THE COMPANIES ACT 1956

A Company means a Company formed and registered under The Companies Act 1956. A Company is an association of many persons who contribute money which is the capital, for conducting some trade or manufacturing activity and become members of the Company, and who share the profit and loss arising therefrom. Thus a Company is an artificial person created by law, having separate entity , with a perpetual succession and common seal.

Hence the distinct features of Company are : Independent legal entity Limited liability Everlasting existence Separate property Flexibility of investment Common Seal Capacity to sue and being sued Separation of ownership and management Proportionate representation Right to own property

Company and Partnership distinguished 1. Company governed by separate Acts 2. A partnership is sum total of persons who come together to share the profits of the business carried jointly by them, it may be registered or not, oral or written. A Company is registered and is a separate legal entity. 3. Liability of partner is unlimited, and that of shareholder the same is limited 4. Property of the partnership is owned collectively by all partners, however the company owns the assets. 5. A partner cannot transfer his interest to other without the consent of other partners, however in a Company the shares are easily transferable. 6. In case of partnership the number must not exceed 20 , and in case of public company there is no restriction on the number of members, but a private limited company the said number is 50. 7. There must to two member for partnership, for public limited company the minimum number is seven and private limited it is 2. 8. In partnership consent of all partners is required , in company the decision of majority prevails. 9. On death of the partner the partnership is dissolved, in case of company on death of the shareholder the existence does not get terminated.

TYPE OF COMPANIES 1. Private and Public Companies 2. Limited and Unlimited Companies 3. Companies registered u/s Section 25 4. Parent and subsidiary Companies 5. Government Companies 6. Foreign Companies

Private Company A private company, as per the Act means a Company that has a minimum paid-up capital of Rs.1,00,000 and by its articles : 1. Restricts the right to transfer its share 2. Limits the number of members to 50 excluding a. persons who are in the employment of the Company or were employed in the Company and continue to be the member after the employment. 3. Prohibits invitation to the public for shares or debentures of the company 4. Prohibits any invitation for acceptance of deposit from persons other than the members, directors or their relatives.

Privileges and Exemptions of Pvt. Ltd. Co. 1. Minimum number of members is two. 2. Prohibits of allotment of shares and debentures. 3. A special resolution to issue shares to non members is not required , restriction u/s 81 relating to rights issue does not apply. 4. Does not need separate Certificate of Commencement of Business 5. No statutory meeting and report are required. 6. 1 (in case 7 members present) and 2 persons (more than 7 present) can demand poll at the meeting. 7. Minimum number of directors is two. 8. Only members are entitled to inspect and get copies of P&L Accounts except in case of subsidiary of a public company or entire share capital held by foreign companies.

Private Company deemed to be Public Limited Company in following cases: 1. Where atleast 25% of the PUC is held by one or more bodies corporate, the Pvt. Ltd. Co shall automatically become public limited company on and from the date on which the shares are so held. 2. Annual average turnover of during 3 consecutive FY is not less than Rs. 25 Cr, irrespective of its PUC. 3. Where not less than 25% of PUC of a public company is held by private company. 4. Where private company accepts deposits after the invitation is made by advertisement or renews deposit from the public

Conversion of Private Company into Public Co The conversion is possible under two heads A. Conversion by default If the company commits a default in compliance with the essential requirements of Pvt. Ltd. Co of the Act , then the company will be treated as public limited company B. Conversion by choice If the private company alters its Article in such a manner that the provisions of private company are excluded. Then within 30 days the company shall file with ROC either prospectus or statement in lieu of the prospectus, as well as the following formalities needs to be fulfiled 1. Passing if special resolution altering the AOA & filing a copy of the same with ROC in 30 days of the resolution 2. Raising the membership to seven 3. Raising the PUC to minimum of Rs.5.00 lacs. 4. Raising the number of permanent directors to three

Conversion of Public Company to Private Company Any public company registered or converted can be converted to private company if the members so desire and the company is not listed in stock exchange, in such cases after one year of delisting. The following procedure needs to be complied; Publish in two widely circulated news papers where registered office is located a notice and get NOC from majority of the unsecured and secured creditors. Convene Board meeting for consideration of the proposal and prepare alteration to AOA meeting the requirements of private company. Obtain approval of Board for the proposal, fix up the day, date, and time of holding the general meeting of the company, approve notice, explanatory statement etc. Hold general meeting and pass special resolution authorizing the conversion and alteration of AOA. Obtain approval of Central Government. File a printed copy of AOA as altered with ROC within one month of the approval from Central Government. ROC will issue a letter granting approval for conversion and shall issue fresh certificate of incorporation.

Limited and Unlimited Company Limited Company- is one wherein the liabilities of the members is limited and are classified as follows A. Limited by Share: in which the liability of the each shareholder or member is limited to the amount individually invested, shareholders have no financial liability in case of fully paid share. B. Limited by Guarantee- used by companied formed for non-commercial purpose, viz. clubs etc. The members guarantee the payment to certain amounts if the company goes insolvent or liquidation otherwise no economic rights in relation to the company. C. Limited by guarantee with share capital-a hybrid entity used where company is for non-commercial purpose, but the activities of the company are partly funded by investors who expect a return

Unlimited Company The liability of the members is unrestricted, hence the liability is similar to that of the liability of the partners of a partnership firm. The Companies Act does not permit formation of Unlimited Company.

Section 25 Company The Central government may allow certain companies to remove the word Limited or Private Limited from their names if the following conditions are satisfied: The company is formed for promoting commerce, science, art, religion, charity , or any other socially useful objects and does not have profit motive. The company does not intend to pay dividend to its members but to apply the profits and other income in promotion of the objectives. However if the company declares dividend it would loose the status of company in which the public are substantially interested.

Parent & Subsidiary Company The company shall be deemed to be a subsidiary of another company if: 1. That other company controls the composition of its Board of Directors, i.e the parent company has power, at its discretion , to appoint or remove all or majority of Directors of the subsidiary company without consent or concurrence of any other person. 2. That the other company holds more than half in face value of its equity share capital, or 3. Where the first mentioned company is subsidiary company of any other company which in turn is subsidiary of another company,

Government Company A public enterprise incorporated under the Act is called Government company. As per Sec.671, a government company is any company in which not less than 51% of PUC is held by 1. The Central Government 2. Any State Government/ s 3. Partly by the Central Governments and partly by one or more State Governments. A subsidiary of a government company shall also be treated as government company.

Foreign Company A company incorporated in a country outside India under the law of that other country and has established the place of business in India.

Sec 2(23A) states a foreign company means a company which is not a domestic company

Lifting of the Corporate Veil This implies that a company has a separate personality different from its shareholders/member. When the corporate personality is being misused then the court will ignore the Veil ( curtain) to reach to the persons under it to reveal the true form and character of the concerned company, this is known as corporate law concept of lifting or piercing the corporate veil. Under this doctrine a shareholder or director is held liable for the debts or liabilities of the company despite general principals on immunity. The rational for this doctrine is that the law will does not allow corporate form to be misused . There are two major circumstances when the corporate veil will pierced: 1. Under Statutory intervention 2. Under Judicial intervention

Under Statutory Intervention 1. Reduction of number of member below the statutory minimum- and company carried on business beyond six months then privilege of limited liability is lost. 2. Misrepresentation in Prospectus Where prospectus includes any untrue statement, every Director, promoter and everyone party such prospectus is liable to pat compensation to every person who subscribes to the said security. The persons responsible are also punishable with fine. 3. Failure to return application money In case minimum subscription not received then to refund the money in the stipulated time frame. 4. Misdescription of Companys Name-the signatory should mention the name of the company for and on behalf the person signs in legible manner or else the director will be liable for penalty. 5. For investigation of Ownership of Company Government may investigate the person who has been financial interested in the success or failure of the company or who are influential in the policy of the company 6. Fraudulent or Wrongful Trading

Under Judicial Interpretations- following are the circumstances that fall under this category: 1. Prevention of fraud or improper conduct 2. Group Enterprises 3. Where a company acts as Agency for its shareholders 4. Trust 5. Determination of Enemy character 6. Tax consideration

FORMATION OF THE COMPANY

The formation of a Company in India can be divided into four major categories 1. Promotion PR-INC Ra-CE 2. Incorporation 3. Raising of Capital 4. Certificate of Commencement of Business

Promotion The person who conceives the idea to form a company and invest the initial funds are known as promoter of the company. The promoters occupy a position of trust and confidence in the company, hence they have some basic duties towards the company which are as follows: 1. They should not make any profits secretly at the expense of the company they promote. 2. They should make full disclosure to the independent Board of Directors, or in the prospectus of all the material facts relating to the formation of the company, including any profit made by them

Promoters Remuneration The promoter besides being remunerated for his preliminary expenses or registration fees may be rewarded by the company, like follows: 1. The company may lump sum for the service rendered. 2. The promoter may make profits on transactions entered by him after making disclousre of the same. 3. The promoter may sell his own property of the company for cash or against fully paid shares in the company. 4. The promoter may be given an option under the rights issue of the company earn commission thereon. (A rights issue is an issue of rights to buy additional securities in a company made to the company's existing security holders)

Promoters Liability In case of default by a promoter in fulfilling his duties, the company may rescind the contract in case any undisclosed profits have been made by the promoters in such contracts. The company can sue him for breach of trust Damages up to the difference between the market value and the contract price can be recovered from the promoter The promoter is also liable for mis-statement made in the prospectus. A person subscribing based on the mis-statement can sue the promoter for loss. The promoter can be punished with a fine for his act unless he proves that he had reasonable grounds to believe that the statement was true.

Incorporation All the companies must be Incorporated for being operational . The company must be registered with the Registrar of Companies (ROC) of the appropriate jurisdiction based on the registered office of the company. The first step is to file the Form 1A with the following details: 1. Four alternative names (company) 2. Names & address of the promoters 3. Authorized capital of the proposed company 4. Main objects of the proposed company 5. Name of the other group companies ROC will scrutinize(examine or inspect closely) the document and then give its consent for the proposed name if the same are in order.

On receipt of the approval of the name the following documents are required to be filed with the ROC: MOA & AOA An Agreement with a person if appointed as MD or Whole time Director. A declaration in Form 1 by advocate, CA, CS stating that the requirements have been complied. Written consent of the persons to act as Directors of the company Form 29. Registered Office address- Form 18 Particulars of the appointment of directors, MDForm 32.

Memorandum of Association This is the most important document to be filed by any proposed company. It sets out the constitution of the company and specified relationship--to outside world. It also stated authorized capital and names of its first or permanent directors. The MOA can be divided in six distinct clauses Name Clause- The name can be altered only by passing a special resolution at the general meeting or as stated in the AOA. Registered Office Clause- The State in which the registered office of the company will be situated .

Object Clause- This defined the activities which the company can carry on. The clause must state Main Object Incidental or Ancillary objects to attain its main objects Other objects are those which are not included above. Liability Clause This contents the nature of liability of the members. A declaration that the liability of members is limited or unlimited. Capital Clause-States the amount of share capital, divided into different shares of fixed amount. A company cannot issue shares greater than the amount of share capital in this clause. Association Clause- The person subscribing to the MOA declare that they are desirous to form a company and agree to subscribe to take shares places against their names.

Articles of Association This is the main instrument which contents the rules and regulation for internal administration of the company. This is nothing agreement between the company and shareholders. They govern the conduct a companys business by stating rights and duties of directors and members. The items covered by AOA are as follows: Powers, rights, duties and liabilities of directors Powers, rights, duties and liabilities of members Rules for meeting of company Dividend and reserves Borrowing power of the company Alteration of Capital Call on shares Transfer and Transmission of shares Forfeiture of Shares Surrender of Shares Voting powers of members Accounts and Audit Winding up of the company

The provision of the AOA must not conflict with provisions of MOA , in case conflict arises then MOA will prevail.
Alteration of Articles can be effected subject to the provisions of the MOA. A company by special resolution at its general meeting can alter the articles. The alteration for converting the private company into public company is effected only with the approval of the Central Government.

Doctrine of Ultra Vires Ultra Vires acts cannot have any legal effect The company cannot sue any person for enforcement of any its rights which are ultra vires. The directors of the company may be held personally liable to outsiders for an ultra vires act. Doctrine of Constructive Notice The MOA and AOA are registered with ROC and hence are public documents. All non members have access to these documents. Hence an outsider dealing with the company is presumed to have read the contents of the registered documents of the company. This is known as the rule of constructive notice

Doctrine of Indoor Management According to this doctrine persons dealing with the company are entitled to presume that internal requirements prescribed in the MOA & AOA are being observed by the company. Exceptions to doctrine of indoor management Knowledge of irregularities Negligence Forgery Act outside the scope of apparent authority

Certificate of Incorporation Once all the formalities are completed like submission of documents, registration and filing fees, stamp duty then ROC will issue the Certificate of Incorporation which is conclusive evidence that the requirements of Companies Act have been fulfilled. A private company or company without share capital are eligible to carry out its business immediately, however public company have to comply with capital subscription requirement and obtain Certificate of Commencement of Business

Raising or floating of capital The process of raising by a public limited company is carried out after receipt of Certificate of incorporation. In case the company needs to raise capital then a Prospectus needs to be filed or in case the capital is raised on their own then a Statement in Lieu of Prospectus needs to be filed with the ROC. Prospectus is a legal document that contains all material information investors need to know about the company.

Contents of the Prospectus Part I 1. General Information 2. Capital Structure of the company 3. Terms of the present issue 4. Particulars of the issue 5. Company management and project 6. Details of other listed companies under same management 7. Outstanding litigations 8. Management perception of risks Part II 1. General Information 2. Financial Information/ Reports 3. Statutory & Other information

Certificate of Commencement of Business

After completing all the formalities as stated above the Public company will be issued a Certificate of Commencement of Business and there after it can start the business. How ever within one of the certificate of commencement of business if the company fails to commence the business then the courts may order winding up of the company.

COMPANY MANAGEMENT

Director A company being a separate entity should be operated at a distance from its members or shareholders, for which shareholders elect and appoint their representatives who are entrusted with the responsibility of managing the operations of the company, and they are known as Directors. The Directors so appointed form a Board of Directors as they jointly oversee the operation of the company. The Board may appoint a person to be responsible for the day to day operation of the company and such a person Managing Director or Whole Time Director. MD or WTD works under the overall supervision and control of the Board of Directors (own: WTD can not be appointed in more than one public / private ltd. Company (as an employee can belong to only one company :P) and a MD can be appointed in more than one company)

Qualification & Disqualification of Director Any person can be a director. Act has not stated any academic or professional requirement, nor any age limit except for minor. However only individuals can be appointed as Directors. In case if AOA provides for certain qualification shares to be held by the person appointed as Director then he needs to acquire the shares within two months of the appointment, or else the person has to vacate the office and also has to pay fine as per the Act.

Disqualifications: 1. Person found to be of unsound mind by the Court 2. An undischarged insolvent 3. A person applies to be adjudicated as insolvent 4. A person convicted by Court for any offence of moral turpitude and sentenced to imprisonment for not less than six months and period of five years have not elapsed from the date of expiry of the sentence. 5. In case share application money is not paid before the due date. 6. If a court has passed an order disqualifying a peron u/s.203 of the Act. 7. In case of public limited company: a.Has not filed annual accounts for three consecutive years. b.Has failed to repay the deposit or interest on due date

Appointment of Directors First Directors- are named in the AOA in case there is no mention then the subscribers to the MOA are the first directors. The first Directors hold the office till the first General Meeting. Appointment by the Company- The first Directors will be in office till first AGM, thereafter at every AGM the Directors shall be reappointed. As per the Act atleast two third of the total number of Directors will retire by rotation and if eligible for reappointment may be reappointed. Re appointment of Director- When a director retires then the same person or any other person can be appointed as a Director in place of the retiring Director.

Appointment by Board of DirectorsThe Board is empowered to appoint directors in following three categories: Additional Director- They hold the office only upto the next AGM and should be reappointed as directors at the said AGM. Casual Director- Vacancy caused by death, resignation, disqualification. The person so appointed will hold the office till the expiry of the term of the director in whose place the appointment is done to fill the vacancy. Alternate Director- A person appointed may be out of India or the state in which the Board meetings are held then the board may appoint a person as Alternate Director. His term is upto the term of the director for whom he is appointed as Alternate Director.

Appointment By Central GovernmentIn case 100 members or number of member holding 1/10 of the total voting rights can apply to National Company Law Tribunal (NCLT) for appointment of directors, then if the NCLT is satisfied can specify the number of directors to be appointed. Central Government on the direction from NCLT would appoint directors for period of three years. Appointment by Third Party- The AOA may empower company to appoint third parties( like banks, FI, Government, etc) to board of directors. These directors are known as Nominee Directors, and such number will not be more than 1/3 of the total strength of the board of directors. Appointment by Proportionate Representation- minority shareholders can have representation on the board.

Minimum and Maximum Number of Directors A public limited company should have minimum at least three directors and a private limited company or a deemed public limited company should have two directors. The maximum number of directors would be as per the AOA, but not more than 12, in case more than 12 directors are to be appointed then approval of Central Government is required to be obtained.

Ceiling on Directorships Sec. 275 debars a person from becoming director in more than 20 companies simultaneously , however following companies are excluded in the calculation of the number of directorship A private company An unlimited company A company u/s 25 A company in which the person is only an Alternate Director In case a person already on the board of 20 companies is appointed on the board of a new company then the new appointment will not have effect unless the person within 15 days vacates the office of director in any company. In case of any default there will be penalty in respect of each of those companies.

Managing Director Every public company (incl. deemed public co.) or a private co which is subsidiary of public co , having a PUC of Rs.5.00 cr or more must have MD or WTD. The appointment requires approval of the Central Government unless the appointment is as per Schedule XIII and return 25C id filed within 30 days of the appointment Mode of AppointmentAn agreement with the company A resolution passed by the company in general meeting A resolution passed by the board of directors The MOA or AOA

Disqualifications of Managing Director: A company cannot appoint or continue to appoint a person who is: An undischarged insolvent Suspends payment to creditors Convicted by Court in an offence of moral turpitude Role and Term of Managing Director The MD will have substantial powers of management subject to the control and general directions of the of BOD. His appointment is for a period of 5 years. He may be reappointed on completion of his tenure or extended for a period of 5 years Managerial Remuneration- not more than 5% of NP in case of one director or 10% in case more than one director. In case of no profits or inadequate profits then the remuneration will not exceed Rs.0.75 to 2.0 lac/pm Depending on the effective capital of the company.

Vacation of the office of Directors under following condition 1. He does not obtain the qualifying shares 2. He found of unsound mind by the Court 3. He applies to be adjudicated as insolvent 4. He is convicted by court of any offence involving moral turpitude 5. He fails to pay the call money 6. He absents from three consecutive board meetings. 7. He accepts loan from the company by contravention of Sec 295. 8. He acts in contravention of Sec. 299. 9. He is removed in pursuance of Sec. 284 10. He is appointed as a nominee director , he ceases to hold that office.

Removal of Director Removal by the company- by ordinary resolution requiring special notice Removal by Central Government Removal by NCLT
Directors Resignation- this is as per the AOA . The director is relived as soon as he resigns and is not depended on the acceptance of the same by the BOD.

General Powers of Board of Directors: The BOD shall be entitled to exercise all such powers, and to do all such acts and thing as a company is authorized to do. Power to be exercised at the Board Meeting To make calls in respect of money unpaid on their share To buy back shares To issue debentures To borrow monies other than debentures except banking company To invest the funds of the Company To make loan

Restrictions on Power of the Board Sell, lease or otherwise dispose of whole or substantially the whole of the undertaking Remit or give time for repayment of any debt due by a Director except in case of banking company Invest, other than in trust securities, amount received as compensation by the company in respect of the compulsory acquisition of any premises or property of the company. Borrow money is in excess of the net worth of the company Contribute to charitable and other funds when the aggregate amount in financial year exceeds Rs.50,000 or 5% of its average net profits for the last three financial years whichever is greater.

Duties and Obligations of Directors Statutory Duties1. Duty to file Return of Allotments 2. To disclose interest 3. To attend Board meetings 4. To disclose receipt from transfer of undertaking or property 5. Other statutory duties6. Convene statutory meeting, AGM and EGM 7. Authenticate and approve annual financial statement. 8. Appoint first auditors 9. Appoint additional directors 10. Prepare and place at the AGM balance sheet and P&L as well as report of auditors and Board of Directors

Liabilities of DirectorsLiability to Company- Being an agent of the company, the directors are required to act in good faith, care and due diligence. Thus the liabilities of directors are: Breach of fiduciary duty- to act honesty in interest of the company Ultra vires the Acts Negligence Mala fied Acts Liabilities to third partiesLiability under provisions of Companies Act Liability for breach of warranty- where they transact business which is ultra vires of MOA & AOA

COMPANY MEETINGS

Company meetings can be categorised into three types: Meeting of MembersGeneral Meetings Statutory, AGM, EGM Class Meetings Meeting of Board of Directors Other meetingsMeeting of debenture holders Meeting of Creditors

Statutory MeetingThis is the first meeting of shareholders of public limited company. Such a meeting must be held within six months , but not before one month from the date on which the company becomes entitles to commence business. A notice must be sent to all members atleast 21 days in advance to the date of the meeting. The matter discussed include: Statutory Report Allotment of shares Money received Contracts entered Money spent on preliminary expenses

Statutory reportTo be certified as correct by atleast two directors, one must be MD if there is one, and also by auditors with respect to allotment of shares , receipt of money, payments made etc. The said report has to be filed with the ROC. Contents of the Statutory Report_ Number of shares allotted-partly or fully paid shares Total cash received in respect of shares allotted. Details of the preliminary expenses The abstract of receipt and payments ,and cash & bank balance. The name, address and occupations of the directors, auditors, managers, secretary. Particulars of any contract submitted to the meeting for the approval The details of the underwriting contracts and its compliance The arrears if any, due on call from director. The particulars of any commission or brokerage paid in connection with issue of shares, debentures .

Annual General MeetingAGM is held in all types of companies once a year. The company may hold its first AGM within 18 months from date of incorporation, in such case it may not hold AGM in year of its incorporation or in the subsequent year. Not more than 15 months must elapse between two AGM In special case ROC may extend the date of holding an AGM by not more than 3 months, however an application before the due date on which AGM needs to be held has to be made to ROC. The AGM must be held on working day during the business hours at the registered office or at any place within the city which is the registered office of the company. If the day is declared as a public holiday after the notice convening the meeting, such a day shall be treated as a working day.

NoticeA notice of at least 21 days before the meeting must be given to all the members, unless consent for shorter duration is given by 95% of the members. The notice must state that the meeting is AGM and also the date, time, and place of the meeting. The notice must be accompanied by annual accounts of the company, directors report, auditors report for the year. Companies having share capital should state that members entitled to attend can appoint proxy who need not be a member, the proxy form must be deposited 48 hours before the meeting

Business to be transacted at the AGM At every AGM following matters are discussed and decided and hence are known as ordinary business. All other matters to be discussed and decided at the AGM are special business. 1. Considering of final accounts, directors report, auditors report 2. Declaration of dividend 3. Appointment of directors in place of those retiring 4. Appointment and fixing of remuneration of auditors. In case any other business has to be discussed and decided then same is special business and an explanatory statement needs to be accompanied with the notice calling the meeting The notice should also give the nature and extent of interest of the directors on the special business. In case any documents has to be approved by the members at the meeting then the said document should be available for inspection at the registered office of the company.

Extraordinary General MeetingAll general meetings other than AGM are EGM. Generally such meetings are called by BOD. The EGM may be called by following : 1. The board on requisition- The members have right to call for EGM, at least one-tenth of the members having voting rights. 2. By the requisitionists- If directors fails to call and hold EGM then the requisitionist may within three months of their requisition call an EGM and claim expenses from the company. The company can recover the money from the director-in-default. At an EGM any business which is not covered by the notice cannot be considered and voted. Minimum 5 members in case of public limited and 2memebers in case of private limited companies must be personally present within half an hour from the time of holding the meeting. At least 21 days notice before the meeting date must be given to members. A Chairman shall be elected by the members from themselves on show of hands. 3. By National Company Law Tribunal- on its own or on application by the directors or members will call an EGM

Board Meetings The Directors act collectively as a single unit and are called Board, hence the term Board Meetings. Preiodicity- public or private companies shall hold one meetings every three months. Sec.25 once in six months. Intervals- any time within three month period. Day- on any working day or even a public holiday. Time During the business hour or even outside business hours. Place- any where in city, state or within or outside country, if required.

Other MeetingsMeeting of Debenture holders- if AOA provides. Matters pertaining to the variation in the terms of the security or rights are to be discussed. The decisions made by majority are valid and binding on the company. Meeting of Creditors- At the time of winding up, a meeting of creditors and contributories is held to ascertain the total amount due by the company and also appoint a liquidator to wind up the affairs of the company.

Requisites of Valid Meetings1. The meeting must be duly convened, by person authorized to do so. 2. Proper and adequate notice must have been given to all those entitled to attend . 3. The meeting must be legally constituted. There must be proper authority in Chair. 4. The rules of quorum must be maintained 5. The business at the meeting must be validly transacted. 6. The meeting must be conducted in accordance with the regulations governing the meeting.

ProxyA person may appoint another person to attend and vote at a meeting on his behalf. Such other person is called Proxy. The term is also applied to the instrument by which the appointment to act on his behalf is made by the member. A company can allow its member to appoint a proxy if AOA authorises. Every notice calling a meeting must contain statement that a member entitled to attend and vote can appoint a proxy in case of private limited company and one or more proxies in case of public limited company. The person appointed as proxy need not be a member of the company. The member appointing a proxy must deposit with the company a proxy form atleast 48 hours prior to the meeting. The proxy form must be in writing signed by the member or his attorney. The proxy can be revoked at any time by the member by giving proper intimation to the company. A proxy is not entitled to vote except on a poll. Proxy cannot vote on show of hands.

Quorum Quorum means the specified number of qualified persons whose presence is necessary for conducting legally binding business at a meeting. A meeting without quorum is invalid and decisions taken at such meetings are not binding. The quorum of the board meeting is one-third of its total strength, or two directors, whichever is higher. Quorum of general meeting shall be five members personally present for public and two for private limited company. Unless AOA provides otherwise the quorum must be present at the commencement of the meeting and not necessarily at time of vote is taken. If within half an hour from the time appointed for holding a meeting of the company the quorum is not present then The meeting is shall be adjourned to same day in the next week at the same time and place or such other day as Board may decide. If the at the adjourned meeting also quorum is not present within half an hour then the members present shall constitute a quorum If the meeting is by requisition then the meeting shall stand dissolved.

Role of Chairperson in Conducting a MeetingChairperson presides over a meeting. If chairperson is not present within 15 minutes after the appointed time for the meeting the directors or members present shall choose among them to act as chairperson for the said meeting. Duties of Chairperson Properly convened , constituted by proper notice and quorum is present. Provisions of AOA are observed during the meeting Ensure business is taken in order as per notice. Impartially regulate the meeting Power to adjourn the meeting in case of indiscipline. Power to order poll correctly and must order poll to be taken when demanded properly. Must exercise his casting vote bona fide in the interest of the company.

Voting and Demand for Poll Generally preliminary matters are decided at general meetings by show of hands. Chairperson can decide on poll of his own if he feels that voting is not appropriate. A poll is allowed if the same is demanded by In case of public company having share capital one-tenth of the total voting power in respect of the resolution In case of private company having share capital by one member having right to vote on the resolution and present in person or proxy in case less than seven member are present in case more than seven members are present then two such member have to demand a poll In case of any other company by persons present in person or by proxy whose total voting power is not less than onetenth of the total voting power in respect of the resolution

Agenda- means the list of things to do at the meeting. Motion- means a proposal to be discussed at a meeting by the members. A resolution may be passed with or without modification . A motion on being passed as a resolution becomes a decision. A motion must be in writing and signed by the mover and put to vote of the meeting by the chairperson. Generally a motion is proposed by one member and seconded by other member. A motion may be amended before but to vote for adoption. An amendment may be proposed by any member who has not already spoken on the main motion or has not previously moved an amendment thereto. There can be amendment to the amended motion also. The Chairperson has discretion to accept or reject an amendment on various grounds such as inconsistency, redundancy, irrelevant etc.

ResolutionA motion with or without amendments is put to vote at the meeting. A motion when passes by requisite majority of votes by shareholders become company resolution. Thus resolution may be defined as the formal decision of a meeting on any proposal placed before it Ordinary Resolution- which is passed by simple majority. This is required in case of business like- declaration of divided, appointment of auditor, appointment of director, passing of annual accounts. Special Resolution- passed by at least three-fourth clear majority. The intention to propose special resolution must be mentioned in the notice for the meeting. Following matters require special resolution To alter object clause of MOA To alter AOA To alter domicile clause of MOA from one state to another state To alter the name of the company with the approval of Central Government.

Resolution requiring Special NoticeCertain ordinary resolution require special notice. The following matters require special notice: To appoint auditors other than retiring auditor. To resolve at the AGM that retiring auditor will not be appointed. To remove director before expiry of his period in office. To appoint another director in place of retiring director.

Minutes- Every company must keep minutes containing details of all proceedings at the meeting. The minute are gist of discussions at the meeting and the final decisions taken thereat. It normally includes resolutions actually passed. The minutes must be recorded within 30 days of the meeting & the Chairperson has to sign the said meeting.
The minute book shall be kept at the registered office of the company and open for inspection by members free of cost

WINDING UP OF COMPANY

Winding up A means by which a company is dissolved. Winding up is the process of bringing to an end the legal personality of a company as a corporate body. During this process the company ceases to carry on its business, the assets are realized, the proceeds are utilized in paying off the debts and surplus, if any, is distributed amongst contributories pro rata. Modes of Winding Up: Compulsory winding up by the order of NCLT Voluntary winding up or by passing of a special resolution by members. This can be either voluntary or creditors winding up.

Compulsory Winding up- This takes place by the order of the NCLT. There could be various reasons due to which a company may be wound up. These are as follows: Special Resolution of members Default in holding Statutory Meeting or delivery of Statutory Report Failure of Commencement of Business or Suspending Business- does not commence business within a year of its incorporation Reduction in number of member below statutory minimumInability to pay debt Petition of compulsory winding up may be made by any one of following Company itself Any creditor/s ROC Central Government An official liquidator

Commencement of Winding up Appointment of official liquidator Terms of appointment of liquidator Remuneration of liquidator Duties of liquidators Working of liquidators

Provisions of Voluntary Winding Up Appointment of Committee of Inspection Powers of Board after appointment of liquidator Meeting of Creditors if Company found insolvent Sale of Assets by Accepting Shares in other Company Meeting of members and creditors Distribution of the property of Company Statement of Affairs by Directors Intimation about appointment as Liquidator Powers of Liquidators Final Report of official liquidator