Question-1: What are different kinds of company meeting? Explain the legal provisions reading convening of each type of such meetings.

Answer:

Company meetings are essential not only for running the business efficiently and smoothly but also to comply with legal obligations. There are different types of company meetings and each one has its own purpose and legal requirements to adhere to.

The kinds of company meetings are

1. Shareholders Meeting:

a. Statutory meetings

b. Annual General meeting

c. Extraordinary general meeting

d. Class meeting

2. Board Meeting

3. Meeting of the Committees of the Board

4. Meetings of the Debentures-holders

5. Meeting of creditors

a. For purpose other than winding-up

b. For winding up

6. Meeting of contributories in winding up

Validity of a meeting

Irrespective of its kind, for a company meeting to be valid it has to satisfy the following conditions:

1. It must be properly convened. This means that:

a. the meeting must have been convened by the proper authority. The proper

authority to convene the meeting is the Board of directors, shareholders or

company Law Board; and

b. proper and adequate notice must have been given to all those entitled to attend.

2. It must be legally constituted. This meant that;

c. the meeting should be chaired by the proper person;

d. there should be proper quorum and

e. the provisions of the Act and Articles must be complied with

3. It must be properly conducted. That is the business at the meeting must be validity

transacted.

Description of kinds of meeting and it legal provisions on convening:

1. Statutory meeting:

Statutory meeting is a meeting of the shareholders held only once during the life time of the company. Generally, it is the first general body meeting. The main purpose of this meeting is to enable the members to know at an early date the financial position and prospects of the company.

Section 165 of the Companies Act requires that every company limited by shares, by guarantee and having a share capital must within a period of not less than one month but not more than six months from the date the company becomes 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 said period if month cannot be called a statutory meeting.

Section 105 (10) provides that the provision of Section 165 are not applicable to a private company. However, if a private company becomes a public company by virtue of section 43-a or converts itself into a public company within a period of 6 months from the date of its incorporation, it will have to hold the statutory meeting as per Sec 165 but if a private company becomes a public company after six months of its incorporation, it will not be required to hold the statutory meeting.

Section 165 of the Act shall not apply to a Government company even through registered as a public company.

Thus we may say that statutory meeting need not be held by:

a. a private company whether independent or subsidiary of a public company

b. a public company not having share capital

c. a public company having liability of its members unlimited

d. a public company having liability of its members limited by guarantee and not having

share capital and

e. a government comp[any whether as a private or public company

Under sec 171 a notice of the meeting must be given at least 21 clear days before the meeting unless members holding not less than 95% of the paid up capital as given right to vote or not less than 95% of the total voting power exercisable at that meeting agree to a shorter notice.

The notice of the meeting must contain the following:

a. A description saying that the meeting to be statutory

b. Date & Time

c. Place

d. Agenda with short explanation

e. Statutory Report

The board of directors should get a report, at least twenty one days before the day on which the meeting is to be held, called statutory report, sent to each member along with the notice of the meeting, and it is to be forwarded to every member of the company. However, if the report is forwarded later, it shall be deemed to have been duly forwarded if it is so agreed to by all the members entitled to attend and vote at the meeting. A copy of statutory report should also be sent to the Registrar of companies.

The scope of the meeting is to discuss any matter relating to the formation of the company or arising out of the statutory report.

2. Annual General Meeting ( AGM )

Every company must in each calendar year hold a general meeting as it annual general meeting in addition to any other meeting in that year and must specify the meeting as such in the notices calling it.

The first AGM of a company may be held within a period of not more than 18 months from the date of its incorporation. If such a meeting is held within that period, it shall not be necessary for the company to hold any other ADM in the year of incorporation or in the following year.

Subsequent AGM must be held each year and the interval between two AGM must not be more than 15 months. However, sec 210 requires that the balance sheet made up to a date not more than 6 months preceding the date of meeting had to be laid before the annual general meeting. In the other words, AGM cannot be held later than 6 months from the date of the closing of the books of account.

A notice of at least 21 days before the meeting must be given to members unless consent is accorded to a shorter notice by members, holding not less than 95% of voting rights in the company. The notice must state that the meeting is an annual general meeting. The time, date and place of the meeting must be mentioned in the notice. The notice of the meeting must be accompanied by a copy of the annual accounts of the company, director’s report on the position of the company for the year and auditor’s report on the accounts. Companies having share capital should also state in the notice that a member is entitled to attend and vote at the meeting and is also entitled to appoint proxies in his absence. A proxy need not be a member of that company.

A proxy form should be enclosed with the notice. The proxy forms are required to be submitted to the company at least 48 hours before the meeting.

Companies licensed under Section 25 are exempt from the above provisions provided that the time, date and place of each annual general meeting are decided upon beforehand by the Board of Directors having regard to the directions, if any, given in this regard by the company in general meeting.

The meeting must be held:

a. On a day which is not a public holiday

b. During business hours

c. At the registered office of the company or at the some other place within the city

town or village in which the registered office is situated.

Business to be transacted at Annual General Meeting:

At every AGM, the following matters must be discussed and decided. Since such matters are discussed at every AGM, they are known as ordinary business. All other matters and business to be discussed at the AGM are special business.

a. The following matters constitute ordinary business at an AGM :-

b. Consideration of annual accounts, director’s report and the auditor’s report

c. Declaration of dividend

d. Appointment of directors in the place of those retiring

e. Appointment of and the fixing of the remuneration of the statutory auditors.

In case any other business (special business) has to be discussed and decided upon, an explanatory statement of the special business must also accompany the notice calling the meeting. The notice must also give the nature and extent of the interest of the directors or manager in the special business, as also the extent of the shareholding interest in the company of every such person. In case approval of any document has to be done by the members at the meeting, the notice must also state that the document would be available for inspection at the Registered Office of the company during the specified dates and timings.

Importance of annual general meeting

It is only at the annual general meeting of a company that a shareholder can exercise any control over its affairs. The shareholder also gets an opportunity to discuss about the affairs and review the working of the company. They can also take necessary steps for the protection of their interests. Appointment of auditors is also made at the annual general meeting. Annual accounts

are presented for consideration of the shareholders and dividends are declared. The shareholders can take up of any other business relating to the affairs of the company for discussions.

Consequences of default:

If the company fails to hold the annual general meeting, two consequences are as follows:

(i) Any person can apply.Under sec.167, to the company law, Board for calling the meeting.

(ii) The company and every officers of the company, who is in default are punishable with fine which may extend toRs.5000 and in case of a continuing default, with a further fine which may extend to Rs 250 for everyday after first during the day which such default continues (sec.168)

3. Extraordinary General Meeting ( EGM )

Any general meeting other than the statutory and annual meeting are called extra ordinary general meeting and the all business transacted at such meetings is called special business.

EGM may be called

a. By the Directors: The Board of Directors may call a general meeting of the member at any time by a giving not less than 21 days clear notice unless members holding not less than 95% of the paid up capital as given right to vote or not less than 95% of the total voting power exercisable at that meeting agree to a shorter notice.

b. By the Director on Requisition: The Board of Directors must convene a general meeting upon request from a member or several members of a company, who together hold not less than 10% of the paid up share capital with voting rights in the company or in the case of a company not having a share capital, representing not less than 10% of the voting rights of the company, can requisition the directors of the company to call an EGM. To do so, they deposit a signed requisition at the company's registered office, stating the purpose of the EGM. Within 21 days of the receipt of the request, the directors must issue a 21 days notice for the holding of the meeting on a date fixed within 45 days of the receipt of the requisition.

c. By the requestors themselves: If the directors fail to hold the meeting as aforesaid, the requestors may call a meeting to be held on a date fixed within 3 months of the date of requisition. All reasonable expenses, of such a meeting can be recovered from the company which in turn shall recover the same from the remuneration of the directors at fault. Resolutions properly passed at such meeting are binding on the company.

d. By the company Law Board: If for any reason, it is impractical to call a meeting of the company, other than an annual general meeting, the Company Law Board may either of its own motion or on the application of any director of the company who would be entitled to

vote at the meeting order a meeting a meeting of the company to be called, held and conducted in such a manner as the Board thinks fit and give such ancillary or consequential directions as it thinks expedient, including a direction that one member present in person or pry shall be deemed to constitute a meeting.

4. Class Meetings

Under the companies act, class meetings of various kinds of shareholders and creditors are required to be held under different circumstances. Under sec. 106, class meeting of the holders of different classes of share are to be held if the rights attaching to these shares are to be varied. Similarly under sec. 394 where a scheme of arrangement is proposed, meetings of the several classes of the shareholders and creditors are required to be held. Also at the time of windings up, the meetings of creditors and members, for certain purpose, are held.

5. Board Meetings and Meeting of the committee of the Board

As per the Companies Act, a Board meeting must be held at least once in a every three calendar months and at least four such meetings must be held in every year. However, so long as there are four meetings in a year the interval between two meetings may be more than 3 months.

The following are the characteristics of Board meeting.

a. Notice to be given in writing to every director, either by person or to postal address in India

b. To be notified al teast a week in advance though section 286 doesn’t specify any minimum notice period

c. If the meeting is notified as recurring on a fixed date it will be sufficient for compliance. However a reminder are to be sent

d. It must be called by Director, manager or secretary on the requisition of director. e. If a director is accidently excluded from a meeting, he has the right to sue for declaration

of the entire proceedings.f. The notice of the Board meeting must state the date, time and place of the meeting.g. Agenda to be sent. However, it is not compulsory to state the nature of the business going

to be transacted in the meeting.h. A board may be held anywhere and anytime, even on a public holiday. However, due to

the fact that adjourned meeting cannot be held on a public holiday, Board meeting ought not be held on a public holiday.

i. As per sec 278, the quorum for board meeting shall be 1/3 rd of its strength (any fraction contained in that one-third is being rounded off as one), or two directors, whichever is higher (Sec. 278)

j. If a meeting of the board cannot be held for want of quorum, it will automatically stands adjourned till the same day in the next week, unless the articles provide otherwise [Sec 88 (12)]

k. Where a meeting of the board is called but could not be held for want of quorum, there is no contravention of Sec 285 [ Sec 288 (2)]

6. Meeting of the Debenture holders

A company issuing debentures may provide for the holding of meetings of the debenture holders. At such meetings, generally matters pertaining to the variation in terms of security or to alteration of their rights are discussed. All matters connected with the holding, conduct and proceedings of the meetings of the debenture holders are normally specified in the Debenture Trust Deed. The decisions at the meeting made by the prescribed majority are valid and lawful and binding upon the minority.

7. Meeting of creditors

Sometimes, a company, either as a running concern or in the event of winding up, has to make certain arrangements with its creditors. Meetings of creditors may be called for this purpose. Eg U/s 393, a company may enter into arrangements with creditors with the sanction of the Court for reconstruction or any arrangement with its creditors. The court, on application, may order the holding of a creditors meeting. If the scheme of arrangement is agreed to by majority in number of holding debts to value of the three-fourth of the total value of the debts, the court may sanction the scheme.