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TMI BlogTHE THRUST OF CORPORATE MEETINGSX X X X Extracts X X X X X X X X Extracts X X X X ..... THE THRUST OF CORPORATE MEETINGS - By: - sachin bhola - Corporate Laws / IBC / SEBI - Dated:- 8-1-2016 - - Assume a situation where company wants to appoint a new director or wants to increase its share capital. Now the question arises how company can give effect to the proposed business because company being an artificial entity cannot act on its own. Board of directors of company has been entrusted with powers to manage and control the affairs of company. Here comes the answer, board act and decide all these matters through a meeting. The word Meeting is nowhere defined in The Companies Act, 2013 . The word Meeting prima facie means a coming together of more than one person for giving effect to particular matter as per the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions provided in Schedule II of The Companies Act, 2013 . The word meeting has different meaning in different context. Meeting in its common connotation means a meeting is a gathering of two or more people that has been convened for the purpose of achieving a common goal through verbal interaction, such as sharing information or reaching agreement. [1] Though The Companies Act, 2013 does not define the term Meeting but it lays down a comprehensive provisions for controlling the affairs of meeting. The whole structure of this article is divided into five parts: Provisions of The Companies Act, 2013 dealing with Meeting. How a meeting is called? How a meeting is conducted? What are the powers of tribunal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o call meeting if company fails to convene? Penal provisions. PROVISIONS OF THE COMPANIES ACT, 2013 Before we move towards the provisions it is of the essence to know the kinds of meeting at this point. The kinds of meeting can be broadly classified into: General meetings Annual general meeting Extra-ordinary general meeting Board meetings. Committee meetings. Section 96 of The Companies Act, 2013 lays down the comprehensive provisions for manner of conducting Annual General Meeting . The provision cast a duty upon every company to conduct Annual General Meeting every year. The maximum gap between two Annual General Meetings should not exceed 15 months. Time Limit: In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of first Annual General Meeting, it should be conducted within a period of 9 Months from the close of first financial year and in rest of the cases it should be conducted within a period of 6 Months from the close of financial year. The provision of sub-section (1) is obligatory in nature. Where company fails to conduct its Annual General Meeting within a time specified, then it can be conducted within a period not exceeding 3 Months upon presenting sufficient cause to the registrar. However the provision of extension is not offered in the case of first Annual General Meeting. The provisions also specify the time and date on which meeting should be called. It expressly states that Annual General Meeting should be called within busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss hours i.e. between 9 A.M. to 6 P.M. and only on working days. It particularly provides that it should not be called on National Holidays. An explanation defines the term National Holiday as any day declared as National Holiday by the Central Government . The proviso further empowers Central Government from excluding any company from the provisions of holding and conducting Annual General Meeting within specified time period and days, but this is subject to the conditions as imposed by the Central Government. Thus, where company wants to conduct its Annual General Meeting on a day which comes out to be a public holiday, then in that case company can hold its meeting subject to approval and conditions as imposed by the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The section expressly excludes One Person Company from the purview of conducting Annual General Meeting. Example: - Suppose a situation arises where company wants to take decision on a matter which cannot be delegated to its next Annual General Meeting. There in that case company is empowered to conduct Extra-Ordinary General Meeting by the provisions of Section 100 of The Companies Act, 2013 . According to the provisions of Section 100 , company can call an Extraordinary General Meeting upon requisition received form its member in writing whenever it deems fit. Where any requisition is received from members of the company in following two situations: Situation I Situation II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company having Share Capital Company not having Share Capital Member holding not less than 1/10 th of total paid up share capital as on date of receipt of requisition. Members having not less than 1/10 th of total voting power as on date of receipt of requisition. Company in that case is obliged to conduct Extra-ordinary Meeting. The use of word Shall in sub-section (2) of Section 100 makes it mandatory for board to conduct Extra-Ordinary General Meeting. The requisition so made according to provisions of sub-section (2) of section 100 should clearly spell out the matters to be decided in the proposed meeting and it should be signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the requisitionists and should be delivered to registered address of the company. Sub rule (1) of rule 17 of Companies (Management and Administration) Rules, 2014 further clarifies that requisition can be in writing or any electronic mode and it should be made at least 21 days before the proposed date of such Extra-ordinary General Meeting. The provisions of Sub Section (4) of Section 100 empowers requisitionist to conduct a meeting within a period of 3 Months if board fails within 21 days to fix a date to consider the matter not later than 45 days from the date of receipt of notice. Example:- Requisition letter was received by company on 01 st January, 2016. So board has to fix a date for consideration within 21 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of receipt i.e. before 22 nd January, 2016. Such date of consideration should not be later than 45 days from the date of receipt i.e. before 14 th February, 2016. If board fails to consider the matter before 14 th February, 2016 then in that case requisiotionist himself can conduct meeting in a period of 3 Months from the date of requisition i.e. before 31 st March, 2016. The meeting thus called shall be conducted in same manner like any other meeting and the expenses of conducting such meeting shall be reimbursed from the salary of director who was in default in calling such meeting. Section 173 of The Companies Act, 2013 deals with the manner of conducting board meetings. Board meeting is the meeting conducted by board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors during a year for giving effect to the day to day transactions of the company. The provision obligates every company to conduct at least 4 meetings of board every year with maximum gap of not more than 120 days between two consecutive meetings. Company should conduct its first board within a period of 30 days of its incorporation. Example:- A company was incorporated on 01 st January, 2016. So the first board meeting should be conducted before 31 st January, 2016. Sub section (2) of section 173 provides that such board meeting can be attended by directors either in person or through video conferencing. HOW A MEETING IS CALLED? Every meeting of a company should be convened upon the authority of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should be validly delivered to every shareholder, director, auditor of the company within specified time frame. Section 101 and Section 173 of The Companies Act, 2013 sets out the provision of notice for conducting Annual General Meeting and Board Meeting respectively. Section 101 provides that for conducting Annual General Meeting, a prior notice of at least 21 days should be given to every member of the company, auditor/s of the company, every director of the company, legal representative in case of deceased member and assignee of an insolvent member. Such notice should specifically state the place, date, day and time of the meeting along with the business to be transacted at in the meeting. Such notice can be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven either in writing or through electronic mode. Rule 18 of The Companies (Management and Administration) Rules, 2014 provides that such notice may be sent through an e-mail as a text or as an attachment to an e-mail or as a notification providing link or URL for accessing such notices. The proviso to sub section (1) of section 101 further clarifies that Annual General Meeting can be called at a shorter notice provided consent of not less than 95% members entitled to vote is obtained. Section 173 in its sub Section (3) provides that every board meeting should be convened upon the authority of notice which should be delivered to every director at his registered address within a period of 7 days. Such notice can be given eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by hand delivery or by post or through electronic medium. The proviso to sub-section (3) of section 173 additionally clarifies that a board meeting can be conducted at a shorter notice provided at least one independent director should be present in that meeting. HOW A MEETING IS CONDUCTED? For conducting valid meetings there are few parameters which need to be taken into account. A valid meeting must have a Chairman , Requisite Quorum and Resolution . A Chairman should be elected out of the members who are personally present in that meeting. Such election can be done by show of hands. Where the provisions of Article of Association provide for some other method of electing chairman, that method should be adhered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That means the provisions of Article of Association will prevail over the provisions of section 104 of The Companies Act, 2013. Another important ingredient for holding a valid meeting is presence of adequate number of members or directors. Quorum in its general sense means minimum number of members required to conduct the specified business. Meeting shall stand adjourned to next week at same time and place where adequate quorum is not present at the meeting. If at adjourned meeting the quorum is again not present then the members present shall be the quorum. For purpose of quorum, members or directors attending such meeting through video conferencing or through proxies shall also be included. The companies act provide for di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent quorum for general meeting and board meeting under the provisions of section 103 and 174 of The Companies Act, 2013 . General Meeting Board Meeting Public Company Private Company 5 Members If numbers of members is less than 1000. 10 Members if number of members is more than 1000 but less than 5000. 15 Members if number of members is more than 5000. 2 Members personally present. 1/3 rd of its total strength or 2 Directors whichever is higher. The section specifically lays down that the provisions of Article of Association shall prevail over the Provisions of Section 103 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respect to quorum. In addition to the requirement of chairman and quorum, another important requirement of a valid meeting is Resolution . Every decision in the meeting is given effect by way resolution. Resolution in its ordinary sense means a firm decision to do or not to do anything. Sub-section (2) of Section 102 deals with resolutions and its kind. It provides that every business of the company transacted at a meeting shall be special business other than following: Consideration of financial statements and reports of BOD and Auditors; Declaration of dividend; Appointment of directors in place of those retiring; Appointment of auditor or fixation of auditor s remuneration. Every resolution other than those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided above passed at a meeting for the purpose of giving effect to something shall be Special Resolutions . WHAT ARE THE POWERS OF TRIBUNAL TO CALL MEETING IF COMPANY FAILS TO CONVENE? Where company fails to conduct its General Meeting or Board Meeting within a period specified by the provisions of the act, then in that case tribunal may order company to convene meeting. Tribunal is empowered under the provisions of Section 97 98 to order company to convene meeting. Tribunal may either upon application by members of the company or any director of the company or Suo Motu, who are entitled to vote at such meeting, direct any company to convene general meeting or board meeting. PENAL PROVISIONS If c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany fails to conduct meeting according to the provisions of section 96 or 97 or 98 , the company and every officer of company who is in default shall be punishable with fine which may extend to ₹ 100,000. The section also provides additional penalty to the tune of ₹ 5000 per day in case of continuing default. The section no where provides penalty for not holding Board meeting. So, section 99 embraces penalty for not conducting Annual General Meeting, not conducting Annual General Meeting upon the orders of tribunal and not conducting Board meeting upon the orders of tribunal. CONCLUSION A meeting is a formal gathering of people in order to decide something. Company acts through Board of directors in a meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing which approved by way of resolution. For conducting a meeting intimation by way of notice should be given to every member, director, auditor as the case may be along with presence of valid quorum in the meeting. [1] https://en.wikipedia.org/wiki/Meeting - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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