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PROJECT REPORT

OF

COMPANY LAW

ON THE TOPIC

“General Meetings under the Companies Act,2013”

Submitted To:

Prof. Rajinder KAur

Panjab University

Chandigarh

Submitted By:

Divya

Roll No 137/13

B.Com LLB (Section C)


CONTENTS
Table of Cases ................................................................................................................................ iii
Introduction ..................................................................................................................................... 1
Kinds of Meetings ....................................................................................................................... 1
1. Meetings of Shareholders: ................................................................................................... 1
2. Meetings of Directors: ......................................................................................................... 1
3. Meeting of Debenture Holders ............................................................................................ 1
4. Meeting of Creditors ............................................................................................................ 1
Annual General Meeting (AGM) [Section 96] ........................................................................... 2
SS-2 and its Relevance: ........................................................................................................... 3
Importance of the meeting........................................................................................................... 4
Key Provisions of Holding an AGM ........................................................................................... 4
A. Extension regarding holding of an AGM ......................................................................... 5
B. Penalty for failure in holding of an AGM ........................................................................ 5
Business to be transacted:- ...................................................................................................... 7
REPORT ON AGM (Sec 121): ................................................................................................... 8
Extraordinary General Meeting (EGM) .......................................................................................... 9
A. Meaning of Extraordinary general meeting – .................................................................... 10
B. Powers of board of directors to call EGM [Section 100(1)]: ............................................. 10
C. BOD legally bound to call EGM on receiving valid requisition from members [Section
100(4)]: ...................................................................................................................................... 11
D. Ingredients of a valid requisition [Section 100(2)/100(3)]: ............................................... 13
E. Procedure to be followed by requisitionists for convening EGM: .................................... 14
F. Venue for EGM The extraordinary general meeting: ........................................................ 15
Difference between AGM and EGM ............................................................................................ 17
Class Meeting................................................................................................................................ 18
Broadly, the requisites of a Valid Meeting ................................................................................... 20
PROXIES ...................................................................................................................................... 23
Resolutions.................................................................................................................................... 24
Special Resolutions ................................................................................................................... 25

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Resolution Requiring Special Notice ........................................................................................ 25
Ordinary Resolutions Special (Section 114) ............................................................................ 25
Table: Distinction between Ordinary Resolution and Special Resolution ............................ 27
Method of Voting .......................................................................................................................... 28
comparison between the 1956 Act and the New 2013 Act ........................................................... 30
Bibliography .................................................................................................................................. iv
Books .......................................................................................................................................... iv
Websites ..................................................................................................................................... iv

ii
TABLE OF CASES
 Kumbakonam Mutual Benefit Fund Ltd. v. S. Kalyanasundaram [2013] 37 taxmann.com
444/123 SCL 1 (Mad.)
 Life Insurance Corpn. of India v. Escorts Ltd. [1986] 59 Comp. Cas. 548 (SC).
 National Roads and Motorists’ Association Ltd. v. Parker (1986) 6 NSWLR 517.
 Pravin Kantilal Vakil v. Mrs. Rohini Ramesh Save [1985] 57 Comp. Cas. 31 (Bom.)
 K.G. Khosla v. Rahul C. Kirloskar [2002] 35 SCL 546 (Delhi)
 N. Jagan v. Investment Trust of India Ltd. [1996] 8 SCL 98 (Mad.).
 B. Sivaraman v. Egmore Benefit Society Ltd. [1992] 75 Comp. Cas. 198 (Mad.)
 Queens Kuries & Loans (P.) Ltd. v. Sheena Jose [1993] 76 Comp. Cas. 821 (Ker.).
 Varadarajan v. Venkateswara Solvent Extraction (P.) Ltd. [1994] 80 Comp. Cas. 693
(Mad.)
 Col. Kuldip Singh Dhillon v. Paragaon Utility Financiers (P.) Ltd. [1986] 60 Comp. Cas.
1075 (Punj. & Har.)
 Ram Prasad Somani v. Bank of Rajasthan Ltd. [2001] 34 SCL 750 (Raj.)/Bharat
Commerce & Industries Ltd. v. Registrar of Companies [1973] 43 Comp. Cas. 275
(Calcutta)

iii
INTRODUCTION
Kinds of Meetings

A meeting is defined as “when two or more than two persons come together to discuss issues of
common interest”. For a meeting to be valid and the business transacted in it to be binding, the
meeting must be convened as per the provisions of the Companies Act 1956, and the rules
framed there under.

Figure: Meetings

In a company there are different types of meetings which are held for different purposes. The
different types of meetings are given below:

1. Meetings of Shareholders:

 Annual General Meeting

 Extra –Ordinary General Meetings

 Class Meeting

2. Meetings of Directors:

1. Meeting of the Board of Directors

2. Meeting of the Committees of Directors

3. Meeting of Debenture Holders

4. Meeting of Creditors

1
Annual General Meeting (AGM) [Section 96]

The Annual General Meeting (AGM) of Company acts as a bridge between Members and
Management. The meeting may be defined as gathering or assembly of some persons for
transacting any lawful objects. Under Company Law, the mere gathering or assembly of persons
doesn’t constitute a meeting. Company Meeting must be convened and held in perfect
compliance with the various provisions of the Companies Act 2013 and allied rules framed under
the law.
To increase emphasis on adherence to norms of good corporate governance, Company Law
assumes an added importance in the corporate legislature by the arrangement of AGM regularly
according to the provisions prescribed by law.
The new Companies Act, 2013 deals with a better regulatory framework for increased disclosure,
enhanced shareholders voting right and easier management interaction, providing equal
opportunities to and prospects for or stakeholders. It is important that the members and
management together use the AGM forum to build a strong capital market environment. AGM
provides a small window to the shareholders to look into the affair of management and can
influence in a right way.

2
A Company, being an artificial person, cannot act on its own and therefore, it expresses its will
or takes its decision through the resolution past at validly held meetings. The prime objective of
a meeting is to ensure that a company gives a reasonable and fair opportunity to those who are
entitled to participate in the meeting to take a decision as per the prescribed procedures.1
AGM’s in India continue to remain completely off the mark compared with the impacts of
AGMs of Companies in rest of world. In India, AGMs have been about forcefully ahead with the
majority shareholders view and completing a critical legal requirement imposed on the company.
AGM is an annual event where the members and management of a company interact with the
purpose of discussion on the activities performed by the company during the whole year. Section
96 of the Act provides that every company, whether they are private or public, other than a one
person company is required held an annual general meeting every year. SS-2 ( Secretarial
Standard 2 ) on general meeting issued by the ICSI and approved by the central government that
is to be mandatorily adhered by all companies as per the provision of section 118 (10) of the
Companies Act 2013.
SS-2 and its Relevance:

SS-2 provides that the Board shall, every year convene or authorize convening of a meeting of its
members called the AGM to transact items of ordinary business specifically required to be
transacted at Annual general meeting as well as the special business if any. The newly enacted
company Act 2013 makes compulsory for all type of companies to hold an AGM every year. The
various transactions like approving company’s financial statement and the report of Board of
Directors & Auditors, approving dividend, appointment or fixation of remuneration of the
director are among important activities that obligate companies to seek a majority of

shareholders approval every year.

1
Company Law, Institute of Company Secretaries of India.

3
In the era of globalization or emergence of easy access to the Internet, the company’s act 2013
inserted the provision of e-voting to increase the shareholder’s participation and their feedback.
It is important that one of the important provisions of newly enacted companies act 2013 is that
the companies may be forced to seek votes from the minority shareholders for the approval on
implements some of the management actions.2
Importance of the meeting

The Annual General Meeting of the company provides the members with an opportunity to
review working of the company and express their views on the working of the company. An
AGM is called by the company majorly for the following four reasons:
a) passing of the annual accounts
b) declaration of the dividendc) election of directors in place of those
retiring by rotation, and

d) appointment and fixation of the remuneration of auditors etc

All other items of the agenda except those given above are considered as special business.
Other Statutory Provisions regarding the holding of the Annual General Meeting are as follows:
a) Who can convene the meeting - the power to convene an AGM vests only with the Board of
Directors. Not even the secretary of the company can convene this meeting without the authority
of the board.

Key Provisions of Holding an AGM

 AGM should be held once in each calendar year.


 First AGM of the company should be held within 9 months from the closing of first

financial year,

2
http://vle.du.ac.in/mod/book/view.php?id=8484&chapterid=11093

4
 Subsequent AGM of the company should be held within 6 months from the date of
closing of relevant financial year,
 The gap of two AGM should not exceed 15 months, or
 A One Person Company (OPC) is exempt from holding AGM

A. Extension regarding holding of an AGM

In the case of failure, the registrar for any special reason, extend the time within which any AGM
shall be held, and such extension can be a period not exceeding three months. The registrar can
grant no extension of time for holding of the first AGM.

B. Penalty for failure in holding of an AGM

Section 99 of the Companies Act 2013 provides that if any default is made in complying or
holding a meeting of the company, the company & every officer of the company who is in
default shall be punishable with fine which may extend to one lakh and in case of continuing
default, with a further fine which may extend to 5000/- per day during which such default
continues3

Case law

Meenakshi Mills Company Ltd. Vs. Asst. Registrar of Joint Stock of


Companies -[A.I.R (1938) Mad 640]

In this case an Annual General Meeting of the company was called in


December, 1934. The meeting was adjourned and held in March, 1935. The
next meeting was held in February, 1936. The company was prosecuted for not
holding any meeting of the company in 1935. It was contented on behalf of the
company that there was a meeting in 1934, in 1935 and in 1936 and as such
there was no default. But the court held that the meeting of March, 1935 was
not a different meeting from the one which began in December, 1934; it was the
same meeting. Hence the company was held liable for not holding a meeting in

3
http://corporatelawreporter.com/companies_act/section-96-of-companies-act-2013-annual-general-meeting/

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1935.

a) First AGM – A company must hold its first AGM within 9 months of incorporation. Not
even the registrar of companies can extend the time limit available.

Illustration:

If Satyam ltd Co. is incorporated on 1st December 2005, then it should hold its AGM within 9
months from the date of the closing of the first financial year of the company.

b) Subsequent AGM – An AGM must be held by the company each year within six months after
the close of the financial year, but the interval between two AGM’s should not be more than 15
months. The Registrar may, for any special reason, extend this time up to three months.

Illustration:

The accounting year of Uniprince Ltd ends on 30-6-2004 and if its AGM cannot be held by
December, 2004, the Registrar of Companies can grant extension to Uniprince Ltd up to March
2005. In such a situation, there will be no violation of law if no AGM is held in year 2004.

Considering the importance of the AGM to the shareholders, the directors of the company must
call the meeting even though accounts are not ready or company is not functioning ,or the
management of the entire controlled business of the company is vested in the hands of the
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Central Government. The correct decision on the part of the company would be to hold the
meeting and then adjourn it to a suitable date for considering the accounts.

Illustration:

At the AGM held on 25th Sept. 2007 of Cosmos Ltd., the auditor is appointed to hold
office up to the conclusion of next annual general meeting. Incidently the next AGM is
held on 20th September 2008 but that also stands adjourned without transacting any
business. In such a situation the auditor appointed on 25th September 2007 of Cosmos
Ltd. will continue to hold office till the conclusion of the meeting because the adjourned
meeting is merely continuation of the original meeting.

c) Day, Hour and Place of the Meeting-


The meeting must be held
1. On a day which is not a public holiday,
2. During business hours,
3. 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.

Business to be transacted:-

As per section 102(2) of the Companies Act, 2013,the following businesses may be transacted
during AGM:-
a) Ordinary Business [Section 102(2)], i.e.
a. Consideration of financial Statements and reports of board of directors and Auditors.
b. Declaration of any Dividend
c. Appointment of directors in place of retiring one
d. Appointment of and Fixation of the remuneration of the auditors.

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b) Special Business [Section 102(b)], : Apart from the above businesses , the rest are
deemed to be a Special business , transacted during the AGM.
Annual General Meeting is compulsory if,
 Business of the Company was taken over by Government.
 Company did not function.
 Accounts of the Company are not ready.
A. Defaulting in holding Annual General Meeting:
If a Company not holding an Annual General Meeting as per Section 166 , or not complying with
any direction of the Central Government, then the Company and its every officer come in the
Category under section 168 of the Company Act ,2013 and punishable with fine which may
extend to Rs. 50000 and for regular basis it may extend to Rs.2500 for every day .[ Section
168].4
REPORT ON AGM (Sec 121):

Apart from minutes of AGM, Listed Companies are required to prepare report on each AGM in
a manner prescribed in rule 31 of Companies (Management & Administration) Rules, 2014
including the confirmation to the effect that the same was convened, held and conducted as per
the provisions of this Act and rules made there under. The copy of report shall be filed with ROC
within 30 days from the date of conclusion of AGM failure to submit that report attract fine on
Company of Rs. 1 lakh minimum which may extend to five lakh and on every defaulting officer
of Rs. 25 thousand minimum which may extend to 1 lakh5

4
https://taxguru.in/company-law/annual-general-meeting-under-companies-act-2013.html
5
https://www.caclubindia.com/articles/meetings-under-companies-act-2013-20227.asp

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EXTRAORDINARY GENERAL MEETING (EGM)
Overview of Section 100

BY Board on
Requisition
of
Shareholde
rs

By
By Calling
Requisitio
Board of EGM nists

By
Tribunal

Section 100 makes provisions as regards:


 Power of Board of Directors to call EGM [sub-section (1)]
 BOD legally bound to call EGM on receiving valid requisition from members [sub-
section (4)]
 Ingredients of a valid requisition [sub-sections (2) and (3)]
 Power of requisitionists to call EGM if board of directors do not proceed to call an
extraordinary general meeting within 21 days of the receipt of a valid requisition [sub-
sections (4), (5) and (6)]

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A. Meaning of Extraordinary general meeting –

Connotation of All general meetings other than annual general meeting shall be called
extraordinary general meeting. [Clause (42) of Table F of Schedule I] Extraordinary general
meeting cannot be called to discuss authenticity of appointment of directors - The combined
appreciation of sections 173 and 186 of the 1956 Act [corresponding to sections 102 and 98 of
the 2013 Act] reveals that appointment of directors in the place of those retiring shall be made
only in the annual general meeting and appointment of respondents in the place of retiring
directors by rotation, which is impugned herein, cannot be transacted in the extraordinary general
meeting; as such, the relief sought for in the company petition calling for extraordinary general
meeting to discuss the authenticity of the appointment of respondents is not maintainable.6
B. Powers of board of directors to call EGM [Section 100(1)]:

The Board may, on its own, whenever it deems fit, call an extraordinary general meeting in
regard to any matter [Section 100(1)]. If at any time directors capable of acting who are
sufficient in number to form a quorum are not within India, any director or any two members of
the company may call an extraordinary general meeting in the same manner, as nearly as
possible, as that in which such a meeting may be called by the Board [Article II(42 and 43) of
Table F of Schedule I]. An extraordinary general meeting may be convened by the directors if
some business of special importance requires approval from members and it cannot wait till the
next annual general meeting. The Act itself provides instances where EGM will have to be
convened by the Board to transact businesses which cannot wait till next AGM:
i. The first auditor of a company, other than a Government company, shall be appointed by the
Board of Directors within thirty days from the date of registration of the company. In the
case of failure of the Board to appoint such auditor, it shall inform the members of the
company, who shall within ninety days at an extraordinary general meeting appoint such
auditor [Section 139(6)]
ii. In the case of a Government company or any other company owned or controlled, directly
or indirectly, by the Central Government, or by any State Government, or Governments, or
partly by the Central Government and partly by one or more State Governments, the first
auditor shall be appointed by the Comptroller and Auditor-General of India within sixty
days from the date of registration of the company. In case the Comptroller and Auditor-

6
- Kumbakonam Mutual Benefit Fund Ltd. v. S. Kalyanasundaram [2013] 37 taxmann.com 444/123 SCL 1 (Mad.)

10
General of India does not appoint such auditor within the said period, the Board of Directors
of the company shall appoint such auditor within the next thirty days. In the case of failure
of the Board to appoint such auditor within the next thirty days, it shall inform the members
of the company who shall appoint such auditor within the sixty days at an extraordinary
general meeting [Section 139(7)]
iii. Any casual vacancy in the office of an auditor shall in the case of a company other than a
company whose accounts are subject to be audited by an auditor appointed by the
Comptroller and AuditorGeneral of India, be filled by the Board of Directors within thirty
days, but if such casual vacancy is as a result of the resignation of an auditor, such
appointment shall also be approved by the company at a general meeting convened within
three months of the recommendation of the Board and he shall hold the office till the
conclusion of the next annual general meeting [Section 139(8)].
C. BOD legally bound to call EGM on receiving valid requisition from members
[Section 100(4)]:

The Board shall within 21 days from the date of receipt of a valid requisition (see para 100.5)
from members in regard to any matter, proceed to call an extraordinary general meeting for the
consideration of that matter on a day not later than 45 days from the date of receipt of such
requisition. [Section 100(4)] 100.4-1 Right of members to requisition a EGM Shareholders have
a right to requisition an extraordinary general meeting subject to statutorily prescribed procedural
and numerical requirements and it is not necessary for them to disclose reasons for resolution
they propose to move at meeting. Nor are the reasons for the resolutions subject to judicial
review. It has been held that when the State or an instrumentality of the State (such as LIC)
ventures into the corporate world and purchases the shares of the company, it assumes to itself
the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights
available to such a shareholder. There is no reason why the State as a shareholder should be
expected to state its reasons when it seeks to change the management by a resolution of the
company, like any other shareholder.7
Members of a company cannot use the statutory powers to requisition EGM if the subject matter
of requisition is a matter of management exclusively vested in the directors - It is no part of the
function of the members of a company in general meeting to express an opinion, by resolution,

7
Life Insurance Corpn. of India v. Escorts Ltd. [1986] 59 Comp. Cas. 548 (SC).

11
as to how a power vested by the company’s Constitution in the directors ought to be exercised by
them. 8 Executive Committee of an incorporated association is not bound to convene EGM
requisitioned by members to decide on matters entrusted by the Articles to the Executive
Committee .
Other instances - Court [now NCLT] cannot prevent shareholders from requisitioning a meeting,
discussing and passing a resolution, proposing a modification to amalgamation scheme, even
when scheme is pending for sanction before Court [now NCLT]. Section 392 of the 1956 Act
[corresponding to section 231 of the 2013 Act] gives wide powers to the Court [now NCLT] to
give such directions in regard to any matter or make such modification in the compromise or
arrangement as it may consider necessary for the proper working of the compromise or
arrangement, arrived at. Under the said section any such modification in the scheme could be
considered by the Court [now NCLT] even at the instance of any shareholder. In that event, a
mere discussion by the shareholders at a properly requisitioned meeting about the proposed
modification [for example, modification to the share exchange ratio] to the scheme pending
before the Court [now NCLT] for sanction and if approved, passing a resolution to that effect,
would not by itself affect either the scheme or the Court’s [now NCLT’s] powers to consider the
modification and sanction the scheme with or without modification. The shareholders could
requisition the meeting for proposing a modification to the scheme pending for sanction before
the Court [now NCLT]. 9- It would be for shareholders to decide in meeting whether to amend
articles of company or not. No injunction could be granted to restrain holding of proposed
meeting.10
Where there was no material to show that there was any dominant group or minority group,
plaintiff, holding miniscule shares, could not claim to represent minority shareholders and could
not stop implementation of resolution passed by general body unanimously authorising board of
directors to make allotment. 11 In the said case majority of shareholders of the defendant-
company passed two resolutions, one for issue of equity share of ` 10 at a premium of ` 30 on
right basis and another for issue of shares to the promoters in order to enhance their interest in
the company. The plaintiffs, holding .0007 per cent of the shares in the defendant-company,
challenged the resolutions passed by the company in extraordinary general meeting. They filed

8
National Roads and Motorists’ Association Ltd. v. Parker (1986) 6 NSWLR 517.
9
Pravin Kantilal Vakil v. Mrs. Rohini Ramesh Save [1985] 57 Comp. Cas. 31 (Bom.)
10
K.G. Khosla v. Rahul C. Kirloskar [2002] 35 SCL 546 (Delhi)
11
N. Jagan v. Investment Trust of India Ltd. [1996] 8 SCL 98 (Mad.).

12
suit praying for injunction restraining the company from giving effect to resolutions. The Court
held that the question whether the resolution would lead to a heavy loss to the company, would
depend on the evidence and it was not a matter which could be decided without any materials
before the Court. The plaintiff was holding only minuscule shares. The plaintiff could not claim
to represent the minority shareholders, though there was an allegation that minority shareholders
were sought to be dwarfed by the dominant group. There was no material before the Court to
show whether there was any dominant group or minority group. At any rate, the plaintiff could
not claim to represent them. Further, the plaintiff could not stop the implementation of the
resolution passed by the general body unanimously. There was no substance in the contention
that the board had no power to make allotment of shares as it was seen that the resolution was a
special one contemplated under section 81(1A) of the 1956 Act and it had authorised the board
of directors to make allotment.12
D. Ingredients of a valid requisition [Section 100(2)/100(3)]:

In the case of a company having a share capital, the requisition should be made by such number
of members as hold 10% or more of the paid up share capital of the company having a right to
vote as at the date of deposit of the requisition. In the case of a company not having a share
capital, the requisition should be made by such number of members as have 10% or more of the
total voting power of all the members as at the date of deposit of the requisition. The requisition
shall set out the matters for the consideration of which the meeting is to be called. The
requisition shall be signed by the requisitionists. The requisition shall be sent to the registered
office of the company. In other words, such a requisition was for consideration of a resolution
which would amount per se to a valid requisition; otherwise, it would clearly mean that the
directors were not required to call a meeting. 13 Numerical majority required for a valid
requisition (10% or more of paid-up capital of the company) In order to be entitled to requisition
a meeting, the requisitionists must, on the date of the deposit of the requisition, hold not less than
one-tenth of the paid-up capital of the company.14 - In the said case the company’s authorized
share capital was ` 5 lakhs divided into 50 equity shares of ` 10,000 each. But the paid-up value
of each share was only ` 8,000. This made the total paid-up share capital ` 4 lakhs. Ten per cent
of this value was ` 40,000. The company had increased the number of members to 52 by allotting

12
Id.
13
B. Sivaraman v. Egmore Benefit Society Ltd. [1992] 75 Comp. Cas. 198 (Mad.)
14
Queens Kuries & Loans (P.) Ltd. v. Sheena Jose [1993] 76 Comp. Cas. 821 (Ker.).

13
two additional shares. The issue was whether the requisitionists who were eight in number held
qualifying number of shares prescribed by section 169(4) of the 1956 Act [corresponding to
section 100 of the 2013 Act]. The Court held that the issue of two more shares having been done
without raising the share capital was illegal. Therefore, the authorized share capital of the
company remained at ` 5 lakhs and the paid-up share capital at ` 4 lakhs. The eight requisitionists
together held share capital worth ` 64,000 (8,000 × 8 = 64,000) which exceeded 10 per cent of `
4,00,000. Therefore, they were qualified to requisition the meeting. Requirements of section 100
would be satisfied even if one member holding requisite number of shares or voting rights makes
requisition. - Though the section uses the expression ‘such number of members of the company’
in the plural, yet the requirements of the section would be satisfied even if one member holding
the requisite number of shares or voting rights makes the requisition, as it is well-settled that
words in the plural include the singular. 15
Where the articles of association of a company prohibited any defaulting shareholder from
exercising his right to vote at any general meeting, shareholders who have not paid calls made on
them, are not entitled to requisition an extraordinary general meeting - Section 169 of the 1956
Act [corresponding to section 100 of the 2013 Act] says that the number of members entitled to
requisition a meeting in regard to any matter shall be in the case of a company having a share
capital, such number of them as hold at the date of the deposit of the requisition, not less than
one-tenth of such of the paid-up capital of the company as at that date carry the right of voting in
regard to that matter. Only those shareholders who have a right of voting can requisition a
meeting. Section 181 of the 1956 Act [corresponding to section 106 of the 2013 Act] provides
that the articles of a company may bar a member from exercising any voting right in respect of
any shares registered in his name on which any calls or other moneys presently payable by him
have not been paid.16
E. Procedure to be followed by requisitionists for convening EGM:

Rule 17 of the Companies (Management and Administration) Rules, 2014 contains the following
provisions as regards calling of extraordinary general meeting by requisitionists on failure of
Board of Directors to call such meeting on requisition.The members may requisition convening
of an extraordinary general meeting in accordance with sub-section (4) of section 100, by
providing such requisition in writing or through electronic mode at least clear twenty-one days
15
.Varadarajan v. Venkateswara Solvent Extraction (P.) Ltd. [1994] 80 Comp. Cas. 693 (Mad.)
16
Col. Kuldip Singh Dhillon v. Paragaon Utility Financiers (P.) Ltd. [1986] 60 Comp. Cas. 1075 (Punj. & Har.)

14
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. Requisitionists should convene meeting at Registered office or in the same city or town
where Registered office is situated. Such meeting should be convened on working day
[Explanation to rule 18 provides that EGM shall be held at a place within India]. If the resolution
is to be proposed as a special resolution, the notice shall be given as required by sub-section (2)
of section 114. The notice shall be signed by all the requisitionists or by a 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 as required under section 102 need be annexed to the notice of an extraordinary
general meeting convened by the requisitionists and the requisitionists 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 three days on which the requisitionists 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 and the company concerned is bound to give a list of members together with their
registered address made as on twenty first day from the date of receipt of valid requisition
together with such changes, if any, before the expiry of the forty-five 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. Any accidental omission to give notice to, or the non-receipt of
such notice by, any member shall not invalidate the proceedings of the meeting.
F. Venue for EGM The extraordinary general meeting:

This shall be held at a place within India[Explanation below Rule 18 of the Companies
(Management and Administration) Rules, 2014. Explanation to rule 17(2) provides that
requisitionists should convene meeting at Registered office or in the same city or town where
Registered office is situated and such meeting should be convened on working day.] Under the
1956 Act there was no requirement of holding EGM at place of registered office of company. 17
100.8 No further dividend at EGM Once a final dividend is declared at an annual general
meeting, no further dividend can be declared at an extraordinary general meeting- Sections 166,
17
Ram Prasad Somani v. Bank of Rajasthan Ltd. [2001] 34 SCL 750 (Raj.)/Bharat Commerce & Industries Ltd. v.
Registrar of Companies [1973] 43 Comp. Cas. 275 (Cal.)

15
186, 210, 211, 217 of the 1956 Act [corresponding to sections 96, 98, 128, 129 and 134 of the
2013 Act] indicate that the declaration of the dividend is a business of annual general meeting. It
is, therefore, manifest that interim dividends and dividends proposed at the annual general
meeting exhaust the dividends for the year. Further, section 173 of the 1956 Act [corresponding
to section 102 of the 2013 Act] makes declaration of dividend a business of the ordinary general
meeting.

Case law 2

Cricket Club of India vs. Madhav L Apte - [(1975) 45 Comp Cas 574 (Bom HC)]
The words “valid requisition” in section 100(4) Word ‘valid’ has no reference to objects of
requisition but to compliance of requirements of section itself. All that is required to be seen
before the provisions of the section become applicable would be to consider whether the
requisition deposited was in accordance with the provisions of the section as to its contents, the
number of signatories and similar matters, and it would not be open to the board of directors of
a company to refuse to act on a requisition on the grounds that, although such requisition was in
accordance with the requirements of the section, it was otherwise invalid. What section 169(6)
of the 1956 Act [corresponding to section 100(4) of the 2013 Act] provides is that
requisitionists may themselves call a meeting, if the board does not call a meeting within 21
days from date of deposit of a valid requisition. The word ‘valid’ provided in this sub-section
clearly indicates that the requisition which was made must be valid and lawful.

16
DIFFERENCE BETWEEN AGM AND EGM

BASIS FOR ANNUAL GENERAL EXTRAORDINARY GENERAL


COMPARISON MEETING (AGM) MEETING (EGM)

Meaning An Annual General Meeting An Extraordinary General Meeting


(AGM) is the general meeting (EGM) is any meeting other than the
which must be held by the AGM in which business relating to
company every year, to company's management are
discuss various business transacted.
matters.

First meeting Must be held within 9 months No such requirement


of the end of the financial
year.

Business Ordinary business and Special business only.


special business (if any) is
transacted.

Day and Time It can be held on any day It can be held on any day including
excluding national holiday, in national holiday, and any time during
business hours only. a day.

Penalty When meeting is not No penalty is prescribed as per law.


summoned within the
stipulated time, penalty is
levied.

17
Convened by Board Board, Board on requisition of
shareholders, requisitionist or
tribunal.18

CLASS MEETING
Meetings of members of a company fall into two broad divisions, namely, general meetings and
class meetings. Class meetings are meeting of shareholders, holding a particular class of share
which is held to pass resolution which will bind only the members of the class concerned. Only
members of the class concerned may attend and vote at meeting. Usually the rules to voting
apply to class meetings as they govern voting at general meetings. These class meetings must be
convened whenever it is necessary to alter or change the rights or privileges of that class as
provided by the articles.

18
https://keydifferences.com/difference-between-annual-general-meeting-agm-and-extraordinary-general-meeting-
egm.html

18
For effecting such changes, it is necessary that these are approved at a separate meeting of the
holders of those shares and supported by a special resolution. Under section 48 of the Companies
Act, 2013 (variation of shareholders’ rights) class meeting of the holders of different classes of
shares shall be held if the rights attaching to these shares are to be varied. Similarly, under
Section 232 (Merger and Amalgamation of companies), where a scheme of arrangement is
proposed, meeting of several classes of shareholders and creditors are required to be held.19

19
https://caknowledge.com/difference-between-agm-and-egm/

19
BROADLY, THE REQUISITES OF A VALID MEETING

(1) A meeting must be properly (2) The meeting must be properly cons-
convened or called, tituted and

(2) The meeting must be properly cons-


tituted and
(3) A meeting shall be properly
conducted.

(2) The meeting must be properly cons-


tituted and
(3) A meeting shall be properly
It has to be noted that the decisions shall be binding provided the meeting is valid and in addition
conducted.
the decision has been properly taken. A decision improperly taken at a valid meeting cannot be
implemented. Further, minutes containing the decisions shall be prepared and confirmed
(3) A
otherwise it is difficult to enforce themeeting shallif be
decisions, properly
challenged.
conducted.
(A) A Meeting must be Properly Convened or Called:

A meeting is said to be properly


(3) Aconvened or called
meeting shall when the following conditions are
be properly
fulfilled: conducted.

(1) A notice containing all the details required, has been sent to every person entitled to attend
the meeting. (3) A meeting shall be properly
conducted.
21 clear days notice either in writing or through electronic mode* (E-mode) in such manner as
prescribed in rules. Notice shall specify the day, date, time and place and the hour of the meeting
and a statement of business to(3)
be A meeting at
transacted shall
suchbemeeting
properlyand shall be given to Every Member
conducted.
20

(3) A meeting shall be properly


conducted.
of the Company, Legal representative of any deceased member or the assignee of an insolvent
member and to the auditors and every director of Company. Accidental omission to give notice
20
or non-receipt of such notice shall not invalidate the proceeding of the meeting.

The details are:

(a) The date, time and place of the meeting;

(b) The agenda or the items to be discussed at the meeting in a serial order;

(c) Date of the notice;

(d) Signature of a competent person calling the meeting;

(d) Additional information, if any (for example, explanatory notes to a special business required
in a notice of annual general meeting of a company);

(e) Any enclosure required to be sent (for example, a copy of final accounts together with the
notice of annual general meeting).

(2) The Notice is sent With in Proper Time: Notice Of General Meeting (Sec 101 With Rule No.
18 Of Companies (Management & Administration) Rules, 2014:

There are specific rules with regard to that proper time. For example, a notice for any members’
meeting of a company must be sent at least twenty-one days before the meeting.

(3) The notice is sent to the recorded address of the person entitled to receive the notice. The
notice may be sent by ordinary post. Under exceptional cases notice can be given over the
telephone. The notice may be sent by a messenger.

(B) A Meeting must be Properly Constituted:

A meeting shall be properly constituted or the gathering is valid and competent to take decisions
if the following conditions are fulfilled:

(1) The quorum or the required minimum number of persons must be present in person. The
quorum shall preferably be continuously present.

20
https://www.caclubindia.com/articles/meetings-under-companies-act-2013-20227.asp

21
(2) There must be a Chairman who is duly elected at the meeting or already elected. He must be
a person competent to be the Chairman.

(C) A Meeting shall be Properly Conducted:

(1) The rules and regulations for conducting the meeting are followed. Those rules may be
statutory, of the organisation, customary or conventional or a combination of them.

(2) Notes shall be continuously and correctly taken (by the secretary) so that proceedings or
minutes can be prepared for evidence.

It shall be remembered that the secretary shall take notes on the proceedings, prepare the minutes
on the basis of those notes and get the minutes confirmed by the Chairman subsequently. After
that virtually a valid meeting is completed.21

STATEMENT TO BE ANNEXED TO NOTICE (Sec 102) In case of any business other than
Ordinary Business a statement setting out following material facts concerning each item of
business to be transacted at a general meeting shall be annexed to the notice convening such
meeting, namely:

(i) Nature of concern or interest, financial or otherwise, if any, in respect of each items of every
director and the manager, if any and every other KMP and relatives of the Director, manager or
KMP.
(ii) 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.
(iii)Where any special business in the meeting of Company affects or relates any other company then
shareholding of promoter, directors, manager and KMP shall be stated in the said statement, if
that shareholding is 2% or more.
(iv) Where any item of business refers to any documents, which is to be considered at the meeting,
the time and placed where the documents can be inspected shall also be specified in the
statement. Special Business in AGM means all businesses other than consideration of financial
statements, report of Board and Auditors, declaration of any dividend, appointment of Directors
in place of retiring and appointment of and fixation of remuneration of Auditors. In case of any

21
http://www.yourarticlelibrary.com/company/meetings/valid-meetings-meaning-and-requisite-company-
management/75154

22
other General Meeting all business shall be special. In case of benefit arises due to non-
disclosure of aforesaid material facts in the statement by promoters/directors/ manager/ KMP
than the same shall be held in trust for the benefit of the Company. Default in complying the
provisions of this section every promoter, director, manager or other KMP who is in default shall
be penalize with fine which may extend to Rs. 50000 or five times of amount of benefit accruing
to promoters/directors/manager/KMP or any of their relatives, which ever is more.
QUORUM: (Sec 103) In case of public Company if on date of meeting: -
Members <_ 1000 then 5 members personally present. –
Members>1000 but upto 5000 then 15 members personally present. - Members>5000 then 30
members personally present.

In case of Private Company 2 members personally present shall constitute quorum. Articles may
provide larger quorum If quorum is not present within half an hour then meeting shall adjourned
in same day in the next week on same time and place or such other time and place as board may
determine but atleast 3 days notice is required to be given to members either personally or by
newspapers advertisement in English and one vernacular language having circulation at the place
where registered office of the company is situated. In case of absence of quorum at adjourned
meeting, the members present shall be quorum. Meeting called by requisition shall be canceled
in case of absence of quorum.22

APPOINTMENT OF CHAIRMAN OF GENERAL MEETING (Sec 104) : Members


personally present at the meeting shall elect one of themselves to be the Chairman thereof on
show of hands. In case of poll is demanded, it shall be taken forthwith in accordance with
provisions of this Act and the Chairman elected on show of vote shall be chairman until some
other person is elected as a result of poll and that other person shall be chairman for rest of the
meeting. Articles of a Company can provide different manner for appointing Chairman.

PROXIES
(Sec 105 with rules 19 of Companies (Management & Administration) rules, 2014): Member
entitled to attend and vote at a meeting of company shall be entitled to appoint another person as

22
https://www.caclubindia.com/articles/meetings-under-companies-act-2013-20227.asp

23
proxy to attend and vote at the meeting. Proxy shall not have right to speak and vote except on a
poll. C.G. may prescribe the companies whose member shall not appoint proxy other then
member of that company and C.G. has prescribed the company registered under section 8.

A person can act as proxy of maximum 50 members if their aggregate holding is not exceeding
10 % of total share capital of company caring voting rights. A member who holds more then 10
% of total share capital carrying voting rights may appoint a single person as his proxy but that
proxy shall not act as proxy of other person. Appointment of proxy shall be in form MGT-11.
Notice of Meeting shall contain a statement that a member entitled to attend and vote is entitled
to appoint a proxy or where that is allowed, one or more proxies to attend and vote instead of
him and that proxy need not be member. Default of mentioning of such statement every officer
of company in default shall be liable to fine upto Rs. 5000. Provisions in articles requiring longer
period then 48 hours before the meeting for a depositing of proxy or other document relating to
proxy with company shall be deemed as 48 hours.23

POSTAL BALLOT (Sec 110 read with rule no. 22 of Companies (Management &
Administration) Rules 2014): Notwithstanding anything contained in this Act. A Company
shall in respect of items of businesses as the C.G. may by notification, declare to be transacted
only by means of postal ballot and if Company voluntary want in respect of any item of business,
other than Ordinary Business and any other 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 prescribed
in rule 22 of Companies (Management & Administration) Rules 2014) instead of transacting at
General Meeting.24

RESOLUTIONS

23
Id.
24
Supra 22.

24
RESOLUTIONS: The word Resolution as such has not been defined in the Companies Act,
however the method of transacting business at any meeting is that each matter is discussed and
debated and finally put to vote, whereupon, if it is carried by the requisite majority, then it
becomes a Resolution of the meeting on that particular matter. Hence it may be defined as”
The formal decision of a meeting on any motion placed before it or a proposal which is
passed and accepted by the members in a meeting.”

Ordinary Resolutions Special Resolutions Resolution Requiring Special


Special (Section 114) Notice
Where proper notice was
duly given, specifying the There are certain businesses
Where proper notice was
intention to propose the under the Act and may be some
duly given for resolution
resolution as a special additional businesses in the
and it is passed where votes
resolution and the vost cast articles of the company, which
casted in its favour exceeds
in favour of the resolution requires special notice for
the vote casted against it by
are not less than three times resolution. The notice of the
the members. The
the number of votes cast intention to move such
Chairperson may cast a
against the resolution. resolution shall be given to the
casting vote.
company by prescribed number
of members holding not less
Board Meeting than one percent voting power
or holding shares of paid –up
value of five lakh rupees. On
receipt of such notice from
these members, the company
shall give notice in prescribed
Ordinary Resolution: manner to its members.

DATE OF PASSING OF A RESOLUTION (SECTION 116):

25
We may understand, the date of passing of a resolution is a date on which it is passed not the
date on which it was proposed for consideration or moved for consideration. There is no issue,
when a resolution moved and passed on the proposed date.
Where a resolution is passed in an adjourned meeting, it shall be treated as having passed on the
date on which it was in fact passed.25

MINUTES OF PROCEEDINGS (SECTION 118):


Minutes are detail of events in chronological order. The resolution are formal statement of
decision.
Every company shall prepare minutes of the proceedings of every meeting and every resolution
passed by postal ballot and gets signed within thirty days of the conclusion of the event in the
consecutively numbered minute books.
The minutes shall contain a fair and correct summary of the proceedings.
All appointments made in a meeting shall be included in the minutes of the meeting.
The minutes of the Board meeting or committee meeting shall also contain the name of all
directors present. In case of each resolution passed in the meeting, the minutes shall contain the
name of the directors dissenting from or not concurring with the resolution. The name of director
assenting is not required to disclose.
The minutes may not include any matter which, in the opinion of the Chairperson of the meeting

(a) Is or could be defamatory of any person; or
(b) Is irrelevant or immaterial to the proceeding; or
(c) Is detrimental to the interest of the company.
This means all relevant and material matters should be included.
The decision to include a matter depends upon absolute discretion of the chairperson.

The minutes of the meeting shall be evidence of the proceeding recorded therein.

Where the minutes have been kept accordingly 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

25

26
appointments of directors, key managerial personnel, auditors or company secretary in practice,
shall be deemed to be valid.
No report of the proceeding of any general meeting of a company shall be circulated or
advertised at the expenses of the company, unless it is included in the minutes of the company.
Every company shall observe the Secretarial Standards specified by the Institute of Company
Secretaries of India and approved as such by the Central Government.
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.
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.26
Table: Distinction between Ordinary Resolution and Special Resolution

Basis Ordinary Special Resolution


Resolution

1. Nature of In this case, items of In this case, items of special


Business ordinary business business require a special
require an ordinary resolution.
resolution.

2. Votes It is passed by a It is passed by a 3/4th


required to simple majority i.e. majority i.e. voted cast in
pass votes casted in favour of a resolution should
favour of a resolution be 3 times than the votes
should be more than cast against it.
votes against it.

3. In this case no In this case an explanatory


Explanatory explanatory statement is required to be
Statement statement is required attached to the notice and a

26
https://aishmghrana.me/2013/11/12/resolution-minutes-and-report/

27
to be attached with copy of special resolution
the notice of the must be sent to registrar of
meeting. companies within 30 days of
passing resolution.

4. Special In this case if there is There is nothing like casting


vote of situation of equality of vote for the chairman in
Chairman. of votes, the the case of special
Chairman can give resolution.
his deciding vote.

METHOD OF VOTING
The various modes through which a shareholder can cast his vote are mentioned below:-

28
A. By attending the General Meeting:-
1. Show of Hands
As per Section 107, 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.
Further, through MCA’s General Circular no. 20/2014 dated 17/06/2014, it has been precisely
clarified that in case of Companies falling under Section 108 read with rule 20 (voting by
electronic means), provisions of Section 107 (voting by show of hands) will not apply.
2. Poll
As per Section 109 a poll may be demanded by such number of members holding, shares worth
minimum value of Rs. Five Lakh or 10% voting power in the Company.
Further, MCA vide its aforesaid General Circular has clarified that in case of Companies falling
under Section 108 read with rule 20 the concept of demand for poll is redundant.
Manner of voting by shareholders present in meeting if Company falls under purview of Section
108:-
It has been clarified by the circular that since these companies are mandatorily required to
provide e-voting facility to its shareholders where the Principle of “One share – One vote” is
recognized, therefore the meeting should be regulated accordingly by the Chairman.
Regulation of meeting by the Chairman:-
The chairman is authorized to regulate the meeting by virtue of Section 109(6) & aforesaid
circular. The procedure has been jotted down in this article.
B. By voting electronically:-
As per Section 108 read with rule 20, every listed company and companies having more
than 1000 shareholders are required to give e-voting option to their shareholders.
Further, as per revised Clause 35B (2) of listing agreement applicable from 17th April, 2014
every listed company agrees to provide to its shareholders who do not have access to e-voting
facility, option to vote through postal ballot.
But, as per the circular issued by MCA it not necessary for a company to provide postal ballot
facility to shareholders in case where rule 20 (i.e. e-voting) is applicable. This is however
contradictory with Clause 35B (2) of listing agreement. As per decided case of Supreme Court,
in case of listed companies listing agreement shall prevail in comparison to company law.

29
Therefore, in case of listed companies option for postal ballot is also to be provided to
shareholders who do not have access to e voting facility27

COMPARISON BETWEEN THE 1956 ACT AND THE NEW 2013 ACT

27
https://taxguru.in/company-law/method-voting-general-meetings-companies-act-2013.html

30
Basis Companies Act,1956 Companies Act,2013

Statutory For a Public company, it is But in the new act, there is no specific
Meeting mandatory to hold a statutory provision for statutory meeting in case of
meeting after 1 public company.
Month of its commencement of
business but before 6 months of its
commencement.

Maximum Here the maximum period for Here the maximum period for holding the
period for holding the 1st annual general 1st Annual general meeting is only 9
holding the meeting is 18 months from the date Months from the date of the closure of
first Annual of its incorporation or 9 months accounts.
General from the date of the closure of
Meeting. accounts, whichever is earlier

Quorum for The quorum of general meeting for In the new act, the quorum of general
the meeting both the companies are specified as meeting is specified as follows:
follows: Private co. - 2 Members
Private co. - 2 Members Public co. -
Public co -5 Members  5 members( if total no. of members are
less than 1000)
 15 members ( if total no. of
members are more than 1000 but less than
5000)
 30 members (if total no. of members are
less than 5000)

Mode of For holding an Annual general Here the notice about the Annual general
Notice for meeting, a written Notice is meeting can be either served in written
holding AGM mandatory and it is mandatory to form or in electronic form.
inform about the notice to all the 31

members in a written form


Time and day The AGM can be held on the date In the new act, the AGM can be held
for holding mentioned in the notice during the during the business hours i.e. between
AGM business hours but the AGM should 9 A.M. and 6 P.M. on
not be held on a public the day mentioned in the notice but that
Holiday day should not be a National
Holiday

Consent for The consent for holding the meeting The consent should be given by not less
shorter notice should be given by all the members than 95% of the members who are entitled
for holding who are entitled to vote at the to vote at the meeting.
AGM meeting.

First Board No specific time is specified for In the new act, the first board meeting
Meeting holding the first board meeting should be held within 30 days from the
date of its incorporation28

28
http://lex-warrier.in/2013/09/comparative-analysis-companies-act/

32
BIBLIOGRAPHY

BOOKS

 Avtar Singh, Company Law Eastern Book Company, 17th Edition 2018
 Study Material,Company Law, Institute of Company Secretaries of India.

WEBSITES

 https://keydifferences.com/difference-between-annual-general-meeting-agm-and-
extraordinary-general-meeting-egm.html
 https://www.caclubindia.com/articles/meetings-under-companies-act-2013-20227.asp
 https://aishmghrana.me/2013/11/12/resolution-minutes-and-report/
 http://lex-warrier.in/2013/09/comparative-analysis-companies-act/
 https://taxguru.in/company-law/method-voting-general-meetings-companies-act-
2013.html
 http://vle.du.ac.in/mod/book/view.php?id=8484&chapterid=11093
 http://corporatelawreporter.com/companies_act/section-96-of-companies-act-2013-
annual-general-meeting/
 https://taxguru.in/company-law/annual-general-meeting-under-companies-act-2013.html
 https://www.caclubindia.com/articles/meetings-under-companies-act-2013-20227.asp

iv