Company Meetings

A company is an association of several persons. Decisions are made according to the view of the
majority. Various matters have to be discussed and decided upon. These discussions take place at
the various meetings which take place between members and between the directors. Needless to
say, the importance of meetings cannot be under-emphasised in case of companies. The
Companies Act, 1956 contains several provisions regarding meetings. These provisions have to
be understood and followed.

For a meeting, there must be at least 2 persons attending the meeting. One member cannot
constitute a company meeting even if he holds proxies for other members.

Kinds of Company Meetings: Broadly, meetings in a company are of the following types :-

I. Meetings of Members :
These are meetings where the members / shareholders of the company meet and discuss various
matters. Member’s meetings are of the following types :-
There are three kinds of meetings of the members of a company:

Statutory meeting, which is to be held not less than one month and not more than six months
from the date of incorporation of the company. The statutory meeting is held only once in the
lifetime of the company. This provision is applicable only to a public limited company.

Annual general meeting, (AGM) to be held not later than six months from the date of the
Balance Sheet. The gap between one AGM and another cannot be more than 15 months. The
meetings are held to conduct business on behalf of the organization or company.

Any meeting other than the AGM is termed an

Extraordinary general meeting (EGM) Every general meeting (i.e. meeting of members of the
company) other than the statutory meeting and the annual general meeting or any adjournment
thereof, is an extraordinary general meeting. Such meeting is usually called by the Board of
Directors for some urgent business which cannot wait to be decided till the next AGM. Every
business transacted at such a meeting is special business. An explanatory statement of the special
business must also accompany the notice calling the meeting.

Notice of General Meeting

A meeting cannot be held unless a proper notice has been given to all persons entitled to attend
the meeting at the proper time, containing the necessary information. A notice convening a
general meeting must be given at least 21 clear days prior to the date of meeting. Notice of every
meeting of company must be sent to all members entitled to attend and vote at the meeting.
Notice of the AGM must be given to the statutory auditor of the company.

Where notice is sent by post, service is effected by properly addressing, pre-paying and posting
the notice. A notice calling a meeting must state the place, day and hour of the meeting and must
contain the agenda of the meeting. If the meeting is a statutory or annual general meeting, notice
must describe it as such.

Meetings of board of directors

The board of directors should meet at least once in three months to comply with the requirements
of law. Sec 292 specifies certain matters that can be transacted only at a meeting of the board of
directors. Rest of the procedures can be carried out by a committee constituted by the board of
directors or by way of a circular resolution.

Meetings of class of people

Class of people represents a class of those who have a stake in the company. The class could be
preference share holders, debenture holders, deposit holders, creditors, lenders, etc. When a
particular class of persons feels that their interests are jeopardized, they may call for a meeting of
the other members of that class. There is no time-frame for such meetings.

Class Meeting
Class meetings are meetings which are held by holders of a particular class of shares, e.g.,
preference shareholders. Such meetings are normally called when it is proposed to vary the rights
of that particular class of shares. At such meetings, these members dicuss the pros and cons of
the proposal and vote accordingly. (See provisions on variations of shareholder’s rights). Class
meetings are held to pass resolution which will bind only the members of the class concerned,
and only members of that class can attend and vote.

Unless the articles of the company or a contract binding on the persons concerned otherwise
provides, all provisions pertaining to calling of a general meeting and its conduct apply to class
meetings in like manner as they apply with respect to general meetings of the company.

III. Other Meetings

A. Meeting of debenture holders
A company issuing debentures may provide for the holding of meetings of the debentureholders.
At such meetings, generally nmmatters 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 debentureholders 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.

B. 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' s 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. A certified copy of the court's order is then filed with the Registrar and it is
binding on all the creditors and the company only after it is filed with Registrar.

Similarly, in case of winding up of a company, a meeting of creditors and of contributories is

held to ascertain the total amount due by the company and also to appoint a liquidator to wind up
the affairs of the company.

Requisites of a Valid Meetings

The following conditions must be satisfied for a meeting to be called a valid meeting :-

1. It must be properly convened. The persons calling the meeting must be authorised 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 maust be a chairperson. The rules of
quorum must be maintained and the provisions of the Companies Act, 1956 and the
articles must be complied with.
4. The business at the meeting must be validly transacted.. The meeting must be conducted
in accordance with the regulations governing the meetings.

Essentials for a meeting

The following are essential for any valid meeting to be recognised as such by law: Notice;
Agenda; Quorum; Proxy; Resolutions and Minutes.

Notice

is a legal communication about the day, date, time and venue of the meeting. Under Company
law, there should be a 21-day clear notice to hold a meeting of the members of the company,
whereas a seven-day notice is required to hold a meeting of the board of directors.

In the case of joint holders, notice is sent to the address of the first joint holder. The company is
not obliged to send notices to other joint holders.

Under certain circumstances, the members may decide for a notice of less than 21 days also.

The onus on the company is to send the notice, (normally by ordinary post). It is not necessary
for the company to ensure that the same is received by the member.

Agenda
refers to the business to be transacted at the meeting. In the case of meeting of members, there
would be a few matters to be discussed. Therefore, the agenda is built into the notice itself.

The agenda for a meeting of shareholders could be ordinary business or special business. The
agenda for an annual general meeting is well set. The agenda for other meetings is to be drafted
to cover the points to be discussed. A note ‘any other item with the permission of the chair’ is
added to permit taking up any last-minute inclusions.

But in the case of meetings of board of directors, there could be several items to be deliberated
upon. Therefore, a separate note containing the details of business to be transacted (the agenda)
is sent, along with the notice of meeting, to each of the directors at the address available with the
company. To apprise the directors of the deliberations, support papers, notes and briefs, are also
sent with the notice.

The concept of corporate governance has come to stay. Companies are now professionally
managed and the Securities and Exchange Board of India (SEBI) requires that committees be
formed. The members of every committee, the number of meetings held by such committees, etc,
should be disclosed in the annual report of the company.

There should be a notice and an agenda for the meetings of various committees of board of
directors, meetings of a class of people, etc.

Quorum:There should be a reasonable number of persons to deliberate and take decisions at

meetings. The number of persons to be present in person to constitute a valid meeting is called a
quorum. The Articles of Association of the company generally contains a clause regarding the
quorum. The chairman of the meeting should wait for a reasonable time for quorum before
calling the meeting to order. If a quorum is not formed within half an hour after the scheduled
commencement of the meeting, the meeting gets adjourned to the same day of the next week at
the same time and at the same venue. At such an adjourned meeting, there is no need for a
quorum and even one person present in person shall constitute a valid meeting.

Proxy: Where a member is not able to personally attend a meeting, he can depute another person
to attend the meeting on his behalf. The member is required to fill in a form giving the
particulars of his share holding and of the proxy. Proxy forms are to be deposited with the
company sufficiently in advance before the commencement of the meeting These proxies have
restricted rights and are not to be counted for quorum.

Minutes : This is a record of the proceedings of the meeting. A Minutes book should be
maintained separately for meetings of the members and of the board of directors.

The chairman of the meeting should initial each page of the Minutes book and affix his full
signature at the end of each meeting.
Minutes of the previous meeting are read out at each meeting to provide continuity of the
procedures. Any director dissenting from the minutes can insist upon his dissent being recorded
in the Minutes book.

Resolutions : A resolution is the legal form of a decision taken at a meeting. There are different
types of resolutions. In the case of a meeting of shareholders, it could be an ordinary or a special
resolution. Certain matters of importance are to be resolved by a postal ballot.

Any decision taken with a simple majority at a meeting of shareholders is called an ordinary
resolution. Certain matters of greater importance, such as amendments to the Articles of
Association, fresh issue of capital, etc, can be done only by passing a special resolution.

There are four essentials to constitute a special resolution:

Notice to the meeting should state that the resolution shall be passed as a special resolution.

A 14-day special notice to be given to all shareholders.

An explanatory note, stating the circumstances and provisions of law as to why the resolution
should be a special resolution, should be appended to the notice of the meeting.

The resolution shall be passed by a majority of not less than 75 per cent of the members present
in person.

Law provides that if an ordinary resolution is passed where a special resolution is required, it is
deemed that no resolution has been passed.

Any decision to be taken by the board of directors shall be by way of a board resolution. Board
resolution could also be a circular resolution. A resolution passed by a committee of the directors
shall be valid as a board resolution. S.292 states the list of items to be decided only at a meeting
of the board of directors. Rest of the items can be decided by a circular resolution or a resolution
passed by a committee.

Kinds of Resolutions
Resolutions mean decisions taken at a meeting. A motion, with or without amendments is put to
vote at a meeting. Once the motion is passed, it becomes a resolution. A valid resolution can be
passed at a properly convened meeting with the required quorum. There are broadly three types
of resolutions :-

1. Ordinary Resolution :
An ordinary resolution is one which can be passed by a simple majority. I.e. if the votes
(including the casting vote, if any, of the chairman), at a general meeting cast by members
entitled to vote in its favour are more than votes cast against it. Voting may be by way of a show
of hands or by a poll provided 21 days notice has been given for the meeting.
2. Special Resolution :
A special resolution is one in regard to which is passed by a 75 % majority only i.e. the number
of votes cast in favor of the resolution is at least three times the number of votes cast against it,
either by a show of hands or on a poll in person or by proxy. The intention to propose a
resolution as a special resolution must be specifically mentioned in the notice of the general
meeting. Special resolutions are needed to decide on important matters of the company.
Examples where special resolutions are required are :-

a. To alter the domicile clause of the memorandum from one State to another or to alter the
objects clause of the memorandum.

b. To alter / change the name of the company with the approval of the central government

c. To alter the articles of association

d. To change the name of the company by omitting “Limited” or “Private Limited”.

Adjournment
Adjournment means suspending the proceedings of a meeting for the time being so that the
meeting may be continued at a later date and time fixed in that meeting itself at the time of such
adjournment or to decided later on. Only the business not finished at the original meeting can be
transacted at the adjourned meeting.

The majority of members at a meeting may move an adjournment motion at a meeting. If the
chairman adjourns the meeting, ignoring the views of the majority, the remaining members can
continue the meeting. The chairman cannot adjourn the meeting at his own discretion without
there being a good cause for such an adjournment. Where the chairman, acting bona fide within
his powers, adjourns the meeting as per the view of the majority, the minority members cannot to
continue with such meeting and, if they do the proceedings there will be null and void.

An adjourned meeting is merely the continuation of the original meeting and therefore, a fresh
notice is not necessary, if the time, date and place for holding the adjourned meeting are decided
and declared at the time of adjourning it. If a meeting is adjourned without stipulation as to when
it will be continued, fresh notice of the adjourned meeting must be given.

Postponement
Postponement of a meeting means defering the holding of the meeting itself at a later date.
Postponement is done by the Board of Directors or by the person convening the meeting. In case
of adjournment, it is the decision of the majority of the members present at the meeting itself.
ORDINARY AND SPECIAL RESOLUTIONS.

(1) 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, as the case may be), in favour of the resolution (including the casting vote, if any, of the
chairman) by members who, being entitled so to do, vote in person, or where proxies are
allowed, by proxy, exceed the votes, if any, cast against the resolution by members so entitled
and voting.

(2) A resolution shall be a special resolution when –

(a) the intention to propose the resolution as a special resolution has been duly specified in the
notice calling the general meeting or other intimation given to the members of the resolution;

(b) the notice required under this Act has been duly given of the general meeting; and

(c) the votes cast in favour of the resolution (whether on a show of hands, or on a poll, as the
case may be) by members who, being entitled so to do, vote in person, or where proxies are
allowed, by proxy, are not less than three times the number of the votes, if any, cast against the
resolution by members so entitled and voting.

3. Resolution requiring Special Notice :

There are certain matters specified in the Companies Act, 1956 which may be discussed at a
general meeting only if a special notice is given regarding the proposal to discuss these matters at
a meeting. A special notice enables the members to be prepared on the matter to be discussed and
gives them time to indicate their views on the resolution. In case special notice of resolution is
required by the Companies Act, 1956 or by the articles of a company, the intention to propose
such a resolution must be notified to the company at least 14 days before the meeting. The
company must within 7 days before the meeting give the notice of the proposed resolution to its
members. Notice of the resolution is required to be given in the same way in which notice of a
meeting is given, or if that is not practicable, the company may give notice by advertisement in a
newspaper having an appropriate circulation or in any other manner allowed by the articles, not
less 7 days before the meeting.

The following matters requiring Special Notice before they are discussed before tha meeting :-

To appoint at an annual general meeting appointing an auditor a person other than a retiring
auditor.

To resolve at an annual general meeting that a retiring auditor shall not be reappointed.

To remove a director before the expiry of his period of office.

To appoint another director in place of removed director.

 Where the articles of a company provide for the giving of a special notice for a resolution, in
respect of any specified matter or matters.
Please note that a resolution requiring special notice may be passed either as an ordinary
resolution (Simple majority) or as a special resolution (75 % majority).

The organs of a Company, a Company is required to have three organs, namely the Board of
Directors, the Board of Commissioners and the General Meeting of Shareholders. The Board of
Directors is the organ responsible for the management of a Company or for running the day to
day operations and business of the Company, while the Board of Commissioners is the organ
responsible for supervising the Board of Directors in performing its duties and responsibilities in
the Company. The General Meeting of Shareholders consists of the shareholders of the Company
who contributed (shares) capital to the Company and has the right to appoint and terminate
members of the Boards of Directors and Commissioners. There are actions of the Company that
require approval from the General Meeting of Shareholders of the Company and therefore, the
General Meeting of Shareholders can also be said have responsibility for 'controlling' the Boards
of Directors and Commissioners in performing their duties and responsibilities in the Company.

The following is brief information on the general duties, responsibilities and liabilities of the
Directors and Commissioners of the Company that are regulated in the Company Law.

A. Directors

The Board of Directors is authorized and responsible for the management of the company in the
interests and to achieve the objectives of the company and for representing the company both
inside and outside the courts in compliance with the provisions of the Articles of Association.

The Board of Directors can consist of one or more Directors. However, certain Companies, such
as Companies engaged in fund raising (e.g. banks), publicly owned Companies, or Companies
issuing notes or bonds to the public, are required to have at least two Directors.

To be eligible as a director, the individual must have capability to perform legal actions and
within a period of 5 years prior to his/her appointment, he/she must have never been (i) declared
bankrupt, (ii) a member of the Board of Directors or Board of Commissioners of a Company
who caused that Company to become bankrupt; or (iii) sentenced for committing a crime causing
a financial loss to the State. A statement letter from the individual to be appointed as a new
Director confirming that he complies with the requirements must be provided to the Company.

B. Commissioners

The primary duties of the Board of Commissioners are to carry out general and/or specific
supervision in compliance with the Articles of Association of the Company and to give advice to
the Board of Directors. Please note that the Board of Commissioners is not involved in the day-
to-day operations of the Company, such actions being the responsibility of the Board of
Directors.