COMPANY LAW

(PART-11)
(UNIT-VII)
MEETINGS
KIND, QUORUM, VOTING
RESOLUTION, MINUTES
PART 1(C)
1. INTRODUCTION
Hello viewers

In today’s session we are going to do part 1C of meetings this is the

chapter 7 of company law portion. In today’s session we will be talking
about the procedure for convening and conduct of general meetings.
The business at the meeting is set to be validly transacted if the
members of the organization or body concern whether or not they
were present are bound by the decision made there at.

They cannot be so bound unless the meeting is validly held. The

essentials of the valid meeting are that the meeting should be properly
convened, that is a proper notice must have been sent by the proper
authority to every person entitled to attend. Secondly it should be
properly constituted i.e. proper person must be in the chair, the rules
as to quorum must be observed and the regulation governing the
meeting must be complied with. Thirdly it should be properly
conducted i.e. the chairman must conduct the proceedings in
accordance with the law relating to the general meeting as per
companies act section 171 to section 185.

2. REQUISITES OF A VALID MEETING

Now let us discuss the requisites of a valid meeting. The meeting must
have been convened by the proper authority as per our discussion. We
will discuss about meeting properly convened, constituted and
conducted, so one by one these three C’s are going to be discussed in
the entire discussion. Number one is the proper authority, the proper
authority will be the board of directors for the general meeting,
secondly the shareholder for the extra ordinary general meeting. The
company law board in case of EGM or AGM on petition from the
directors or the shareholders.

Now we have to see that proper and adequate notice must have been
served to all those who are entitled to attend the meeting. For e valid
meeting the provisions given in the articles as to the quorum is to be
followed. For a meeting to proceed a chairman is to be elected as per
the provisions of the articles, proper minutes are to be kept by the
proper authority. We will be discussing who is the chairman and what
are the minutes, in the later on discussion.

3. NOTICE
Now the notice: - Notice is compilation of various information’s like
time, place, date, day of meeting and it is sent to all the shareholders.
The length of the notice is 21 clear days, 21 clear days’ means the day
of the meeting and the day of posting will be excluded plus 48 hours of
the postal delay also be excluded so besides this, 21 clear days will be
provided.

A shorter notice is valid for the AGM if all the members that is 100% of
the members who are entitled to vote at the meeting consent to such
a shorter notice. A shorter notice would mean a 14 days’ notice. For
other meetings a shorter notice will be valid if the members holding
95% of the voting rights consent. So for an AGM it is to be 100% and for
any other meeting 95% should be consenting.

Notice to whom? (That is who all are entitled to get the notice). The
notice must be sent to every member of company legal representative
of a deceased member, official assignee of a insolvent member and the
auditor of the company. Contents of the notice would include-

 the place of the meeting,

 day of the meeting,
  time of the meeting,
 agenda of the meeting and
 The right to appoint the proxy.
Agenda means the reason why the meeting is being called and right to
appoint the proxy if a person is not able to attend the meeting in
person then he can appoint his representative who will be attending
the meeting and voting there at.

4. DOCUMENTS TO ACCOMPANY NOTICE

Now the documents which are required to be accompany the notice.
For an AGM the audited financial statement of accounts, director’s
reports, auditor’s reports and proxy form etc. shall be sent along with
the notice. So 21 clear days is the time span at this when the notice is
to be sent, all these documents shall also be sent along with. For a
statutory meeting the statutory report has to be sent and the proxy
form will be sent. And for an EGM the explanatory statement and proxy
form. The explanatory statement is required for all special business
and all business transacted at the EGM are bound to be special. So
explanatory statement shall be required and the proxy form also shall
be required along with the notice for the EGM. Now what will happen
if such a notice is not sent to the required persons? If the there is an
accidental omission to send notice then it will render the proceedings
and the meeting invalid and nothing would follow that means the
decisions were taken at the meeting shall fail.

So this has been discussed u/s 172 (3) that means deliberate omission
to give notice at the meeting to the members or to a single member
would make the meeting invalid. There is a case law Smith V/s hasley
which can be referred. Now the expression accidental implies absence
of intention or deliberate designed that means there is no motive
behind not sending the notice. The notice could be skipped from
sending to a member if page is found torn in the register of members
there has been typographical error there has been some address
mismatch and the notice could not reach to the required member. In
such a situation it is accidental but if a certain set of members or a
particular member has not been sent a notice because he asked too
many questions at the meeting and they find it difficult to deal with
the member and he has been left out, then it will be a deliberate
design.

5. QUORUM
There is another requirement of quorum. Now once the notice has
been sent, the members are present at the meeting on the desired
date, we have to also see that a particular numbers of members turn
out at the meeting so the meeting can be constituted. A single person
does not contain a meeting so it has to be seen that the required
number of people are present. Requisite number of person at the
meeting is called as quorum.

Quorum for the general meeting in absence of any provisions in the

articles for a public company would be any five persons personally
present being personally present means physically present that means
proxies would not be counted. In the case of a private company it will
be two members who are personally present again proxies would not
be counted. It has to be noted that articles may provide for a larger
quorum that means instead of five for the public or two for the private
company a larger quorum could be set but it cannot provide for a
shorter quorum.

Now some rules regarding a quorum only members present in person

are counted not there proxies, preference shareholder are not counted
because preference shareholders do not have right to vote in general
meeting. They can vote only at the matters concerning there payment
of payment dividend which has been in arrears so they do not have
general voting right. Then is the joint holders are treated as the single
members. If two or more people are holding a share in joint names so
the will be considered as one member only nor two or three.

A member present in two capacity as an individual members as a

trustee may be counted as two members so if a person has named as
trustee and he holding the share plus he owns the share in his own
name he will be counted as two, even though physically one person is
present. In case of company being a member of another company then
the representative shall be treated as a member not as a proxy. That
means one company A holds the share of company B since company is A
artificial person it cannot be present at the meeting it has to be
physically represented by somebody so such a person who is
representing that company will be counted as a member not as a
proxy.

Then in case of President of India or Governor of State who is a

member and he sent his representative- such representative shall be
treated as a member not as a proxy because the Governor and the
President they cannot attend the companies meeting due to the
reasons of protocol since they are held in high dignity it is not feasible
to attain the meetings.

The course of action in case of quorum not being present at the

general meeting has been discussed u/s 174 that means what will
happen if the required quorum fixed for public and private company
respectively is not present at the meeting. So with in half an hour from
the time appointed for holding the meeting the quorum is not present
in the meeting (if called upon the requisition of member) shall stand
dissolved. That means if the members had call the meeting upon a
requisition and the quorum could not be present then such a meeting
shall fail, it shall be dissolved. In any other case that is if the directors
have called the meeting by sending the notice and the required
number of persons i.e. the quorum is not present at the meeting then
in such a case the meeting shall be postponed to some other day at the
same time and place.

If at the adjourned also the quorum is not present within half an hour
from the appointed time then the members present shall be the
quorum even if the number of member is one.

6. PROXY
Now we will discuss the term proxy, proxy means a person being the
representative of a shareholder at the meeting of the company who
may be described as his agent to carry out which the shareholder has
himself decided upon. It is to be known that the shareholder at the
meeting can question, he can be present at the meeting and he can
vote but proxy has limited rights that is he can attend the meeting and
he can vote, he cannot question and cannot give an opinion.
So who can appoint a proxy, the shareholder or member who can
appoint the proxy not the company itself. So company A if it is holding
its meeting will not suggest proxies or appoint proxies for their
members but the members will be sent a proxy form and they will
decide who has to represent there at the meeting.

Who can be appointed as a proxy?

Any person whether he is a member of a company or not can be

appointed as proxy.

How to appoint a proxy it is always appointed in a written form which

has been sent along with notice of the meeting. It should be signed by
the member and it should be duly stamped. The time for lodging a
proxy form is at least 48 hours before the meeting at least two
complete days before the date of meeting. The proxy form which is
valid should have been received at the company.

Then is the right of proxy. The right of the proxy shall be to attend the
meeting and right to vote at the meeting.

Proxy in the case of a company or body corporate- In a foregoing

discussion we had discussed that a company cannot be physically
present at the meeting if it is a member of another company, so
representative who have been appointed to attend the meeting shall
not be considered as a proxy but he shall be considered as a member.
So proxy in the case of a company is appointed by the president and
then only he will be given a right to take part in the opinion of the
meeting.

And the proxy form till what time valid? For example we have to
appoint a proxy- here Mr. A has appointed the proxy Mr. B to attend
the meeting and then Mr. A decides that not B but Mr. C should be
attending the meeting. In that case he can do so, he can revoke Mr. B’s
proxy and submit Mr. C’s proxy, if the same is received at least 48
hours before the meeting and it is validly signed and authenticated
proxy form.
There are two kinds of proxies- one is the general proxy. The proxy will
be generally attending all the meetings of the company and a special
proxy is only for that specific meeting.

7. CHAIRMAN AND MINUTES

The chairman is the person who is elected to preside over the meeting
and conduct the proceeding of the meeting according to section 175 a
meeting cannot proceed to transect any business without electing a
chairman, so the meeting has to be headed by a physical person who
will be seeing how the proceedings of the meeting are carried on and
then conclude the meeting and decide the matter which have been
taken by unanimous by majority decision.

Who shall be the chairman?

A chairman is usually a member of body over which he is to preside. In

case of a company the articles usually name the chairman of the board
of directors to preside over the general meeting. If the articles are
silent then a chairman is elected from among the members present.

What shall be the procedure of election?

Under section 175(1) Chairman may be elected by the show of hands.

Section 175 to provides that if the poll is demanded then the chairman
shall be elected by poll. That means if somebody wants to elect the
chairman not by show of hands but by voting and poll then that can be
carried on.

Then its function, the function of the chairman shall be preside over
the meeting, he conducts the proceeding the he must decide question
arising out at the meeting, he gives reasonable chance to the members
to decide any proposed resolution.

Next we discuss the minute of the meeting.

The minutes are the written record of the meeting, it is in an official

and is the summary of business transacted and the decisions arrived at
the meeting. So every minute detail is recorded in the written form,
section 193 makes it compulsory for every company to maintain the
minute book, recording all the proceedings of every type of meeting
conducted. The owners of maintaining the minutes listed on the
company secretary of the meeting.

The provisions regarding the minutes are:- the minute has to be

written in a minute book, the minute book has to be bounded and its
pages consecutively numbered. The minute book has to written within
30 days of the conclusion of the meeting. Every page of the minute
book must be initialled or signed by the chairman and on the last page
the chairman shall sign and put the date.

The chairman has to sign the minute book within 30 days of the
conclusion of meeting. If the chairman dies or is unable to sign the
minute book then one of the directors duly authorised by the board
must signed the minute book. The minute book shall be kept at the
registered office of the company and shall remain open during the
business hours for members, to be inspected without charge. The
members are also entitled to copy of minutes, however on a payment
of prescribed fees.

8. PROCEDURE FOR INSPECTION OF MINUTES BOOK

Now let us discuss the procedure for inspection of minutes both, of the
general meeting of a company by the members. The members
whenever they want during the working hours of the company they can
come and inspect the minute book. They can do so to check whether
the provisions regarding the minutes have been complied with. They
can see whether the book is bound, and its pages consecutively
numbered to see whether every page has been initialled, or signed by
the chairman and the last page has been signed and dated, to see
whether the book has been kept at the registered office of the
company.

The provisions which apply to the procedure for inspecting the

minute’s book of general meeting of a company by the members are as
follows.

The book constituting the minutes of the proceeding of any general

meeting of the company shall be kept at the registered of the company
shall be open during the business hours for the inspection of the
members without any charge. Subject to such reasonable restriction as
the company may impose by articles or in general meeting so however
that not less than two hours in each day are allowed for inspection. So
for maintenance of minute’s book it can be disallowed which is the
reasonable restriction, otherwise two hours should be provided for
inspection of minute book. Any member who wants a copy of the
minutes shall be provided with the copy within seven days of
requisition of the same.

And payment of such sum as has been prescribed for every hundreds of
words thereof to be copied. If any inspection required under section is
not provided within the specified time the company and every office of
the company who is at default shall be punishable with the fine which
may extent to Rs 5000 in respect of each offence. For any such refusal
or default the central govt. may by order compel immediate inspecting
of minute book or direct copy to be immediately sent to the person
requiring it.

9. KINDS OF RESOLUTIONS
Now let us discuss the kinds of resolutions which can be taken at the
meeting. There are three types of resolutions. First one is the ordinary
resolution, second one is special resolution, the third one is not a new
kind of resolution but is a resolution which requires special notice. So
such a resolution can either be passed by an ordinary resolution i.e.
ordinary majority or by special majority i.e. ¾ majority.

Now let’s discuss the ordinary resolution u/s 189(1). A resolution is set
to be ordinary when it is passed by a simple majority i.e. it is more
than 50% of members who are present and voting caste in favour of
resolution. Some of the cases in which only ordinary resolution is
required, no. 1 the alteration of authorized capital, second is the
declaration of dividend, appointment of auditors other than the
appointment covered by the section 224(a) and fixation of
remuneration and election of directors.

Then let’s discuss the special resolution. U/s 189(2) special resolution
means requiring a special majority that is at least ¾ majority i.e.
people who are casting in favour of the resolution should be three
times of those who are against the resolution. In this kind of resolution
only the members who are present and voting shall be counted those
who have abstained from the voting shall not be considered. The
intention to propose the resolution as a special resolution should have
been duly specified in the notice calling the general meeting or other
kind of intimation should have given to the members. The notice which
is required under the companies act i.e. at least 21 clear days’ notice
should have been duly sent at general meeting.

Some of the matters for which special resolution is required to be

passed are - firstly to alter the objects clause of the memorandum.
Secondly to change the registered office of the company to one state
to another, thirdly reduce the share capital of the company and
fourthly to alter the article of association.

Now let’s discuss the resolution which requires special notice under
section 198. A special notice means a 14 days’ notice i.e. it is not 21
clear days but 14 days are to be reckoned right from the date of the
meeting. So these are some major decisions requiring urgency and they
required the meeting to be held in that stipulated time. 14 days are
provided because at least the member should get that much time to
decide and make arrangements for their presence at the meeting. It is
a different kind of ordinary resolution of which notice of the intention
of moving resolution has to be given to company by the proposer.

The notice shall be given not less than 14 days before the meeting at
which the resolution is to be moved exclusive of the day on which the
notice is to be served or deemed to be served and the day of meeting.
The object of special notice is to give the member’s sufficient time to
consider the proposed resolution and to give board of directors an
opportunity to indicate their views on their resolution.

A special resolution will be required in the following cases. No. 1 is

appointment of auditor other than the retiring one, pro by the retiring
auditor shall not be re-appointed, removal of a director before the
expiry of a period and appointment of a director in place of one who is
removed. The articles of the company may provide the additional
matters in respect of which a special notice could be required. These
are actually the only four instances in which a special notice is
required, if a company wants in its articles it can require instances
requiring special notice.

Now let’s discuss the meeting of debenture holders. The debenture

holders meeting are determined by trust deed which has been signed
by the debenture holders when they have been issued the debentures.
The debenture trustee is the person who is entitled to conduct all the
debenture holders meeting. He sees that no unfavourable instances
have occurred for the debenture holders. In case there is breach of
contract or if the clauses of debentures trusts deed are not followed
then it affects the interest of the debenture holders and hence a
meeting is necessitated.

All matters which are connected with the holding, conduct and
proceeding of the meetings of the debenture holders are given in the
debenture trustee. The decision arrived at the meetings with the
requisite majority are valid and binding upon the minority.

Very often a provision is made in the debenture trust deed to dispense

with the holding of the meeting of the debenture holders. A provision
is made whereby a circular resolution duly signed by the debenture
holders would be treated as the decision of the debenture holders. In
such a case it is not necessary to adopt the procedure for convening
and holding a meeting of the debenture holders.

10. Summary
With this we are concluding our today’s session. In our today’s session
we discussed the procedure for conduct of meeting. We discussed the
three C’s of the meeting i.e. the constitution of meeting, the conduct
of meeting and the quorum and properly being convened. We also
discussed the provision relating to chairman, the provision relating to
quorum, the kinds of resolution, resolution requiring the special notice
and we discussed the debenture holders meeting. I hope you enjoyed
the session.

Thank you.