Company law

A Company is a body corporate, a body of persons, known as its members or shareholders The body corporate is recognized by law- the Companies Act, 1956- as a legal person having its entity separate from its members. It acts in its own name, enters into contracts, own and hold property in its name, sue others and can be sued by others. Despite all these, it has no physical person of itself. It, therefore expresses its will or take its decisions through resolutions passed at regularly convened meetings of the company A gathering or assembly or getting together of a number of persons for transacting business activities There Must be at least two persons to constitute a meeting Every gathering or assembly does not constitute a meeting Company meeting must be convened & held in perfect compliance with the various provisions of the Companies Act, 1956 and the rules framed there under.

Kinds of Company Meetings

Meetings of the Board of Directors

Sec: 192 Board of Directors are empowered to do all such acts & things which the Company is authorised to do Shareholders meetings Statutory meeting (S.165) AGM (S.166) Extraordinary General meetings Class Meetings of shareholders

Other Kinds of Meetings

Meetings of the Board committees Meetings of the debenture holders Meetings of creditors for purpose other than winding up Meetings of creditors for winding up Meetings of contributories in winding up

Sec.165 (1): Statutory Meeting

Every company limited by shares, and every company limited by guarantee and having a share capital shall, within a period of not less than one month nor more than six months from the date at which the company is entitled to commence business hold a general meeting of the members of the company, which shall be called the Statutory meeting. A meeting held before the statutory period of one month could not be called a Statutory meeting. The NOTICE must set out that the meeting is the statutory meeting. Failure to hold such a meeting renders the company liable to be wound up. Sec 165(10) provides that the provisions of Sec. 165 are not applicable to a Private company It therefore follows that statutory meetings are required to be convened only by public company limited by shares or limited by guarantee and having a share capital

Statutory Report
The Board of Directors shall, at least 21 days before the day on which the meeting is held, forward a report referred to as The Statutory Report to every member of the company.

Contents of the Statutory Report

 Shares allotted, amounts paid up thereon, and the consideration received, if cash not received on those shares; Cash received on shares with an abstract of receipts and payments and balance in hand; Preliminary expenses of the company-an account or estimate thereof; Names, addresses and occupations of the directors, auditors, manager and secretary and changes, if any, since incorporation; Particulars of contracts or modifications thereof, if any, proposed to be submitted to the meeting for its approval; The extent, if any, to which each underwriting contract, if any, has not been carried out, and the reasons therefor; Calls, if any, unpaid by the directors and manager Particulars of commission and brokerage paid or payable to the directors or the manager

Certification of the Statutory Report

Sub sec (4) of Sec.165 makes it obligatory that the Statutory Report be certified by at least two directors, including the managing director, if there is one, and also by the companys auditors in so far as the report relates to the shares allotted by the company, cash received in respect of the shares and the receipts and payments of the company.

Registration of the Statutory Report

The Board of Directors must file a copy of the statutory report duly certified as per sub sec (4), with the Registrar of Companies (ROC) for registration after copies thereof have been sent to the shareholders of the company.

Notice and Time & Place

NOTICE for calling every general meeting of a company, including a statutory meeting, must be given at least 21 clear days before the meeting unless consent is accorded to a shorter notice by members Sec.165 does not specify TIME and PLACE for holding a statutory meeting. Hence, it can be assumed that it can be held at any time and any place suited to the company.

Production of List of Members

The Board shall cause a list showing the names, addresses and occupations of the members of the company and the number of shares held by them respectively, to be produced at the commencement of the statutory meeting

Scope of the Statutory Meeting

Sub Sec (7) of Sec 165 gives absolute liberty to 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; but no resolution may be passed of which notice has not been given in accordance with the provisions of the Act.

Adjournment of the meeting

Statutory meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the provisions of the Act, may be passed, and the adjourned meeting shall have the same powers as the original meeting

Penalty for Default

If default is made in complying with the provisions of Sec. 165, every director or other officer of the company, who is in default, shall be punishable with fine which may extend to rupees five thousand.

Annual General Meeting

Sec 166: Every company must, in each calendar year hold an annual general meeting, so specified in the notice calling it provided that not more than 15 months shall elapse between two annual general meetings. Sec 210: Every company must within 6 months from the date of closure of accounts place its annual report in the annual general meeting to consider the financial performance

Business transacted in AGM

Annual General meeting of the company is called for transacting the following ordinary businesses: The consideration of the accounts, balance sheet and the reports of the Board of Directors and report of the Statutory auditors; The declaration of dividend; The appointment of directors in the place of those who are retiring on the date of the AGM, and The appointment of, and the fixing of remuneration of the statutory auditors. At the AGM, all other businesses are Special business, or, All businesses transacted at any other general meeting are special businesses

Provisions regarding holding of AGM

The power to convene the Annual General meeting vests with the Board of Directors. The person authorized by the Board can only be the signatory for calling an AGM Individual directors have no such power. Even Secretary cannot issue notice for the Annual General meeting without the authority of the Board

First Annual General Meeting

A company must hold its first annual general meeting within 18 months of its incorporation. There can be no extension of this period even by the Registrar. In that event it need not hold any annual general meeting in the year of its incorporation or in the following year.

Subsequent AGMs
Subsequent annual general meeting must be held by the company each year within six months after the close of the financial year but the interval between any two AGMs must not be more than fifteen months. Registrar may, for any special reason, extend the time by a period not exceeding three months.

Time and Place for Holding AGM

Every annual general meeting called after giving at least 21 clear days notice must be held on a day other than a public holiday, i.e. It should be held on working day, during business hours 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.

Notice
There is no contravention if an adjourned meeting accidentally comes to be held on a public holiday. Annual general meeting may be held with a shorter notice if it is so agreed by all the members entitled to vote in the meeting The notice must expressly specify the meeting to be Annual General meeting.

Default
If a company defaults in holding an annual general meeting two consequences will follow: Firstly, any member may apply to the company law board which may call or direct the calling of the meeting, and give such directions as it may consider expedient in relation to calling, holding and conducting of the meeting. The central government can give any ancillary or consequential directions which it thinks expedient in relation to calling, holding and conducting of the meeting. The company law board may direct that one member present in person or by proxy shall be deemed to constitute the meeting. Secondly, the failure to call this meeting is an offence punishable with fine which may extend to Rupees 50,000 on the company and every officer of the company who is in default and for continuing default, a further fine of Rupees 2500 per day during which the default continues.

Object of holding an AGM

An AGM is an important meeting for safeguarding the interests of the company Since the ultimate control of the company should vest in the hands of the shareholders, it is necessary that they should meet at least once every year to review the working of the company during the previous year Extraordinary General Meetings All the general meetings of a company, with the exception of the statutory meeting and the annual general meetings, are called extraordinary general meetings. Who may convene Extraordinary General Meetings The board may, whenever it thinks fit, call an extraordinary general meeting If at any time, there are not within India directors capable of acting who are sufficient in number to form a quorum, 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.

Calling of EGM on requisition (169)

(1)The board of directors of a company shall, on the requisition of such number of members of the company as is specified in sub sec (4), forthwith proceed duly to call an extraordinary general meeting of the company. (2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company. (3) The requisition may consist of several documents in like form, each signed by one or more requisitionists. (4) The number of members entitled to requisition a meeting in regard to any matter shall be-

In the case of a company having 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 carries the right of voting in regard to that matter; (5) In the case of a company not having a share capital, such number of them as have at the date of deposit of the requisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter. (6) If the board does not, within twenty-one days from the date of the deposit of a valid requisition, proceed duly to call a meeting for consideration of those matters on a day not later than 45 days from the date of the requisition, the meeting may be called By the requisitionists themselves (7) A meeting called under sub-sec (6) by the requisitionists or any of them: Shall be called in the same manner as that in which meetings are to be called by the Board; but Shall not be held after the expiration of three months from the date of the deposit of the requisition. Where two or more persons hold any shares jointly, a requisition, or a notice calling a meeting, signed by one or some of them shall have the same force and effect as if it had been signed by all of them. Any reasonable expenses incurred by requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the company

Class Meetings
Class meetings are those meetings which are held by holders of a particular class of shares, e.g. preference shares. Thus, for effecting such changes, it is necessary that a separate meeting of the holders of that class of shares is held and the proposed variation is approved at the meeting. Meetings of Debenture holders & Creditors When a company issues debentures it provides in the trust deed executed for securing the issue for holding of meetings of debenture holders. Meeting of Creditors A company, either as running concern or in the event of winding up, has to make certain arrangements with its creditors, which has to be worked out in the meetings of creditors.

Secs.171 to 186 to apply to meetings

171: Length of notice for calling meeting A general meeting of a company may be called by giving not less than 21-days notice in writing. A general meeting may be called after giving shorter notice, if consent is accorded thereto-

 In the case of an AGM, by all the members entitled to vote thereat; and In the case of any other meeting, by members of the company A: holding, if the company has a share capital, not less than 95% of the paid up share capital, or B: having, if the company has no share capital, not less than 95% of the total voting power exercisable at that meeting

Contents and manner of service of notice and persons to whom it is to be served

Sec 172(1) Every notice of a meeting of a company shall specify the place and the day and hour of the meeting, and shall contain a statement of the business to be transacted thereat. (2) Notice of every meeting shall be given to every member of a company to the persons entitled to a share in consequence of death or insolvency of a member, by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignees of the insolvent to the auditor or auditors for the time being of the company The accidental omission to give notice to, or the non-receipt of the notice by, any member or other persons to whom it should be given shall not invalidate the proceedings of the meeting. 173: Explanatory statement to be annexed to notice (1) For the purposes of this section In the case of annual general meeting, all business to be transacted at the meeting shall be deemed special, with the exception of business relating to ordinary businesses; and In case of any other meeting, all business shall be deemed special. Where any items of business to be transacted at the meeting are deemed to be special, there shall be annexed to the notice of the meeting a statement setting out all material facts concerning each such item of business, including in particular [the nature of the concern or interest] if any, of every director, and the manager, if any

174: Quorum for meeting

Unless the articles of the company provide for a larger number, five members personally present in the case of public company, and two members personally present in the case of any other company, shall be the quorum for a meeting of the company. If within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting if called upon the requisition of members, shall stand dissolved. In any other case, the meeting shall stand adjourned to the same day and at some other time and place as the Board may determine

Sec-175: Chairman of meeting

 Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands. If there is no Chairman or he is not present within 15 minutes after the appointed time of the meeting or is unwilling to act as Chairman of the meeting, the directors present shall elect one among themselves to be the Chairman of the meeting Sec 176: Proxies Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself; but a proxy so appointed shall not have any right to speak at the meeting

Ordinary and Special resolutions

A resolution shall be an ordinary resolution when at a general meeting of which the notice required under this Act has been duly given, the votes cast (whether on a show of hands, or on a poll) in favor of the resolution by members, exceed the votes, cast against the resolution by members so entitled and voting.

Special resolution
A resolution shall be special resolution when the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting the votes cast in favor of the resolution are not less than three times the number of votes cast against the resolution by members so entitled and voting.