.
• To forfeit the share
• To transfer, the shares.
• To fix the rate of dividend.
• To take loan in addition to debentures.
• To invest the wealth of the company.
• To think over the difficulties of the company.
• To determine the policies of the company.

Quorum:

Section 103 of the Companies Act lays down the Quorum which is required for the meeting. The quorum refers to the minimum number of members required to conduct a meeting.

Quorum for Board Meetings:

According to Section 174 of the Companies Act, one-third of the total number of members to the meeting constitutes a quorum for the meeting. In a meeting, a minimum of two directors are required to attend the meeting but where the company is owned by a single person then, in that case, the condition does not apply.

According to Section 174(1) of the Companies Act, It is possible for a director to attend a meeting through a video conference call. A director attending a meeting through video conference will also be considered while counting for a quorum.

A quorum of the meeting has to be maintained throughout the meeting. In order to ensure that quorum is present throughout the meeting, a roll call is to be made by the chairperson before the commencement, in between after every break and at the time of when the meeting is being concluded. In case the quorum is not present then the meeting will be called off.

Quorum for AGM:

In the case of a private company, two members present at the meeting shall be the quorum for the AGM. In the case of a public company, the quorum is

• Five members present at the meeting if the number of members is within one thousand.
• Fifteen members present at the meeting if the number of members is more than one thousand but within five thousand.
• Thirty members present at the meeting if the number of members is more than five thousand.

In case the quorum for the meeting is not present within half an hour from the scheduled time, the meeting will be adjourned to the same day in the following week for the same time and at the same place.