AGENDA AND MEETINGS
The subject matter to be discussed indicated in the notice is called the agenda of the meeting. The agenda must not be vague but should be clear and definite. Keye V. Croydon Tramways, (1898) 1 Ch 358. The agenda of a meeting whether it is a board meeting or any other meeting lists out the things to be done at a meeting and businesses to be discussed and transacted at a meeting. The Companies Act, 1956 does not have any provision for the preparation or for the requirement of sending agenda for the board of directors meeting or general meetings but although not statutorily required laying down agenda for a meeting cannot be totally abondoned. The order of businesses to be set out in the agenda is usually fixed in consultation with the chairman of the meeting and routine items such as confirmation of minutes of previous meeting and consideration of leave of absence of directors are mentioned first.
In the context of the subject under discussion, the word "meeting" is to be understood in the sense of meeting of two or more minds in order that a consensus is reached for taking a decision. The word "meeting" also connotes that there should be at least two persons to constitute a meeting. This general rule is, however, subject to a statutory exception where even one person may validly constitute a meeting, e.g., a class meeting of preference shareholders, the entire class of preference shares being held by a single shareholder, or a class meeting of creditors, there being only one creditor. East v. Bannet Bros. Ltd., (1911) 1 Ch 163. Similarly, the Company Law Board may, under section 167 and Section 186 of the Companies Act, 1956, order that a single person shall constitute a valid meeting. The Court may also order a meeting to be called with a single member attending the meeting. Sticky Fingers Restaurant Ltd. Re, 1992 BCLC 84 (Ch D). Except in such exceptional cases, meeting means and implies, meeting of more than one person. Under the Companies Act, 1956 there can be board meeting, general meeting and class meeting. In definitions given under Secretarial Standard-1, board meeting means a meeting duly convened and constituted of the Board or any Committee thereof' and under in definition giving Secretarial Standard-2, meeting or general meeting or extraordinary general meeting means a meeting of members duly convened by the Board or on the requisition of members.
Since the purpose of meeting is to arrive at a consensus on a matter oil which decision is required to be taken, it is necessary that the persons meeting must know before hand the matter under discussion so that they come prepared and take the right decision. From this it follows that there cannot be any meeting without a proper notice indicating tile subject matter to be discussed at the meeting. Henderson v. Bank of Australia, (1890) 45 Ch D 330. It is a general rule of common law that a corporate body is not properly constituted unless the notice of Meeting is Given to every member. Mahabir Prasad Jalan v. Bajrang Prasad, [20001 102 Com Cases 81 (Cal).
A chance meeting of two or more shareholders in the street or two or more Directors in a Coffee Shop is not a meeting either of the shareholders or of the Directors. Barron v. Potter, (1914) 1 Ch 895. The logical necessity of a notice of a meeting, Smyth v. Darley, (1849) 2 HLC 789, further implies that the persons attending the meeting must know the place as well as the time where and when the meeting is to be held. There is also implicit in the requirement of notice that the notice is issued by proper authority for otherwise every member of a body of persons may issue notice thereby creating confusion. Of course, unless otherwise prohibited by any statutory provision, the members can agree to waive the requirement of notice. Hooper v. Kerr, (1900) 83 LT 729.
Paragraph 1.1 of Secretarial Standard- I provides that unless the articles of association provides otherwise, any director of a company may and the manager or secretary on the requisition of a director should, at any time summon a meeting of the Board. Paragraph 1. 1 of Secretarial Standard-2 provides that a general meeting should be convened on the authority of the Board.
Unless the bye-laws or the regulations constituting the body convening the meeting permit or unless there is a specific statutory provision to this effect, a meeting, once convened, cannot be postponed by subsequent notice and before the meeting is convened. Smith v. Paringh Mines, (1906) 2 Ch 193. Of course, once convened, the meeting can always adjourn, itself to finish its unfinished business or to take up the entire business of the meeting on some other date. A meeting can also be adjourned for want of quorum. The meeting itself will indicate the date, time and place when and where the adjourned meeting is to be convened. If the bye-laws or regulations of the body permit, a meeting can be adjourned sine die but then, a separate notice is required to be given for holding the adjourned meeting. However, in the event of disorder, even if the relevant rules do .not give the Chairman power to adjourn the meeting, he may do so. Such an adjournment must be for no longer than the Chairman considers necessary and the Chairman must, so -far as possible communicate his decision to those present. Chandrakant Khare v. Dr. Shantaram Kale, (1989) 1 CLA 142 (SC).
As a rule, in the case of a meeting of the Board of Directors, the meeting cannot transact any business, unless a quorum is present at the time of trausacting the business. It is not enough that a quorum was present at the commencement of the business. The quorum of the Board is required at every stage of the meeting and unless a quorum is present at every such stage, the business transacted is void. Balakrishna v. Babu Subudhi, AIR 1949 Pat 184. Section 287(2) provides that at least two dis-interested directors or one third of the total strength, whichever is higher must be present at the meeting in order to constitute the quorum. As regards meetings of committee of directors where there is no provision of a quorum, the whole of the committee must meet.
Under definitions heading and also in Paragraphs 3.1 and 3.2 of Secretarial Standard- 1, provide for quorum of meetings of the Board under definitions, quorum is mentioned as meaning the minimum number of directors whose presence is necessary for a meeting. Sub-paragraphs 3.1.1 and 3.1.2 of paragraph 3.1 provide that quorum should be present throughout the meeting, and no business should be transacted when the quorum is not so present and that where the member of directors is reduced below the minimum, fixed by the articles of association, no business should be transacted unless the number is first made up by the remaining directors through a general meeting. Paragraph 3.2 provides that in the case of meetings of committees, the presence of' all the members of any committee constituted by the Board is necessary to form the quorum for meetings of such committee unless otherwise stipulated by the Board while constituting the committee.
The quorum required is the quorum to be present at the time of' beginning to consider the business; and it need not be present throughout or at the time of taking the vote on any resolution. Re, Hartly Baird Ltd., (1954) 3 All ER 695 (Ch D). 11' no quorum is present, then there is no meeting and the proceedings are invalid. Re, Romford Canal Co., (1883) 24 Ch D 85. Where at the time of transacting business, the number of members is less than the quorum fixed for the meeting the business cannot be transacted; it will be a nullity. Re, London Flats Ltd., (1969) 2 All ER 744 (Ch D). If there be any irregularity as to quorum, third parties without notice will not be affected. County of Gloucester Bank v. Rudry Merthyr Steam & House Coal Colliery Co., (1895) 1 Ch 62~. The representative of a body corporate appointed under section 187 or the representative of the President or a Governor of a State under section 187 A is a member personally present for purposes of counting a quorum. Re, Kelantan Coconut Estates, 1920 WN 274. An attorney as distinct from a proxy of a member will also not be counted towards quorum. R. Harris Ltd., AIR 1956 SC 207. If two or more corporate bodies who are members of a company are represented by a single individual, each of the bodies corporate will be treated as personally present through that individual representing it. If, for instance, he represents three corporate bodies, his presence will be counted as three members being present in person for purposes of quorum. Macleod (Neil) & Sons Ltd., Petitioners, 1967, Scottish Law Times 46. But a single member present in dual capacity, one as a member and another as a representative, cannot constitute quorum for a single person cannot constitute a meeting. Prain & Sons Ltd., Petitioners, 1947 SC 325.
In the absence of any statutory provision in this regard or in the absence of any specific requirement in the bye-laws or regulations governing the body, requisite quorum for holding the meeting where at least two members, Sharp v. Dawes, (1876) 2 QBD. 26, must be present. Quorum actually means the minimum number of persons entitled to hold a meeting. Where the Statute requires the quorum to be present when the meeting proceeds to business it means that quorum needs be present only at the time when the meeting first assembles and if the number of persons present in the meeting afterwards falls short of the quorum, the meeting is not invalid. In re : Hartley Baird Ltd., (1954) 3 WLR 964.
A meeting is orderly conduct of certain business for taking certain formal decisions. It is, therefore, considered to be an essential requirement of a meeting that there must be a Chairman of a meeting. Blair Open Hearth Furnace Co. v. Reigart, (1913) 108 LT 665. The Chairman is a person who has been put in the chair by the persons constituting the meeting as 11' by an agreement amongst themselves, to regulate the conduct of the meeting within reasonable bounds. To preserve orderliness in the conduct of the proceedings of a meeting, to conduct the proceedings in accordance with established procedure and to record the sense of the meeting correctly, National Dwellings Society v. Sykes, (1894) 3 Ch 159, are some of the duties of the Chairman. The Chairman's further duties include the duty to decide all points of order raised in the meeting as also the duty to stick to the decision already taken. Henderson v. Bank (~f Australia, (1890) 45 Ch D 330. The Chairman must be fair and impartial, Reg. v. D'oyly, (1840) 12 A & E 139, to all the members present and, unless the bye-laws or regulations of the body or the statute permit, he should not exercise his casting vote. Nell v. Longbottom, (1894) 1 QB 767. The Chairman must not also adjourn the meeting unless such adjournment is necessary in the interest of the business in hand. Salisbury Gold Mining Co. v. Hathorn, (1897) AC 268. In view of the recent trend of not prescribing qualification shares for Directors and generally the Chairman of the Board of Directors presides over General Meetings, a non-member Chairman can preside over General Meetings of companies. Of course he cannot vote at such meetings if he is not a shareholder. But he can have a casting vote, provided the regulations or bye-laws permit the same.
The entire body of law relating to meetings, it must be understood, I s not codified by statute. Therefore, the legal answer to a question concerning meetings, if the answer is not found in the Companies Act, 1956, must be found in decisions at common law. Thus, that there is no need for a motion to be moved by one person and seconded by another in the absence of any specific regulation or law is supported only by judicial decision. Horbury Bridge Coal, In Re, (1884) 26 Ch D 70. Similarly, although the Chairman of the meeting can refuse to accept all irrelevant amendments to a proposed resolution, his refusal to accept a relevant and material amendment may lead to a more serious consequence of the entire resolution being struck down. Henderson v. Bank of Australia., (1890) 45 Ch D 330. Where the statutory law is silent as to the manner of ascertaining the sense of the meeting, the common law decision that the same should be ascertained by a show of hands is good law. In re : Horbury Bridge Coal Co., (1879) 11 Ch D 109. Further, although the statutory law laid down in the Companies Act provides that the decision of the Chairman as to what happened in the meeting is final, a resolution, apparently duly passed may be set aside where an alleged fraud is proved or where there is a prima facie error in the declaration of the results on a poll. In re : Caratal (New) Mines, (1902) 2 Ch 498. Similarly, in the absence of a statutory prohibition, a non-member attending the meeting has a right to participate in voting even on a show of hands. Ernest v. Loma Gold Mines, (1897) 1 Ch 1. The other common law decisions relevant for a discussion of the subject of meeting have been alluded to at appropriate places in what follows.
For Board Meetings its Agenda constitutes importance as it not only lists out businesses to be transacted of the Meeting but also gives in brief the reasons and necessity of transacting Such businesses in the nature of notes. An agenda should be able to assist directors to know in advance the items of business to be discussed in the board meeting and give them a chance to make up their mind as to the outcome of those businesses. The Companies Act, 1956 does not contain any provision for attaching an Agenda with the Notice of the Board Meeting.
There is no prescribed form of an Agenda but usually and generally it should be distinct, clear and definite and important items of business to be transacted should be given preference. Matters which are routine in nature should be placed first and thereafter other matters should be mentioned. There should always be kept an item as any other business to be transacted with the permission of the Board to give some flexibility to the decision making process of the Board. Vote of thanks to the Chairman should be the concluding item. Meetings of Board should try to follow the order of the Agenda unless it is absolutely necessary to change the order and that should be done only with the consent of all the directors present at the meeting.
AnneXUre B of Secretarial Standard- I gives illustrative list of items of business for the agenda for the first meeting of the Board of Directors of the company and Annexure C of Secretarial Standard-l gives illustrative list of items of business for the agenda for the meeting of the Board of Directors of which annual accounts, etc. are to be considered. These anneXUres are given below:
Illustrative list of items of business for the Agenda for the First Meeting of the Board of Directors of the Company
1. To appoint the Chairman of the Meeting.
2. To note the Certificate of Incorporation of the company, issued by the Registrar of Companies.
3. To take note of the Memorandum and Articles of Association of the company, as registered.
4. To note the Situation of the Registered Office of the company.
5. To confirm/note the appointment of the first Directors of the company.
6. To read and record the notices of disclosure of interest given by the Directors.
7. To consider the appointment of Additional Directors.
8. To consider the appointment of the Chairman of the Board.
9. To fix the financial year of the company.
10. To consider the appointment of the first Auditors.
11. To adopt the Common Sea] of the company.
12. To appoint Bankers and to open bank accounts of the company.
13. To authorise printing of share certificates
14. To authorise the issue of share certificates to the subscribers to the Memorandum and Articles of Association of the company.
15. To approve preliminary expenses and preliminary contracts.
16. To consider the appointment of the Managing Director/Whole time Director/Manager and Company Secretary, if applicable and other senior officers.
Illustrative list of items of business for the Agenda for the Meeting of the Board of Directors at which annual accounts, etc. are to be considered
(Besides regular Agenda items, such as confirmation of Minutes, granting leave of absence to Directors, reading Notices of disclosure of interest of Directors)
1. To consider and approve matters arising out of the accounts such as commission to Directors, write-offs, provisions, legal cases, etc.
2. To consider and approve transfers to Reserves and other appropriations.
3. To consider recommendation of dividend
4. To consider and approve the Balance Sheet and the Profit and Loss Account as well as the abridged Accounts or statement of financial results.
5. To approve the cash flow statement
6. To consider and take note of the Directors to retire by rotation at the Annual General Meeting.
7. To consider the draft Notice of the annual General Meeting and to authorise issuance thereof.
8. To consider the appointment of Auditors and the payment of remuneration to them, to be proposed for members' consideration.
9. To take note of the draft Auditor's report.
10. To consider the draft Directors' Report and to autborise issuance thereof.
11. To open a Bank Account for payment of dividend.
12. To approve/note the closure of the Register of Members and the Share Transfer Books for the purposes of the Annual General Meeting.
13. To approve the text of the advertisement inviting fixed deposits.
14. To discuss the Compliance Certificate issued by a secretary in whole-time practice.
Agenda of General Meetings contains only the items of business and the proposed resolutions under separate heading of ordinary resolution and special resolution. In Annual General Meetings, the Agenda contains two separate headings of first the ordinary business and then the special business. In all other general meetings all businesses mentioned in the Agenda are special. There is no provision for Agenda also in the Companies Act, 1956 and neither there is any form prescribed by the said Act. The form of Agenda adopted has come down to the present form through years of secretarial practice.
Quorum in a meeting and adjournment thereof.-A valid meeting presupposes the presence of the minimum number of persons statutorily required to be present at a meeting for transacting business. Section 174 of the Companies Act, 1956, stipulates the quorum for holding a General Meeting as under:
(i) Public company Five members personally present (eligible to vote thereat)
(ii) A company deemed to be Two members personally present (eligible to public under section 43A.
(iii) Private company Two members personally present (eligible to vote thereat)
The articles of a company may provide higher number of members to be present at a meeting for the purpose of quorum. In that event, such higher number of members shall form a quorum for a meeting of that particular company.
Section 174 also provides that if within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved. In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may determine. If, at the adjourned meeting also, a quorum is not present within half an hour from the time appointed for holding the meeting, the members present, even if they fall short of the quorum, shall form the quorum.
The representative of a body corporate appointed under section 187 or the representative of the President or a Governor of a State under section 187A is a member 'personally' 'present' for purposes of counting a quorurn. Re, Kelantan Coconut Estates Ltd., 1920 WN 274.
Quorum, when present and absent.-In the absence of a quorum in a meeting, any resolution passed thereat is a nullity as the meeting itself cannot be said to have been validly held.
Proceedings at a General Meeting are largely regulated by the articles of the company. Clause 49, Table A of Schedule I to the Companies Act, 1956, would indicate that no business should be transacted at any General Meeting unless a quorum of-' members s present at the time when the meeting proceeds to business'. This clause also forms the standard article in most of the Articles of Association of' public companies. The strict legal view is also to the effect that the quorum should be present at the beginning of the meeting and may not affect the proceedings of the meeting if it falls shorter than the required number subsequently. A shareholder can thus materially vitiate the decisions of a meeting by initially forming quorum and then withdrawing from the meeting subsequently. Again, a quorum is presumed to be present unless it is questioned at tile meeting or the record shows that a quorum was not in fact present. The American practice, which is more logical, makes a departure from these common law principles. Thus
"A quorum must be present not only to begin a meeting but to transact business. Thus, if, during the meeting a number of shareholders (members) depart, leaving less than a quorum present, tile meeting must be discontinued by adjournment. However, if a meeting is once organised and all the parties have participated, no person or faction, by withdrawing capriciously and for the sole purpose of breaking the quorum, can render the subsequent proceeding invalid". American Encyclopaedia Dictionary of Business, Prentice Hall, New York.
Quorin for joint and other types of shareholders. -S hares may be registered in Joint names. There is no statutory limit as to the number of Joint members which really depend on the provisions made in the Articles of Association of a company. Shares may be registered in the name of limited companies also. The standard practice presently followed by companies is to limit the Joint holders either to three or four persons, any or all of whom may be limited company. If more than one of the Joint members are present at a meeting then, unless articles provide otherwise, only one of the holders should be considered for purpose of forming quorum.
The presence of non-members at a meeting will not by itself invalidate a meeting, unless they have taken part in the proceedings. Carruth v. Imperial Chemical Industries, 1937 AC 707. Thus, a preference shareholder may be allowed at a General Meeting but unless he has voting right (there cannot be any voting right for the preference shareholder except where there are arrears of dividend for a particular period), he cannot be counted for the purpose of forming quorum for the meeting,
For equity shares, two joint holders attending the meeting will be treated as two members of the company. Jamail Singh v. Bakshi Singh, (1960).30 Com Cases 192.
The quorum should be of the effective members, that is, members qualified to take part at and decide upon question brought before the meeting. Henderson v. Lonttit, (1894) 21 Rettis 674
A body corporate is eligible to hold shares subject to the limitations contained ill section 372 and other applicable provisions of the Companies Act, 1956, and the articles of a company; and in accordance with section 187(l ) of the Act, a corporate member can appoint a representative by a resolution of its Board oil' Directors to represent it at a General Meeting of a company.
Representative when deemed to be personally present.-The representative of' a company or a body corporate, by virtue of' the provisions of section 187 or the representative of the President or a Governor of a State, by virtue of the provision of section 187A, is a member personally 'present' for the purposes of constituting the quorum. If representatives of bodies corporate of required number are present they can form a quorum for the meeting. It may happen that a single person has been appointed representative to represent two companies at a General Meeting. In such event, even the single person should be counted as two members personally present at the meeting of the members because each of the companies will be treated as personally present through representation by a single individual as if that individual has a number of persons.
As against the above view, it may be urged that a single individual acting as representative of the required number of companies cannot form a valid quorum, since each company or body corporate is considered to be a single member and can be represented through only one individual. This is because it would amount to a meeting by a single individual which is against the basic principles of a meeting. A meeting prima facie means, a gathering of two or more persons and the Courts have consistently held that there cannot, in general, be a meeting of one person. In re: Sanitary Carbon Co., (1877) WN 223. Such is the case even where a single shareholder holds the proxies of all the remaining shareholders. In re .- James Prain & Sons Ltd., - (1947) SC 3 25.
In the course of a judgment, Lord Coleridge made a remark that "it is, of course, possible to show that the word 'meeting' has a meaning different from the ordinary meaning", and this was shown in a case, East v. Bannet Brothers Ltd., (1911) 1 Ch 163. where a person himself only can constitute the class meeting if he holds all the shares of a class. In that case, the memorandum provided that no new shares could be issued so as to rank equally with or in priority to the existing preference shares, unless the issue was sanctioned by an extraordinary resolution of the holders of the preference shares at a separate meeting of the holders specially summoned for the purpose. The existing preference shares being all in the hands of one person, and there being nothing provided in the articles of the company to the contrary, the word 'meeting' was held to be applicable to the case of a single shareholder. This is, however, an exceptional case and is a departure from the general practice.
(Ss. 187, 187A and 187B)
Persons competent to act as representatives.- Sections 187, 187A and 187B of the Companies Act, 1956, deal with the representations of bodies corporate, Government or trustees (under certain circumstances, e.g., section 187B) to represent such body corporate at a General Meeting of the company. A representative pursuant to section 187 of the Act, shall be appointed by a resolution of the Board of Directors of such company. The body corporate, which is a member of a company, should communicate well in advance to the company of which it is a member furnishing them with a certified copy of the Board Resolution making the appointment of the representative. Unless an authenticated copy of the resolution of the Board of Directors or other governing body authorising a person by name or description to attend a meeting of the company is filed, no one claiming to represent the body corporate is entitled to attend or otherwise take part in the meeting. The resolution must specify the company and the meeting or the meetings at which the representative shall be eligible to function or act. A donee of a general power of attomey cannot act as a representative of a body corporate to participate in the General Meetings of a company of which that body corporate is a member.
If any person claims to be the representative of a body corporate, he should carry an authenticated copy of the Board resolution with him so that if called for, he may immediately produce before meeting his authority for the participation at the meeting. The procedure that usually should be followed in cases of appointment of representatives is to send a certified true copy of the resolution concerning appointment of the person concerned as representative directly to the company, in time.
Altemate representative members.-Usually, the Board resolution appointing a representative is drawn in such a way that enough leverage is reserved for representation at a General Meeting by the company if the sole or the first named representative is either not available or is otherwise disqualified to represent such body corporate at any General Meeting, by adding few names in the resolution who can represent such body corporate.
The specimen Board resolution in regard to appointment of representative will indicate that a body corporate in most of the cases appoints more than one person to represent but it always gives preference to such person in order of the names indicated therein. The wording used that appointment of ‘A’ failing him 'B’ failing him 'C', etc. is quite significant. For so long as 'A' is present at the General Meeting as a representative of such member-body corporate, 'B’ that is the next person, cannot act as a representative of the same member-body corporate. In any event, if both 'A' and 'B' are present at the same General Meeting of a company, only 'A' will be counted as the sole representative of such member-body corporate and only he will rank for the purpose of quorum, voting and all other matters concerning participation at such General Meeting.
Order of procedure among the representative members.-Problem is often faced where more than one body corporate being members of the same company appoint the same set of persons as the representative to represent a company at a General Meeting. For example, A & Co. Ltd., B & Co. Ltd. and C & Co. Ltd., who are members of & Co. Ltd., appoint the same set of persons, say, either Mr. M or Mr. N or Mr. P to represent all the three companies at any General Meeting of X & Co. Ltd., Mr. M, Mr. N and Mr. P all being present at the meeting of X & Co. Ltd. represent to the Chairman thereof that Mr. M will represent A & Co. Ltd., Mr. N will represent B & Co. Ltd. and consequently Mr. P will be a representative of the remaining C & Co. Ltd. In actual practice, subject to the acceptance of the contention of the representatives, the Chairman of the meeting may accept the representations of Mr. M, Mr. N. and Mr. P in the order they desired either for quorum or participation in the proceedings of the meeting thereof.
Restricted representative.-Because of the shifting of personnel from one department to another or from one place to the other, the financial institutions who are members of most of the reputed companies in India appoint a representative only for a particular meeting of the company in question. The resolution of such institutions appointing representatives specifically indicate the limitation of the representative to act only at the ensuing General Meeting. The validity of such representation is short-lived and limited to the General Meeting mentioned therein. If no further fresh representation is received in relation to any subsequent General Meeting, the old representative can no more act as a representative.
Usually a resolution passed by the Board without limiting and indicating any terms will be valid for any General Meeting of the company to be held oil any future date and until a fresh resolution is received from the member-body corporate changing the earlier panel of representatives.
Representative's right co-extensive with member's.-A resolution of a body corporate can only authorise a representative to discharge its functions as a member of such corporate body. Being appointed as a representative, he can exercise the rights and powers as an individual member including right to vote by proxy and can move any resolution in his own name, participate in any discussion and propose amendment and do any act or take any action as if he is the member himself. He is, however, not eligible to be appointed in his capacity as a representative, as a Director of the company in the same way as an individual member may be, or exercise other rights of a member such as signing a requisition for a meeting, receiving dividends, etc. The authority of the representative does not extend further than representing the body corporate at the General Meeting.
There is however nothing to prevent the authorised representative from contesting an election to the Board. Dinkar Rai D. Desai v. R.P. Bliasin, (1982) 3 Comp Cases U 198 (Del); Motion Pictures Association, Re: (1984) 55 Com Cases 375 (Del). One such representative can be appointed irrespective of the amount of shareholding. There is neither any need for nor any question of joint representatives. Manoj Kumar Sonthalia v. Nariman Point Building Services and Trading P. Ltd., (1995) 84 Com Cases 559 (Mad).
Representative's authority prevails over proxy's.-If a representative is not in a position to act personally at a General Meeting, it is possible for him to appoint a proxy to attend the General Meeting in his stead in the same way a shareholder can appoint a proxy. Pursuant to the provisions of section 187 of the Companies Act, 1956, the appointment of a representative is limited to the authority given by the Board of Directors of the member-body corporate and a representative, therefore, cannot appoint any further representative to act for him. A corporation may either appoint a representative under section 187 or a proxy pursuant to section 176 of the Act. In this event, however, a body corporate appoints both a representative and a proxy to act at the same meeting, the appointment and attendance of a representative will prevail over the proxy, and the latter's attendance at the same meeting will have the effect of canceling the proxy.
Pursuant to section 187 of the Act, the power of appointment of a representative is only given to the Board of Directors who, of course, can pass a resolution in this regard either in a meeting of the Board or adopt such resolution by circulation of the subject matter among the Directors and getting their approval thereto. But within the meaning of section 187, there is no scope for the Board of Directors to delegate its power of appointment of a representative to any of its committee or any other Director or the Managing Director, if any.
President and Governor's representative.- The President of India or the Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his representative at any meeting of the company or at any meeting of any class of members of the company.
A person appointed to act, as aforesaid, shall, for the purposes of this Act, be deemed to be a member of such a company and shall be entitled to exercise the same rights and powers (including the right to vote by proxy) as the President, or as the case may be, the Governor could exercise as a member of the company.
The status of a member company and that of a representative appointed by an order of the President or the Governor, as the case may be, although basically appointed for the identical purpose are different. A representative appointed by the President/Governor has more power and can act in a wider sphere as compared to a representative appointed by a member company under section 187 of the Act. Thus, a representative appointed by the President or the Governor of a State, though the appointment is for acting as a representative at meetings of the company, is deemed to be a member for all purposes of this Act. Subject to any terms/conditions restricting or limiting his activities at the time of his appointment, it is considered that a representative appointed by the President/Governor may be eligible for appointment to the office of Director, give valid discharge for the dividend payable to the President or the Governor, as the case may be and exercise all other rights of a member of a company.
Appointment of a representative by the President or by the Governor of a State is a discretionary power and he can appoint any person (otherwise not unfit) at his will, as he thinks fit. This, in other way, is a pointer that such discretionary power cannot be delegated and a representative under this section shall only be appointed by an order issued by and in the name of the President or the Governor of a State, as the case may be.
Trustees as members.-S hares are quite often allotted/transferred in the names of the trustees for the benefit of a trust either private or discretionary or for the benefit of the general public. In such cases, as the company, pursuant to section 153 of the Act, is not to take any notice of any trust, express or implied or constructive, the company is obliged to consider the trustees of the trust as the apparent owner of the shares and enter their names in the register of members who can act as a member irrespective of the fact that they are merely acting on behalf of a beneficiary.
Provision of Section 187B will be attracted only when there is an expressly created trust within the meaning of section 3 of the Indian Trust Act. New Batik of India Ltd. v. Union of India, (1981) 51 Com Cases 375 (Delhi).
Suspension of membership rights of trustees.-This section provides that notwithstanding, anything contained in any other provisions of the Companies Act, 1956, or any other law or any contract, memorandum or articles, where any shares in a company are held in trust by a person (trustee), the rights and powers (including the right to vote by proxy) exercisable at any meeting of the company or at any meeting of any class of members of the company by the trustee as a member of the company shall
(i) cease to be exercisable by the trustee as such member; and
(ii) become exercisable by the Public Trustee.
Pursuant to section 153B(5) of' the Act, the following kinds of trusts attract the aforesaid provision:
(a) Where a trust is created by an instrument in writing;
(b) the value of the shares in, or debentures of a company held in trust is not less than one lakh of rupees;
(c) exceeds one lakh of rupees but does not exceed either five lakhs of rupees or twenty-five per cent of the paid-up share capital of the company, whichever Is less;
(d) where the trust is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may he approved by the Securities and Exchange Board of India established under sub-section (1) of section 3 of the Securities and Exchange Board of India Act, 1992.
The entire purpose of shifting the voting rights of the trustees in favour of the Public Trustee (appointed by the Central Government) is that holding of securities privately through trust should not be used by a group of persons for the purpose of augmenting their own voting rights. Public Trustee is appointed by the Central Government under section 153A of the Act by notification in the official gazette.
Section 187 B does not substitute the public trustee as a shareholder in place of the trustee who holds the shares but it only vests the right of voting attached to such shares in the public trustee. C.I.T v. Indian Hotels Co. Ltd., (1980) 53 Com Cases 500.
Under section 9(2) of the -Depositories Act, 1996, the provisions of section 187B are not to apply to the securities held by a depository on behalf of beneficial owners (investors).
It may be observed that voting rights exercisable by a Public Trustee is based on the holding of shares/debentures of a particular company. If the paid-up capital of a company is just more than one lakh of rupees and the entire shares of that company are held in trust, the voting power of the trustee of that trust in a General Meeting in respect of that company will devolve only to the Public Trustee. In the event of the particular trust holding securities in other companies, the aggregate value of which exceeds five lakhs of rupees without hitting the restrictions contained in section 153B, the Public Trustee shall have no jurisdiction over the trustees of such trust in regard to the voting rights exercisable at any General Meeting of any of the companies whose shares/debentures are so held in trust.
To summaries the provisions in regard to the applicability of this section (section 187B), the following pattern emerges:
Name o the Paid-up share Securities of such Voting right exercisable at
company capital/debenture paid-up value held by a General Meeting by the
the trust Public Trustee / Trustees
A Rs. 1,00,00,000 Rs. 4,00,000 Trustee
B Rs. 1,25,00,000 Rs. 4,60,000 Trustee
C Rs. 1,50,00,000 Rs. 4,90,000 Trustee
Total securities held Rs. 13,50,000 by the trust
The voting power in all the three companies, that is A, B and C, at any General Meeting will be exercisable by the trustees only and not by the Public Trustee.
Name o the Paid-up share Securities of such Voting right exercisable at
company capital/debenture paid-up value held by a General Meeting by the
the trust Public Trustee / Trustees
AB Rs. 1,00,000 Rs. 1,00,000 Trustees
CD Rs. 10,00,00,000 Rs. 4,90,000 Trustees
DE Rs. 30,00,00,000 Rs. 4,50,000 Trustees
Total securities Rs. 10,40,000
held in trust
The voting power in all the three companies, that is, AB, CD and DE will be exercisable by the trustees at General Meetings. Although the trust holds the entire paid-up shares (debentures, if any) of AB, because of the exemption under section 153B(4)(b)(1) (the holding of securities does not exceed one lakh of rupees) the voting power in company AB remains with the trustees although the trustees hold the entire paid-up capital of the company.
Name o the Paid-up share Securities of such Voting right exercisable at
company capital/debenture paid-up value held by a General Meeting by the
the trust Public Trustee / Trustees
X Rs. 10,00,000 Rs. 4,00,000 Public Trustee
Y Rs. 1,00,00,000 Rs. 6,00,000 Public Trustee
z Rs. 30,00,00,000 Rs. 4,90,000 Public Trustee
Total securities Rs. 14,90,000 held in trust
The voting power of the companies at X and Y above attract the provisions of section 153B and hence the voting power at a General Meeting of X and Y will devolve on the Public. Trustee and not on the trustees in whose names the shares of these companies have been registered. In the case of Z, as the holding of securities in trust is less than five lakhs of rupees and is also less than twenty-five per cent of the paid-up share capital of that company, the same will not call for the exercise of the voting right in a General Meeting by the public trustee.
According to a circular issued by the Department a society registered under the Societies Registration Act, 1860, is a person within the meaning of section 187B and if such society holds shares in trust, it should conform to the requirements of this section'.
Public Trustee, rights and duties.-The company whose shares and securities are registered in the name of trustees (the trustees are bound to give notice in such cases to the company concerned) and by virtue of section 153B/187B of the Companies Act, 1956, the voting power at any of the General Meeting of such companies or class meeting of such companies is to devolve on the Public Trustee, the company shall send the relevant notice(s) of any such meetings to the Public Trustee. In fact, the Public Trustee is entitled to receive notices of meetings of the company and such balance-sheet and other documents as any member is entitled to receive, and he may have the same right as a member, to inspect books and other papers (available for inspection of the members) of the company.
Having regard to the interests of the trust and of the beneficiaries, the Public Trustee may use his own discretion and decide whether or not to attend any meeting and whether or not to appoint a proxy to attend and vote at any meeting. If he appoints a proxy, he can either appoint an officer of Government or the trustees of the trust but not any other person. One finer point arises when the Public Trustee appoints a proxy instead of his attending the meeting. Unlike a proxy appointed to represent at a General Meeting of the company and possesses limited power at the time of poll only, a proxy who is a trustee of the trust appointed by the Public Trustee may exercise all rights and powers of a shareholder.
There is nothing objectionable if a trustee of the trust itself is appointed as a proxy to represent the Public Trustee at a General Meeting of a company. This enables such a trustee who gets a proxy from the Public Trustee to be not a mere dumb voter as invariably proxy holders are but take an active part in any proceedings of the company.
It is otherwise if the proxy appointed by the Public Trustee is not a trustee of the same trust. In the event of an officer of the Government appointed a proxy, such proxy will have the same limited rights as any other proxy appointed by a member under the Act has. Such a proxy cannot speak or take part in any debate, or vote by a show of hands.
The trustee of the trust, when Pubic Trustee attends a meeting may also attend a meeting but cannot participate in any proceedings thereof except advising the Public Trustee some line of action, if there be any, which may be adopted by him, in the interest of the trust or the beneficiaries thereof; he/they can also communicate to the Public Trustee his/their own views in respect of certain proposed action, but it entirely depends on the Public Trustee either to accept such suggestion or reject them completely. The Public Trustee, however, should act for the benefit of the trust as such and the beneficiaries there for and in such line as he thinks expedient. He is protected by law and his action at a meeting cannot be taken up by the trustees of a trust as unjust and no suit, prosecution or other legal proceeding shall lie against the Public Trustee either at the instance of the trustee of the trust or any other person on his behalf.
Public Trustee appointed under section 153B takes place of the trustee who is a member of the company only at a meeting of that company. So, the right to give consent for shorter notice under section 171(2) cannot be exercised by the Public Trustee because it 2 is not a right exercisable at a meeting of a company.
For the purpose of quorum, the presence of the Public Trustee shall be considered as a member personally present.
Who can act as Chairman.-The standard provision in almost all the Articles of Association of the company is drafted in the following lines
The Chairman of the Board shall be entitled to take the chair at every General Meeting. If there be no such Chairman, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, or is unwilling to act, the members present shall choose another Director as Chairman and if no Director be present, or if all the Directors present decline to take the chair, then the members present shall on a show of hands or on a poll if demanded, elect one of themselves being a member entitled to vote, to be the Chairman.
A convenient summary may be drawn up of the persons who are entitled to take chair at a General Meeting of the members (in order of preference):
(a) The Chairman of the Board of Directors: The Board should designate a Chairman by a resolution passed at a Board meeting making such person as the Chairman for any of the meeting of the Board.
The Chairman of the Board is allowed time up to fifteen minutes from the scheduled time to attend the meeting, after lapse of which in ordinary circumstances such Chairman may be considered a person as absent.
In the event, a company has no designated Chairman a person who usually takes chair at the Board meeting normally may be appointed a Chairman at a General Meeting of the members. Only formality that seems to be required to be observed in the latter case is some of the members present will have to propose such person to take the chair and some of the members present will follow seconding the proposal.
(b) In the absence of the regular Chairman of the Board or the person who usually takes chair at a Board meeting, preference will be given to a Director of a company as may be decided by the members present to be Chairman of that General Meeting.
(c) If no Director is present at the meeting or all the Directors present decline to take the chair, then the members present will elect one of them to take the chair at the said General Meeting.
Although the provision of the Articles of Association of a company is given priority in regard to selecting a Chairman of a General Meeting, provision in this regard has also been made under section 175 of the Companies Act which provides that
(1) Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands.
(2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of the Companies Act, the Chairman elected on a show of hands exercising all the powers of the Chairman under the said provisions for the purpose of poll.
(3) If some other person is elected Chairman as a result of the poll, he (such other person) shall be Chairman for the rest of the meeting.
Paragraphs 5.1 and 5.2 of Secretarial Standard-I provides for Chairman of a board meeting and its committees, Paragraph 5.1 provides that every company should have a chairman who would be the Chairman for meetings of the Board. Paragraph 5.2 provides that the Board while constituting any committee should also appoint the Chairman of that committee, unless such appointment is to be made in pursuance of any other applicable guidelines, rules or regulations.
Paragraphs 5.15.2, 5.3 and 5.4 of Secretarial Standard-2 (SS-2) provide for Chairman of a general meeting. Sub-paragraph 5.1.1 of paragraph 5.1 provides that where the articles of association so provide, the Chairman of the Board should take the chair and conduct the meeting. If there is no Chairman or if he is not present within 15 minutes after the time appointed for holding the meeting or if he is unable to act as Chairman of the meeting, the directors present should elect one of themselves to be the Chairman of the meeting. If the directors are unable to do so or if no director is willing to take the chair, the members present shall elect one of themselves to be the Chairman of the meeting. Sub-paragraph 5.1.2 of paragraph 5.1 of SS-2 provides that in the absence of any express provision contained in the articles of association, members personally present at the meeting shall elect one of themselves to be the Chairman of the meeting. Paragraph 5.2 of SS-2 provides that the Chairman should explain the objective and implications of each resolution before the resolution is put to vote. Paragraph 5.3 of SS-2 provides that the Chairman should provide a fair opportunity to members who are entitled to vote to raise questions and/or offer comments and ensure that these are answered. Paragraph 5.4 of SS-2 provides that the Chairman should not propose any resolution in which he is deemed to be concerned or interested nor should he participate in the discussion or vote on any such resolution.
Quorum should not comprise of non-member Chairman.-Functions of a Chairman of a General Meeting has been evolved mostly out of convention and precedents. The articles of a company usually spell out Chairman's powers, obligations and functions in so far they relate to the conduct of the meeting. A Chairman, however, need not be a member of the company. But then, by virtue of his being the Chairman of the Board, he is automatically entitled to take the chair at any General Meeting of the members. If the articles of a company do not provide for the Directors to hold any qualification shares, the Chairman of the Board, need not hold any share in the share capital of the company. In that event, since the Chairman is not a member of the company, his presence cannot be considered while ascertaining quorum for the General Meeting of a company.
Chairman's powers and functions.-(a) The Chairman, having taken the chair, will ascertain that a proper quorum of members is present. This depends on the articles. Sometimes, a specified number of members form a quorum and sometimes it is otherwise ascertainable on the basis of holding of shares of specified amount (quite often so in the case of a class meeting). In order to ascertain that a quorum is present, it may be necessary to refer to the register of members or the attendance list. The Chairman shall see that if there is no quorum present within the time fixed by the articles, the meeting is dissolved or adjourned, according as the provisions of the articles may require.
(b) The Chairman has prima facie authority to decide all questions arising in the course of discussions at a General Meeting. He should be impartial and should abide closely by the enactments, articles and procedures applicable to the company. He has full authority to conduct a meeting in accordance with the provisions of the Companies Act and the articles and to apply his own interpretation of the said provisions, But a member, by submitting to his ruling and voting upon a resolution which the Chairman allowed to be put, is not precluded from claiming in subsequent litigation that he was wrong. Pursuant to the provisions of section 178 of the Companies Act, a declaration by the Chairman in accordance with the provisions of section 177 of the Act that on a show of hands, a resolution has or has not been carried either unanimously or by a particular majority, followed by an entry to that effect in the books containing the minutes of the proceedings of the company, is conclusive evidence without proof of the number or proportion of the votes cast in favour of or against such resolution. An incorrect statement by the Chairman as to the effect of, or of what is intended to be done under a resolution in connection with the approval to an agreement to be entered into will not modify or affect the contents of the agreement so long as it is approved by the members.
(c) The duty of the Chairman is to conduct the meeting with utmost care and attention, peacefully and with dignity. He should conduct the proceedings with regularity and as per the agenda and take care that the sense of the meeting is properly ascertained as regards any question before it. He should move in order of the business as per the agenda and should not take the last one first or change the serial at his whims. Of course, when a meeting is convened and held under the order of the Court, any motion, amendment or resolution not coming within the terms of the Court's order may be rejected by the Chairman. Bello v. Co-operative Navigation Co., (1924) 26 Bom LR 907.
Chairman's power to adjourn.-(d) A meeting properly convened cannot be cancelled or adjourned at the pleasure of the Chairman and except as otherwise provided by the articles and in accordance therewith. The Chairman, however, has every right to adjourn a meeting if such adjournment is necessary for the proper conduct of the business but not to frustrate it. He has no power to stop a meeting at his own will and pleasure. If he does so, the meeting can itself resolve to proceed with the business for which it has been convened and elect another Chairman to conduct the rest of the business. Catesby v. Burnett, (1916) 2 Ch 325. In the absence of proper authority or provision in the articles, once a meeting has been convened, the Chairman should continue with the meeting until its conclusion and is not bound to adjourn it on his own motion. Salisbury Gold Mining Co. v. Hathoman, (1817) AC 268. A well drafted article of a company would usually make the following provisions in regard to the powers of a Chairman and authority regarding adjournment of a meeting:
(i) The Chairman of a General Meeting may, with the consent of the meeting, adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
(ii) When a meeting is adjourned, it shall not be necessary to give any notice of an adjournment of the meeting or of the business to be transacted at an adjourned meeting unless such adjournment extends to more than one month from the date of the original meeting.
In a case before the Rajasthan High Court, Seth Sobhag Mal Lodha v. Edward Mill Co. Ltd., (1972) 42 Comp Cases I (Raj), the Chairman's authority to adjourn a meeting was explained in the following terms:
"It is a settled law that when a meeting is called, no Chairman can arbitrarily adjourn it or disperse it at his own choice without the consent of the members, unless the business for which it was convened has been concluded. The power of adjournment rests in the majority of those present at the meeting. If the Chairman should vacate the chair or adjourn the meeting regardless of the views of the majority, those remaining, even if a minority, can appoint a Chairman and conduct business left unfinished by -the former Chairman."
(e) Impartiality on the part of the Chairman . is an essential part of conducting a meeting. There could be matters to be decided in the meeting in which he may be personally interested or to which he may be strongly opposed. In spite of his say in the matter, he must give a reasonable chance to the members present to discuss any proposed resolution, and ensure that all the views are adequately heard. He may, however, insist that the discussion must be kept within reasonable limits and should not hesitate to stop discussion on any resolution, after it has been reasonably debated. While it will be his look-out to that the minority shareholders are not harassed or oppressed in any way, he must go by the majority vote in respect of all matters where he has to take a decision. C.F. Wall v. London Northern Assets Corporation, (1898) 2 Ch 469. He should not use the 'closure' to prevent discussion or the proper hearing of minorities, but after the minorities have had sufficient opportunity of stating their case, he may, with the consent of the meeting, apply the 'closure' and put the question to vote. He may be called upon to decide difficult questions and must decide them to the best of his ability.
(f) Among other matters, he must decide as regards persons present at the meeting as to who is a member and who is a non-member or being a member, not entitled to vote on the proposed resolution. He should see that the proxy holders are allowed to participate in the proceedings of the meeting only on a poll. The proxy holders usually only intermingle with the members and sometimes interfere with the proceedings of the meeting. If a Chairman acts in good faith in this respect and only subsequently detects any irregularity in voting due to such mix-up, he is protected from liability in damages for refusing, on mistaken grounds, to allow the voting by a shareholder.
(g) Where the Chairman of a meeting was himself a candidate the Madras High Court has held that such a Chairman's ruling in favour of validity of nominations including his own was not valid as the meeting itself was not legal and members were not duly elected. Nagappa Chettiar v. Madras Race Club, (1949) 19 Com Cases 175 (Mad). The said High Court also held that it was immaterial whether the ruling of the Chairman was correct or incorrect but since there was a conflict between the Chairman's duty and his interest and his was as a Chairman in the position of quasi-judicial officer he should have vacated the Chair and another member should have taken the Chair. The maxim that no man shall be a judge in his own cause is elementary and of universal application. But Calcutta High Court distinguished this judgment of Madras High Court and held that in a shareholder's meeting the Chairman's power is limited and cannot decide on the resolution proposed at the meeting and the resolutions will have to be voted on by the shareholders, so long there is no equality of votes and possibility of Chairman's casting vote is absent, the Chairman's ruling will be valid. Bengal and Assam Investors Ltd. v. JX Eastern Industries (P) Ltd., (1957) 27 Com Cases 86 (Cal). This view of the Calcutta High Court was followed by Bombay High Court also. Kishore Y. Patel v. Patel Engineeri . ng Co. Ltd., (1992) 3 Comp U 98 (Bom).
A Chairman of a meeting can, however, exert his absolute authority where a meeting is convened and held under the orders of a Court and any motion, amendment or resolution not coming within the terms of the orders of the Courts may be rejected by the Chairman. But he has no power to stop or adjourn a meeting at his will. Second Consolidated Trust Ltd. v. Amalgamated Tea and Rubber Estate, (1943) 2 All ER 567. But where there is serious disorder, the Chairman has an inherent power to adjourn. John v. Rees, 2 All ER 274 (Ch D).
Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself but a proxy so appointed shall not have any right to speak , In every notice calling a meeting of a company which has a share capital or the articles of which provide for voting by proxy at the meeting, there should appear, with reasonable prominence, a statement that a member entitled to attend and vote is entitled to appoint a proxy or where that is allowed, one or more proxies to attend and vote instead of himself and that a proxy need not be a member. If default is made in complying with this requirement as respects any meeting, every officer of the company who is in default will be punishable with fine of upto Rs. 5,000/- There is, however, a time schedule within which a proxy in the prescribed form is required to, be deposited with the company. Sub-section (3) of section 176 of the Act provides that any provision in the articles of a public company or of a private company which is a subsidiary of a public company, which specifies or requires a longer period than forty-eight hours before a meeting of the company, for depositing with the company or any other person ally instrument appointing a proxy or any other document necessary to show the validity or otherwise relating to the appointment of a proxy in order that the appointment may be effective at such meeting, shall have effect as if a period of forty-eight hours had been specified in or required by such provision for such deposit. Paragraph 7.2 of Secretarial Standard-2 [ICSI] provides for Form of proxy. Sub-paragraph 7.2.1 provides that an instrument appointing proxy should be either in the Form specified in the articles of association or in any of the Forms set out in the Act. Sub-paragraph 7.2.2 provides that an instrument of proxy duly filled stamped and signed, is valid only for the meeting to which it relates including any adjournment thereof. This only emphasises that the provision in the article contrary to this provision will have no validity. The usual provision in any standard article 4 in regard to proxy is something to the following effect
(a) An instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorlsed in writing or if such appointer is a body corporate, be under its common seal or the Hand of its officer or attorney duly authorised. A proxy who is appointed for a specified meeting only shall be called a special proxy. Any other proxy shall be called a general proxy.
(b) A person may be appointed a proxy though he is not a member of the company and every notice convening a meeting of the company shall state this and also the fact that a member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him.
(c) The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a certified copy of that power or authority, shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument purports to vote in respect thereof. In default, the instrument of proxy will not be treated as valid.
Paragraph 7.6 of Secretarial Standard-2 [ICSI] provides for deposit of proxies. Subparagraph 7.6.1 provides that proxies should either be deposited with the Company in person or received through post not later than 48 hours before the commencement of the meeting at which they are to be used and a proxy should be accepted even on a holiday if the last date by which it could be accepted is a holiday. Proxies may be accepted at a shorter period, being not less than 24 hours before the commencement of the meeting if the articles of association so provide. Sub-paragraph 7.6.2 a member who has not appointed a proxy to attend and vote on his behalf at a meeting may appoint a proxy for any adjournment of the meeting not later than 48 hours before the time of such adjourned meeting.
On the question whether a proxy form can be filed through fax, a beginning has been made with a creditors meeting (S. 500). It has been held that a creditor can attend a meeting through a proxy by sending the proxy nomination by fax. A Debtor (No. 2021 of 1995). ex parte, Re, (1996) 1 BCLC 538 (Ch. D); IRC v. The Debtor, (1996) 1 BCLC 538 (Ch. D). It was also held that a proxy form would be deemed to be signed if it carried same distinctive or personal mark placed by the creditor, that is to say, signed by electronic devices or by a rubber stamp (ibid). In order to avoid any dispute or controversy the original proxy form should be sent immediately after fax transmission. It would also be advisable to have an authority in the company's articles to accept faxed proxy forms.
The purpose of appointment of a proxy by a member is to record his support or otherwise of any resolution to be moved at a meeting even in his absence. If, therefore, a meeting is adjourned, it seems possible that a member can appoint a fresh proxy to attend and vote in his stead on the business to be transacted at the adjourned meeting if the articles of the company so provide. The requirement as to deposit of the proxy before forty eight hours of the time of the meeting is, however, indispensable.
This is so because Sub-section (3) of section 176 provides for submission of instrument appointing proxy before 48 hours of a meeting and not 48 hours of a meeting or tile adjourned meeting. McLaren v. Thompson.
In re,,ard to form of proxy, the Companies Act, 1956, in Schedule IX, prescribes a form of proxy and it is stated therein that an instrument appointing a proxy in any of the forms set out in the said Schedule, shall not be questioned on the ground that it falls to comply with any special requirements specified for such instrument by the articles. This form of proxy requires the date of the meeting to be mentioned. This is a 'must' for otherwise the possibility cannot be ruled out of the use of those undated proxy forms also at meetings subsequent to the meeting for which they were meant. (Circular No. 2/52/58PR, dated 25-10-1958).
Paragraph 7.4 of Secretarial Standard-2 provides for execution of proxies. Subparagraph 7.4.1 provides that in addition to the member appointing a proxy, the proxy holder also should sign the instrument of proxy. Sub-paragraph 7.4.2 provides that an authorised representative of a body corporate or of the President of India or of the Governor of a State, holding shares in a company, may appoint a proxy under his signature.
Shares may be held in the name of more than one person depending on the provisions in the articles of the company. Unlike other rights being exercisable by the first named, considered to be valid, execution of the proxy is not valid unless executed by all the joint holders. A proxy, being in the nature of an instrument appointing an agent, creates a contractual relationship which can be effective only when all the principals Jointly execute it or when it is executed by one of them acting under the authority of all.
A proxy, in effect, is an agent of his principal, the shareholder or the shareholders. A proxy once executed by a shareholder can be revoked and a new proxy appointed therefor, provided this is done in the prescribed time within the meaning of section 176 of the Companies Act, 1956. Proxy is bound to act according to the direction of the principal but in the absence of any specific direction, a proxy may vote at a General Meeting according to his discretion. In re : Tata Iron and Steel Co. Ltd., AIR 1928 Bom 80.
A proxy once appointed may be revoked or annulled by the issue of a fresh proxy in the name of some other pet-son, the company being informed 'In this behalf'. If a shareholder having executed a proxy, himself attends the meeting personally, the authority of the proxy, even if he is also present at the meeting, is revoked automatically. Cousins v. International Bricks Co., (1931) 2 Ch 90. On the death of a shareholder, after he had appointed a proxy, the proxy is revoked if a written notice of death is served on the company before the meeting. If the instrument of proxy is not properly stamped, it is not valid.
If a letter is given revoking a proxy such a letter is due information to the company even through the said letter IS undated. Firestone Tyre & Rubber Co. v. Synthetic & Chenfical Ltd., (1971) 41 Com Cases 377 (Bom).
Paragraph 7.7 of Secretarial Standard-2 (SS-2) [ICSI] provides for revocation of proxies. Sub-paragraph 7.7.1 of the said paragraph provides that if a proxy had been appointed for th6 original Meeting, any proxy given for the adjourned meeting revokes the proxy given for the original Meeting. Sub-paragraph 7.7.2 provides that a proxy later in date revokes any proxy/proxies dated prior to such proxy. Sub-paragraph 7.7.3 provides that a proxy is valid until written notice of revocation has been received by the company before the commencement of the Meeting or adjourned Meeting, as the case may be. If a proxy need not be informed of the revocation of the proxy issued by the Member. Even an undated letter of revocation of proxy should be accepted. Unless the Arti6les provide otherwise, notice of revocation should be signed by the same person who had signed the proxy.
As already mentioned, in the event of death of the shareholder appointing a proxy, the authority of the proxy is revoked if the company has proper notice of death before the meeting. Every standard articles of a company provides a safeguard in this regard in its Articles of Association in the following terms, which are in line with Regulation 63, Table 'A' of Schedule I to the Companies Act, 1956 :
"A vote given in accordance with the terms of an instrument of proxy 'shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given :
Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used."
If the same shareholder in respect of his same shares gives two or more proxies then the proxy bearing the earlier date will be superseded by the proxy bearing the later date. Devadeshi Polytex Ltd. Re, (1988) Comp Cases 709 (Del).
Battle to collect proxy to carry through a proposed resolution or to block a resolution is quite common and, very often the Directors or other interested parties collect blank proxy forms. A blank proxy form, if duly signed by the member with date and handed over to the interested person who wants to utilise the proxy is of no avail unless the instrument of proxy, complete in all respects, is deposited with the company. A proxy is not a deed of contract and it is to be used for the limited purpose of voting at the meeting only and, therefore, no objection to the blank form being filled up by the agent of the appointer, even though appointed by parol can be raised. Virendra Kumar Goel v. Raghu Raj, 1987 Tax LR 177S (Del.)
Paragraph 7.5 of Secretarial Standard-2 [ICSI] provides for proxies in blank and incomplete proxies. Sub-paragraph 7.5.1 provides that a proxy form which does not state the name of the proxy should not be considered valid. Sub-paragraph 7.5.2 provides that if an undated proxy, which is otherwise complete in all respects, is lodged within the prescribed time limit, it should be considered valid. If the company receives multiple proxies for the same holdings of a Member, which are either not dated or bear the same date without specific mention of time, all such multiple proxies should be treated as invalid.
The instrument in a blank of proxy case is not complete till it is filled up and affixed with proper stamp. The present stamp duty on proxy is thirty paise 5. If a proxy is not duly stamped, the instrument is not valid and may not be taken into account.
A proxy bearing uncancelled stamps is an unstamped proxy and is unenforceable in law. TM. Shanmugam v. Mylapore Hindu Permanent Fund Ltd., (1990) TLNJ 52 (Mad.). In case of a proxy executed outside India, it should be properly stamped within three months of its receipts in India. Saudagar Singh v. Gurdip Singh Gill, (1980) 50 Com Cases 591 (1313) (P & H).
Proxies executed by shareholders in a State though bearing the stamps of another State are valid. Firestone Tyre & Rubber Co. v. Synthetics and Chemicals Ltd., (1971) 41 Com Cases 377, 458 (Bom).
Paragraph 7.3 of Secretarial Standard-2 [ICSI] provides for stamping of proxies. It provides that an instrument of proxy is valid only if it is properly stamped. Unstamped or inadequately stamped proxies or proxies upon which the stamps have not been cancelled are invalid.
The power and authority of a proxy is limited either by the Act, the Articles of Association of the particular company, or by the instrument of appointment. His status remains the same if he is appointed under an instrument of proxy specifically for a General Meeting (special proxy) or with general power to attend and vote at any meeting of the members or class of members (general proxy), as the case may be. A proxy ordinarily is entitled to vote only on poll. He cannot participate in any discussion on any business transacted in the General Meeting nor can he speak or move any resolution. He cannot be counted as a member personally present and, therefore, cannot rank with other members to form a quorum. Normally, he cannot participate in voting by show of hands, going by the relevant provisions in Table 'A' of Schedule I to the Companies Act, 1956. He can only function by casting his vote on a poll. Since he is not a member who can participate in voting on a show of hands, he cannot also join others in demanding a poll.
Paragraph 7.8 of Secretarial Standard-2 [ICSI] provides for inspection of proxies. Subparagraph 7.8.1 provides that requisitions, if any for inspection of proxies should be received in writing from a member at least three days before the commencement of the meeting. Sub-paragraph 7.8.2 provides that proxies should be made available for inspection during the period beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting. Sub-paragraph 7.8.3 provides that a fresh requisition, confirming to the above requirements, should be given for inspection of proxies in case the original meeting is adjourned.
The company should maintain a register for recording the lodgement of proxies. At the time of entry in the register, the validity or otherwise of the instrument of proxy may be checked in every respect and if any proxy is to be rejected, such rejection may be intimated preferably before the date of the meeting so that the person with defective proxy may be prohibited from entering into the General Meeting of the members for which he was authorised to attend. Preferably the register should have simple columns stating the following :
(a) the name and address of the member,
(b) description of the instrument appointing a proxy,
(c) whether such proxy is special or general,
(d) the name and address of the proxy,
(e) initial of the person who checked the entry.
Regarding voting on a proposed resolution, Table 'A’ makes the following provisions:
(i) no objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered and every vote not disallowed at such meeting shall be valid for all purposes;
(ii) any such objection made in due time shall be referred to the Chairman of the meeting, whose decision shall be final and conclusive.
This, however, cannot afford protection to any member or proxy holder found to have committed fraud or acted mala fides. Walls v. Exchange Investment Corporation, (1926) Ch 143.
Paragraph 7.9 of' Secretarial Standard-2 [ICSI] provides for record of proxies. Subparagraph 7.91 provides that all proxies received by the company should be recorded chronologically in a register kept for that purpose. Sub-paragraph 7.9.2 provides that in case any proxy entered in the register is rejected the reasons therefor should be entered in the remarks column.
Sub-section (4) of section 176 prohibits issue of any invitation to appoint a proxy a person or one of a number of persons specified in the invitations at the company's expense to any member entitled to have a notice of a meeting sent to him and to vote thereat by proxy. If this prohibition is not followed every officer of the company who knowingly issues the invitations as aforesaid or willfully authorises or permits their issue will be punishable with fine of Rs. 10,000/-.
It is a common practice with big companies with large number of shareholders to send an 'attendance slip' along with the notice of the meeting for the use of the members. Such slips duly filled in are required to be deposited at the gate with the secretarial staff employed by the company. These are then serially or alphabetically arranged and kept with the Chairman of the meeting for his use.
Attendance slips could also be used for recording of attendance at the meeting by the members for which a separate bound attendance book may be maintained. For a specimen attendance slip, see Annex. 11.
A Statutory Meeting is a General Meeting of the members of a public company which must be held by a company limited by shares, or limited by guarantee and having a share capital, not less than one month and not more than six months from the date at which the company is entitled to commence business
Paragraph 2.1 of Secretarial Standard-2 [ICSI] provides that every public company having a share capital and every public company limited by guarantee and having a share capital should, after one month but not later than six months from the date on which it is entitled to commence business, hold a meeting called statutory meeting.
The notice convening the Statutory Meeting must clearly state that is the Statutory Meeting and that all the requirements of the Act have been complied with. Gardner v.Iredale, (1912) 1 Ch 700. The notice of this meeting should be accompanied by a report of the Board of Directors called Statutory Report containing information/particulars in regard to the total number of shares allotted against cash and separately showing against consideration other than cash, the total amount of cash received by the company against issue of shares, an abstract of the receipts and payments accounts of the company, particulars of the amount of cash remaining in hand and an estimate of the preliminary expenses of the company showing separately any commission or discount paid or to be paid on the issue or sale of shares or debentures. The report should also contain the details of the management of the company and other information as provided in section 165 of the Act. The object of the meeting is to give shareholders the opportunity of making themselves acquainted with the promotion and floatation of the company, both by means of the Statutory Report and also by means of discussion at the meeting. The Statutory Report is required to be certified by two Directors of the company as to the correctness of the contents thereof and also by the Auditor in so far as the report relates to the shares allotted by the company, the cash received in respect of such shares and the receipts and payments of the company. The Statutory Report is to be prepared in Form No. 22 giving abstract of receipts and payments from the date of incorporation up to a date within the previous seven days from the date of the report.
Immediately after the report is despatched to the members, a copy, certified as above, must be delivered to the Registrar of Companies for registration. If the company is listed on a recognised Stock Exchange, then six copies of the Statutory Report must be forwarded to the concerned recognised Stock Exchange and a copy each to all recognised Stock Exchanges in India as soon as it is issued to the members.
At the commencement of the meeting, a list must be produced, showing the names and addresses of the members, with their respective holdings, and this must remain open and accessible to any member during the meeting. Sub-section (8) of section 165 of the Act provides for the adjournment of the meeting from time to time and at any adjourned meeting, any resolution of which notice has been given in accordance with the provisions of the Act, whether before or after the former meeting, may be passed. The provision, as is drafted, appears that the power of 'adjournment' of the meeting does not lie on the Chairman of the meeting as in the case of other General Meetings. It would seem that at a Statutory Meeting the majority can compel the Chairman to adjourn a meeting. The adjourned meeting has the same powers as the original meeting and it may pass any resolution of which notice has been given in accordance with the articles, either before or after the original meeting.
The provision of section 165 of the Act in regard to Statutory Meeting have no applicability to a private company. The provision of this section do not apply to a public company governed by section 43A, for such a company still retains its private character by not altering its Articles of Association to delete the restriction as to invitation to make subscription towards its share capital and matters specified in clause (iii) of sub-section (1) of section 3 of the Act. But, if a private company, on its becoming public, alter its articles, thus, throwing open the public subscription towards its capital, it will have to comply with the provisions of section 165 of the Act, regarding holding a Statutory Meeting, of course if such conversion takes place within six months of commencement of business. Similarly if a private company becomes public within six months of its being entitled to commence business, that is the date of its incorporation as such private company 10, such converted public company must hold Statutory Meeting having regard to the provisions of sub-section (1) of section 165 of the Act. If a private company, however, becomes a public company after six months of its incorporation as a private company, it would be outside the scope of sub-section (1) of the aforesaid section. The provisions of this section also do not apply to Government Company. [Notification GSR 578(E), dated 16-7-1985]. If there is failure to hold a statutory meeting as provided in section 165 or there is default in delivering the statutory report to the Registrar of Companies, every director or every officer of the company who is in default is punishable with fine of Rs. 5,0001-.
The Companies Act, 1956 provides the shareholders a forum of protection and that forum is the general meeting of the shareholders. The holding of the general meeting is compulsory every year. There are other meetings, the holding of which is the choice of the management or of a given percentage of shareholders to exercise their power to compel the company to convene a meeting. The following meetings are required to be held for administration of the affairs of the company
(a) General Meeting of members
(1) The Annual General Meeting; and
(2) The Extraordinary General Meeting.
(b) Meetings of a class or classes of shareholders.
(c) Board Meetings-discussed in Chapter-3 of this part.
Company to hold Annual General Meeting each year.-Section 166 provides that every company is required to hold each year a general meeting as its Annual General Meeting in addition to any other meetings. The notice of the meeting should specify it as an Annual General Meeting. Not more than fifteen months shall elapse between the date of one general meeting and that of the next.
First AGM to be held within eighteen months of incorporation. -The first annual general meeting is required to be held within eighteen months from the date of incorporation of the company and there is no provision for granting an extension of time in this case. If such meeting is held within that period, it shall not be necessary for the company to hold any annual meeting in the year of incorporation or in the following year. For instance it will not satisfy the provisions of the Section, if an annual general meeting is held say in December of a year and the next annual general meeting in January of the year next after the one following [Smedley v. Registrar of Companies, (1991) 1 KB 97]. The word "year" is not defined in the Act but it is defined in the General Clauses Act, and it means a calendar year. Gibson v. Barton, (1875) LR 10 QB 329; Park v. Lawton, (1911) I KB 588. Failure to convene annual general meeting is a continuing default for which there is provision for punishment and such a provision will be applicable even if that meeting is postponed by company under bona fide belief that holding of such meeting would be against spirit of judgment of Court in another proceeding. T. V. Mathew v. Nadukkara Agro Processing Co. Ltd., (2002) 1 Comp U 289 (Ker.)
Secretarial Standard-2 [ICSII.-Paragraph 2.2 of Secretarial Standard-2 provides that every company should, in each year, hold a meeting called the annual general meeting.
Power of Registrar to extend time.-The Registrar of Companies is empowered to extend time for holding an annual general meeting for special reasons by a period not exceeding, three months.
The second proviso to sub-section (1) of section 166 of the Act empowers the Registrar of Companies, for any special reason, to extend the time of holding an Annual General Meeting (not being the first Annual General Meeting) by a period not exceeding three months. The power is absolutely a discretionary one to be used by the Registrar only in appropriate cases. But such extension should on no account be made due to apprehended or actual delay in the completion of the audit of the annual accounts. (Press Note, dated 29-1-1959 issued by the Department of Company Affairs).
The Department is of the view that the Registrar can grant extension of time without any restriction up to a limit of three months for special reasons even though such extension results in the holding of the Annual General Meeting beyond the calendar year. (Letter No. 34/11/69-CL-111, dated 13-1-1972).
For obtaining extension of time for holding the Annual General Meeting the application should be made to the Registrar of Companies before the expiry of the period mentioned in section 166 (1) and not after that. (Company News and Notes 1-7-1963). There is no prescribed form of this application. As per the citizen's charter of the Department of Company Affairs, Schedule 111, Serial No. 5. The approval should be given within 10 days. [Press Note No. 9/99, dated 9-8-1999]. In case of Government Companies, the said application for extension of time should be made to the Central Government. [Modification made by SRO 355, dated 7-1-1957].
Department is also of the view that for the purpose of section 159 (relating to annual return to be filed by the company), the time within which the Annual General Meeting should be held is governed only by section 166 and not also by section 210. [Circular No. 2/79118/35(159/166)/78-CL-V/28/38/78-CL-II], dated 15-9-1979].
An annual general meeting can be held only in the city, town or village where the registered office of the company is situate and not elsewhere or out of business hours.
The venue should be within the postal limits of the city in which the company's registered office is situated. Circular No. 1/1/80 CL. V, dated 16-2-198 1.
Section 166(2) does not apply to section 25 companies, 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. [S.O. No. 1578, dated 1-7-1961].
No Annual General Meeting shall be held on a public holiday. Public Holiday is defined in section 2 (38) of the Act. According to the Negotiable Instruments Act, the expression "Public Holiday" includes Sundays, New Year's Day, Christmas, if either of such days falls on a Sunday, the next following Monday, Good Friday and any other day declared by the Central Government by notification in the official gazette to be a Public Holiday. Banks observe their closing days for accounting purposes on April, I and September, 30 each year. Although these two days are declared as holidays under the Negotiable Instruments Act, these two days are not public holidays.
The proviso of section 2 (38) also says that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday in relation to any meeting unless the declaration was notified before the issue of the notice convening such meeting.
The Central Government may exempt any class of companies from the provisions of sub-section (2) of section 166 subject to such conditions as it may impose. It is to be noted that no such exemption can be given to an individual company but only to class of companies.
The second proviso to sub-section (2) of section 166 provides that a public company or a private company which is a subsidiary of a public company may by its articles fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meeting.
[S. 166 (2) Second proviso]
In the case of a Private Company which is not a subsidiary of a public company, both the time and place of meeting may be fixed either by the articles or by a preceding annual general meeting or by a resolution agreed to by all its members.
The word 'Time' mentioned in the second proviso to sub-section (2) of section 166 indicates only the hour and the date of the commencement of the meeting. Letter No. 8/16/(1)61-PR, 9-5-1961.
Failure to lay accounts at AGM, consequence of.-As mentioned above, holding of Annual General Meeting in accordance with the provisions of section 166 on the one hand and the laying of the accounts of the company duty audited accompanied by the reports of the Directors and Auditors on the other are two separate functions. The default in not laying the balance-sheet before a General Meeting constitutes an independent offence, distinct from the offence arising out of the default in not calling a meeting. Vishwanathan v. Asstt. Registrar of Joint Stock Companies, (1953) 1 MLJ 408 : AIR 1953 Mad 558.
Pursuant to the second proviso to sub-section (1) of section 166, only the Registrar of Companies, at his discretion can extend the time of holding of an Annual General Meeting by three months. Nothing in the Companies Act empowers any authority to grant extension of time beyond this period, and an Annual General Meeting should be called by the Directors in due time whether or not the accounts, the consideration of which can only be made at an Annual General Meeting, are ready".
Irrespective of the fact that a default has been made knowingly or unknowingly, it must be proved that the Directors had no mala fide intention in not calling the Annual General Meeting. The only way open for the defaulting Directors and the company is to apply to the High Court of appropriate jurisdiction to grant relief within its general power, reserved under section 633 of the Act. In Gautam Kanoria v. AROC, (1999) 2 Comp LJ 27 (Bom) the court granted relief to the company for failure to hold annual general meetings and to file returns as the company was under takeover by the government. The relief contemplated under this section relates to civil liabilities only and Court cannot grant any relief in criminal proceedings. The Court may grant relief either wholly or in part and upon such terms as it thinks fit. The granting of relief is discretionary. Ramakrishna Dalmia v. Registrar of Joint Stock Companies, Delhi, (1962) 32 Comp Cases 341.
If the accounts are not laid before the Annual General Meeting within the statutory period, it would not invalidate the said meeting. Sunil Dev v. Delhi and District Cricket Association, (1990) 2 Comp U 254 (Del).
Modification of decisions taken at AGM, if possible.-Matters dealt with at the meeting and the resolution adopted thereat should not be altered even if there were mistakes or the decision was wrong. A case of revision/rectification of balance-sheet and/or profit and loss account which were earlier approved at an Annual General Meeting came up for clarification before the Department of Company Affairs. The following clarification has been issued by the Department:
"I am directed to say that the Board has had under consideration the question as to whether the annual accounts of a company can be reopened, after adoption by the company in Annual General Meeting with a view to rectifying errors of some magnitude or to incorporating omission which may have come to the notice of the Board of Directors at a later date. In view of the Board, the annual accounts of a company should be deemed as conclusive once the accounts are adopted by the company in an Annual General Meeting. While there can be no objection to the Board of Directors correcting any minor or obvious errors in the accounts subsequently, any substantial errors and acts of omission or commission cannot be rectified by attempting to introduce corrections in the accounts already adopted of by recasting such accounts. The Board feels that the necessary rectification should be done in the accounts of the company for the succeeding financial year." [Circular No. 3(50)-CL-VI/65, dated 30-3-1966].
The combined reading of section 166 and section 210 requires compliance with the following where Annual General Meetings and the placing of accounts before shareholders is concerned:
(1) There must be one meeting held in each calendar year.
(2) Not more than 15 months must elapse between one general meeting and another.
(3) The period of 15 months may be extended to 18 months by the Registrar.
(4) Except in the case of the first annual general meeting, the accounts must relate to a period beginning with the day immediately after the period for which they were last submitted and ending with a day which must not precede the day of the meeting by more than six months or six months and the extension granted by the Registrar under section 166, i.e., a maximum period of nine months.
If any person being a director of a company, falls to take all reasonable steps to comply with the provisions of this section, he will in respect of each offence be punishable with imprisonment for 6 month or with fine of Rs. 10,000/- or with both. Any person other than the director who has been charged by the board of directors with the duty of seeing that the provisions of this section are complied with makes default, he will also be punishable as above.
A general meeting of a company be called by giving not less than twenty-one days' notice in writing. An annual general meeting may be called at shorter notice than 21 days' clear notice if consent is accorded thereto by all the members entitled to vote thereto. Not less than 21 days has been construed as meaning 21 clear days, i.e., excluding both the date on which notice is served and date of the meeting. Further the time for effecting service of notice of meeting, i.e., forty-eight hours as per section 53(2)(b) is also to be excluded.
At an Annual General Meeting four items constitute ordinary business. They are:
(1) To consider Balance-sheet and Profit & Loss Accounts, Auditor's Report thereon and Directors' Report.
(2) To declare dividend.
(3) To appoint directors in place of those retiring.
(4) To appoint auditors and to fix their remuneration. At an Annual General Meeting, all other business is special business. At an Extraordinary General Meeting every business is special business. It may be remembered that special business does not require special resolution unless specifically required by the Act.
Any other item except the aforesaid four items considered in the Annual General Meeting will constitute special business and therefore will require explanatory statement.
Under the heading "Definitions" of Secretarial Standard-2 ordinary business means business to be transacted at an annual general meeting relating to the (i) consideration of the accounts, balance sheet and the reports of the Board of Directors and Auditors; (ii) the declaration of a dividend; (iii) appointment of Directors in the place of those retiring; and (iv) the appointment of, and the fixing of the remuneration of the Auditors.
Under said heading special business means business other than the ordinary business to be transacted at an annual general meeting and all other business to be transacted At any other general meeting.
The circumstances that no Annual General Meeting was held will not absolve the Directors from liability as they were themselves responsible for holding the meeting and have failed in their duty to do so. Assistant Registrar of Companies, West Bengal v. Mati Begum Safaram Khatoon, (1979) 49 Comp Cases 651. The accounts are to be prepared and should contain the information in the manner required in Schedule VI to the Act.1n the case of a new company which has not commenced production and the question of profit or loss has not arisen, there will be no objection to the company preparing the expenditure account of construction etc.
The default in not laying the balance-sheet before a General Meeting constitutes an in dependent offence distinct from the offence arising out of the default in not calling the meeting. Appaya v. State, (1952) 22 Comp Cases 78, The Directors of a company cannot evade liability for failure to lay the accounts and balance-sheet before the Annual General Meeting merely by stating that the Auditors had not sent the same. Registrar of Companies, West Bengal v. Proshad, (1986) 59 Comp Cases 780 (Cal).
It has been held that an acknowledgment in the balance-sheet if it was colourable and not bona fide will not be good as an acknowledgment so as to save limitations. Babulal Bal Mukund v. Official Liquidator, (1969) 39 Comp Cases 4 : (1968) 1 Comp LJ 1. A balance-sheet showing fees due to Directors has been held not to amount to an acknowledgment on the ground that it is not competent for the Board of Directors to promise to pay to themselves since each is interested in the matter and is capable of binding the company by passing any resolution. Re : Colisium (Barrow), (1930) 2 Ch 44.
Even Chit Fund Companies working under the Chit Funds Act, 1982 cannot take away their right to file accounts within the period allowed under section 210 under their rulemaking power. Madurai Ramanathapuram Mavatta Seetu Companigal Sangam v. Union of India, (1994) 80 Com Cases 686 (Mad).
Section 220(2) has been amended by the Companies (Amendment) Act, 1988. Now the company not adopting the balance-sheet in an Annual General Meeting or adjourning the meeting without adopting the balance-sheet, is required to send a statement to that effect and of the reasons thereof to the Registrar of Companies along with the balance-sheet.
Accounts not ready for laying, effect of.-As per sub-section (2) of section 220 amended by the Companies (Amendment) Act, 1988, in case the annual accounts are not laid in the Annual General Meeting and the meeting is adjourned, the balance-sheet etc. will have to be filed by companies along with a statement containing reasons therefor. The amendment has thus plugged the lacuna, as a company was hitherto not required to file its balance-sheet etc. with the Registrar in case the Annual General Meeting was held in time and adjourned to a subsequent date, without the annual accounts having been laid thereat.
Directors' Duty to call Meeting.-There is a clear statutory duty on the directors to call the meeting whether or not the accounts the consideration of which is only one of the matters to be dealt with at an annual general meeting are ready or not (Re El Sombrero Ltd., (195 8) 3 All ER I (Ch D).
The company becomes punishable for its failure to do so per se because there is no excuse even on the ground of sufficient cause.
Thus if the accounts are not placed at the Annual General Meeting or at the adjourned Annual General Meeting within the statutory period, the directors of the company are responsible for such lapse and may be prosecuted. Bijoy Kumar Karnani v. Assistant Registrar of Companies (W.B.) (1985) 58 Com Cases 293 (Cal D.B.)
The default in filing accounts within time is a continuing offence and that even after retirement a director can come in the category of an officer in default. Amita Chadha v. ROC, (1999) 96 Com Cases 265 (Delhi).
In the case of a sick industrial company, the court has ordered that since the officers of the company were not able to get access to company's premises in spite of police help and therefore could not comply with the requirements of the Companies Act, 1956, the officers should prepare and file the accounts in accordance with the statutory requirements within 6 months from the date of revival of the company and till then no proceedings should be launched against them. Sanjay Modi v. Registrar of Companies, (1995) 82 Com Cases 681 (Raj).
Subject to the provisions in the articles, any General Meeting of the Company can be called only on the authority of a resolution of the Board of Directors and if the managing director, manager, secretary or other officer calls a meeting without such authority it will not be effectual unless the Board ratifies the effect before the meeting is held. [Re: Haycraft Gold Reduction and Mining Co., (1900) Ch 230]. For this reason only the notice calling the General Meeting always contains the words, "by order of the Board."
Adjournment, a continuation of the original meeting.-Articles usually make provisions relating to adjournment of a General Meeting. The model provisions in the articles of a company are somewhat as follows
(a) The Chairman may, with the consent of the company at which a quorum is present and shall, if so desired by the meeting, adjourn the meeting from time to time and from place to place.
(b) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
(c) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.
(d) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
An adjourned meeting is a mere continuation of the original meeting and so the proxies appointed for the original meeting are available for the adjourned meeting also. W.B. Subramania Iyer v. United India Insurance Co., (1928) 55 MLJ 385 : AIR 1928 Mad 1215.
Where provision, as in (c) above, is made in the Articles of Association of a company, the requirement of notice, when a meeting is adjourned for thirty days or more is mandatory and must be strictly complied with. Rubber Bachellor & Sons v. Bachellor, (1945) 1 All ER 522.
It is not necessary to give notice of the adjourned meeting to the members of the company if the date of the adjourned General Meeting is decided at the original meeting and if that adjourned meeting falls on a holiday, it would not amount to contravention of section 166(2). If the date of the adjourned General Meeting is fixed at the original meeting and the Directors of the company fix another date for that meeting, then a notice is to be given to the members of the company in accordance with the provisions of the Companies Act, 1956. [Letter No. 8/61(1)/61 -PR, dated 19-5-1961
The adjourned meeting should also be held within the statutory time period allowed by section 166. Mundra (MD) v. Asstt. Registrar of Companies (W.B.), 1980 50 Com Cases 346 (Cal-DB).
Paragraph 14 of Secretarial Standard-2 [ICSI] provides for adjournment of general meetings.
Sub-paragraph 14.1 provides that a duly convened meeting should not be adjourned arbitrarily by the Chairman. The Chairman may adjourn a meeting with the consent of the members and shall adjourn a meeting if so directed by the members. Meetings may be adjourned for want of requisite quorum. The Chairman may adjourn a meeting in the event of disorder or other like causes, where it becomes impossible to conduct the meeting and complete its business.
Sub-paragraph 14.2 provides that it' a meeting is adjourned stne-die or for a period or thirty days or more, a Notice of the adjourned meeting should be given in accordance with the provisions contained hereinabove relating to Notice.
Sub-paragraph 14.3 provides that if a meeting is adjourned for a period of less than 30 days in the case of listed companies with more than 5000 members, notice thereof specifying the day, date, time and venue of the meeting should be published immediately in a newspaper having a wide circulation within such States of India where more than 1000 members reside.
Sub-paragraph 14.4 provides that if a meeting other than a requisitioned meeting stands ad , journed for want of quorum, the adjourned meeting should be held on the same day, in the next week at the same time and place or on such other day and at such other time and place as may be determined by the Board. In the case of listed companies with more than 5000 members, notice thereof specifying the day, date, time and venue of the meeting, should be published immediately in a newspaper having a wide circulation within such States of India where more than 1000 members reside.
Sub-paragraph 14.5 provides that if within half an hour from the time appointed for holding a requisitioned meeting, a quorum is not present, the meeting shall dissolved.
Sub-paragraph 14.6 provides that at an adjourned meeting, only the unfinished business of the original meeting should be considered.
Section 167 provides what should be done when default occurs in holding the annual general meeting within the stipulated time. Only the Company Law Board has the power to order the convening of a meeting after the statutory time has elapsed.
Default.- Default can be said to have been made in holding the meeting only after the expiry of the period mentioned in the second proviso to sub-section (1) of section 166 of the Act.
Member's right to apply to Company Law Board.-If default is made in holding an annual general meeting in accordance with the provisions contained in the section 166 of the Act, any member of the company may apply to the Company Law Board and the Company Law Board may call or direct the calling of a general meeting of the company. The Company Law Board may give such ancillary or consequential directions as it thinks expedient in relation to the calling, holding and conducting of the meeting.
The underlying policy is to exercise the power only where the management is found to be unwilling to convene an annual general meeting of the company with a view to keeping the shareholders in the dark about the affairs of the company or where the management is unable to convene the meeting on account of party faction or other like reasons.
When Company Law Board will exercise power.-In case of default in holding the annual general meeting, the Company Law Board will exercise the power to call or direct the calling of the annual general meeting but only on the application of the member.
Application to Company Law Board for direction to call Annual General Meeting. An application is to be made as per the Company Law Board Regulations, 1991 to the concerned Bench of the Company Law Board setting out therein the facts in regard to failure to call the general meeting.
Documents to be attached with the application
1. Affidavit verifying the application.
2. Bank draft evidencing payment of application fee of Rs. 500/-.
3. Memorandum of Appearance or executed Vakalatnama.
Company Law Board has no power to rectify violation of Articles.-The remedy of a member complaining that an annual general meeting was held in violation of the articles of the company is to move the Court and not the Company Law Board to rectify the action of the Company. The Company Law Board has power to direct a company to call a meeting under Section 167 but not to rectify violation of the articles if any committed by the company. [Prakasam (R) v. Sree Narayana Dharma Paripalana Yogam, (1980) 50 Comp Cases 611 ].
One member to constitute a meeting.-For one member to be deemed to constitute a meeting, the direction of the Company Law Board is necessary, otherwise, at least two persons are necessary for a meeting. [State of Kerala v. West Coust Planter's Agencies Ltd., (1958) 28 Comp Cases 13 (DB) (Ker)]. Gates Corporation d/b/a The Gates Rubber Co. v. Anand Gates (India) P. Ltd., (1999) 98 Com Cases 708 (CLB).
Order for calling meeting when time lapsed.-The Company Law Board ordered an annual general meeting to be held where the time for holding it lapsed in order to ensure the validity of such a meeting because a meeting held by a company out of time cannot be a valid meeting. While ordering such a meeting to be held the Company Law Board directed that the business of the meeting should be restricted to the ordinary routine business only. Taihan Electric Wire Co. Ltd. v. TDP Copper Ltd., (1999) 96 Com Cases 415 (CLB).
Section 168 which contains penalty provisions provides that if default is made in holding a meeting of the company in accordance with Section 166 or in complying with any directions of the Company Law Board under sub-section (1) of Section 167, the company and every officer of the company who is In default shall be punishable with fine which may extend to Rs. 50,0001- and in case of continuing default with a further fine which may extend to Rs. 2,500/- for every day after the first during which such default continues. When the books of the company have been seized by the police and produced in Criminal Court the default is beyond the control of the company and should not be punished. [In re: Bank of Deccan Ltd., (1960) 30 Comp Cases 204].
Section 169 provides that the Board of Directors of the company shall forthwith proceed to call an extraordinary general meeting of the Company in regard to any matter on the requisition of member, in the case of a company having a share capital, holding at least one-tenth of the paid-up capital carrying voting rights in respect of that matter and in the case of the company not having share capital on the requisition of members having at least one-tenth of the total voting power carrying voting rights in respect of that matter. The requisition shall contain the specific purpose for which the meeting is proposed to be called. In case any special resolution is to be passed at the meeting, the special resolution as well as the explanatory statement should accompany the requisition.
When requisitionists call the meeting they need not annex the explanatory statement to the notice. S. Vardarajan v. Venkateswara Solvent Extraction P. Ltd., (1994) 80 Com Cases 693 (Mad).
No form prescribed for requisition.-There is no form prescribed in which the requisition is to be sent by the requisitionists. It may be in the form of a letter signed by all requisitionists addressed to the Board of Directors of the Company. There may be several letters also for the same purpose. If a requisition consists of two or more distinct matters its validity has to be determined in respect of each matter. The requisition may be deposited at the Registered Office of the company or it may be sent by registered letter addressed to the company at the Registered Office.
The requisition made by the requisitionists must be valid and lawful. Sivaraiman (B) v. Egniore Benefit Societv Ltd., (1992) 75 Com Cases 198 (Mad).
Board to decide whether the meeting requisitioned is to be called or not.-On receipt of the requisition, the Board of Directors of the company will decide as to whether a meeting should be called or not. If it is decided by the Board to call the meeting, a resolution to this effect will be passed fixing the day, time and place of the meeting. The Board is required to take a decision to this effect within 21 days of the deposit of the requ1sition and the meeting is to be held within 45 days of the deposit of the requisition. The Board has to send notice of the meeting within 21 days of the deposit of the requisition by giving 21 days' clear notice.
Even if the resolution proposed to be passed at the Extraordinary General Meeting by the requisitionists is illegal, the meeting is required to be called by the Directors. Cricket Club of Indla v. Madhav L Apte.
Failure of Director to call Meeting-Consequences.-If the Board of Directors fails to call the meeting within 21 days from the date of deposit of a valid requisition on a day not later than 45 days from the date of deposit of the requisition; then it will amount to contravention of the provision of Section 169 of the Act and for such contravention the Directors shall be liable to prosecution and fine which may extend to Rs. 500/-(S. 629A).
On failure of Director requisitionists themselves can call meeting.-On the failure of the director to call the meeting the requisitionists themselves may convene a meeting. However, when the meetina is called by the requisitionists themselves the expenses incurred in this connection will have to be repaid by the company and which in turn can be recovered by the company from the directors who are in default.
When directors fail to issue notice requisitionists themselves may issue notice of meeting. -Where the directors fall to issue notice of the meeting within 21 days of the deposit of the valid requisition, the requisitionists themselves will issue the notice of the meeting within three months from the date of deposit of the valid requisition. In the case of' a company having share capital by the requisitionists as represent a majority in value of the paid-up share capital held by all of them or not less than 1/10th of the paid-up share capital as on that date carries the right of voting in regard to the matter for which meeting is called and in the case of a company not having share capital by such of the requisitionists as represent not less than 1/10th the total voting power of all the members having on the said date a right of vote in regard to the matter.
Notice to mention Extraordinary General Meeting convened by requisitionists.- The notice of the meeting should mention that the meeting called is an Extraordinary General Meeting of the company and is being convened at the requisition of the shareholders of the company. The notice issued by the requisitionists should also mention that the meet1 n g is being convened by the requisitionists as the directors of the company have failed to call the meeting It has been held that failure to mention the name of the meeting makes the meeting invalid [Gardner v. Iredale, (1912) 1 Ch 700].
It has also been held that the right of members to requisition a meeting is not lost because a receiver has been appointed in respect of their share. [Bal Krishan Gupta v. Swadeshi Polytex Ltd., (1985) 58 Comp Cases 563].
The Act does not require that a general meeting other than an annual general meeting must be held at the re,,istered office or in the city, town or village where the registered office of the company is situate. However, unless the meeting is held in or near the place of the registered office, the purpose of the requisitionists will not be served if the Directors of the Company decide to convene the meeting at a far off place where the requisitionists or other members may not have access.
A requisition for an extraordinary general meeting drafted by one shareholder who has the locus standi and signed by the prescribed number of shareholders has been held to be valid. B.G. Somayaji v. Karnataka Batik Ltd., (1995) 83 Com Cases 649 : (1995) 3 Comp LJ 334 (Kant).
Section 186 provides that, if for any reason, it is impracticable to call a meeting of a company other than an annual general meeting, in the mannert in which meetings of the company are to be called or to hold or conduct the meeting in the manner prescribed by the Act or the Articles of the company, then the Company Law Board either of its motion or on the application being made by any director or any member of the company having the right to vote at the meeting order that the meeting of the company be called and held and issue such other directions for conducting the meeting as it thinks expedient. The directions issued by the Company Law Board may also include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. The meeting called, held and conducted in accordance with the orders of the Company Law Board shall be deemed to be a meeting of the Company duly called, held and conducted.
Power confined to calling of Extraordinary General Meeting.-The Section gives power and Jurisdiction to the Company Law Board only in the case of meetings other than Annual General Meetings. After 1st June 1988 even Annual General Meetings can be called by the Company Law Board under section 167, on the application of any member of the company.
By whom the application can be presented.-By any director or member of the company.
Contents of the application. -The application shall set out clearly the facts as regards the impracticability of the company to call a meeting.
1. Evidence in proof of status of the applicant
2. Affidavit verifying the petition
3. Bank draft evidencing payment of application fee
4. Memorandum of appearance with the copy of the executed Vakalatnama.
Fee payable on application is Rs. 500/-.
Court cannot exercise power of Company Law Board.-The Court cannot execise the power of Company Law Board even under its inherent powers because this power cannot be invoked where statutory provisions exist. Ashok Mathew Zacharia (Dr.) v. Majestic Kuries and Loans (P.) Ltd., (1987) 62 Comp Cases 865.
Impracticable to be interpreted in a reasonable manner. -'Impracticable' should be interpreted in a reasonable manner and from the common sense point of view of ordinary businessmen, taking to account the circumstances of each case.
The power conferred on the court (now Company Law Board) under the section to call a meeting of a company should be exercised with caution and only when it was not practicable to call a valid meeting under the constitution of the company. Lothian Jute Mills Co. Ltd. In re: (1951) 21 Comp Cases 290.
It was held, on the facts, that were serious doubts and controversy as to who were the directors and there was a possibility that meeting called by any particular group of directors might be invalid, a situation Would be held to have arisen when it has become impracticable to call a meeting of the company. The power under the Section should be exercised when it cannot be stated with reasonable approach to certainty, or even prima facie, that a meeting called in exercise of the powers contained in Its regulations could be valid.
Intpracticability- condition precedent.- The condition precedent for ordering a meeting of a company under section 186 is the impracticability of calling such a meeting in the usual course for any reason. If such a condition exists, then the Company Law Board can exercise its power and direct the calling of such a meeting. Baptist Church Trust Association v. Member Company Law Board, (1986) 60 Comp Cases 381.
The word impracticable should be distinguished from the word impossible the former is more limited in scope than the later word. Payne v. Coe, (1947) 1 All ER 841 (Ch D).
Exercise of power by Company Law Board.-As to the circumstances under which the Court (Company Law Board) could exercise its power under this section, Re.- Clive Mills Co. Ltd., (1964) 1 Comp LJ 301 , that the power of the Court (Company Law Board) under this section is very wide and extraordinary power which should be used sparingly and with great caution, because it is for the company to manage its own affairs including the calling of a General Meeting and the Court will intervene only if it is satisfied that it is impracticable to call or hold the meeting. Where the shareholders themselves are in a position to requisition an extraordinary General Meeting but without availing themselves of that procedure, make an application to the Court (Company Law Board), the Court should not accede to it.
Main guiding Principles.-The main principles that should guide the Court (now CLB) as regards ordering a meeting to be called are the following: Ruttonjee & Co. Ltd., (1970) 40 Comp Cases 491 (Cal).
1. The Court (now CLB) would not ordinarily interfere with the domestic management of a company which should be conducted in accordance with the articles.
2. The discretion granted under section 186 should be used sparingly with caution so that the Court (now CLB) does not become either a shareholder or director of the Company trying to participate in the internecine squabbles of the company.
3. The word 'Impracticable' means impracticable from a reasonable point of view.
4. The Court (now CLB) should take a common sense view of the matter and must act as a prudent man of business.
5. A prudent man of business has not a sensitive officious view of intervention in case of every rivalry between two groups of directors; prudence demands that the Court (now CLB) should ordinarily keep itself aloof from participating in quarrels of rival groups of directors or shareholders.
6. But where the meeting can be called only by the directors and there are serious doubts and controversy as to who are directors or where there is a possibility that one or other or both the meetings called by the rival groups of directors may be invalid, the Court (now CLB) ought not to expose the shareholders to uncertainties and should hold that a position has arisen which makes it "impracticable" to convene a meeting in any manner in which meetings of the company may be called.
7. The Court (now CLB) should exercise its power under section 186, when, upon considering all the facts and circumstances of a case, it can with a reasonable approach to certainty or even prima facie that a meeting called in the manner in which meetings are ordinarily called under the Act or under the articles, would be invalid.
8. Before the Court (now CLB) exercises its discretion under section 186, the Court (now CLB) must be satisfied when a director or a member moves an application, that it has been made bona fide in the larger interests of the company for removing a deadlock otherwise irremovable."
Power after calling meeting.-Power under the Section can be exercised only when, in the opinion of the Company Law Board, it is found impracticable to call a meeting of the Company. After a meeting has been called, the Company Law Board has no power to come and intervene for the purpose of appointing a chairman, regulating the proceedings or advising their course or conduct. If a meeting already convened by the company has become disorderly or otherwise impossible to be proceeded with, the proper course is to apply to the Company Law Board to exercise its powers under the Section. R. Rangachari v. S. Suppiash, (1975) 45 Comp Cases 641 (SQ.
An outsider cannot be appointed as the observer in a meeting which has been already convened. Menon TMY. Universal Film (India) Pvt. Ltd., (1982) 52 Com Cases 371 (Mad).
Order can prescribe the business to be transacted.-The order of the Company Law Board calling a meeting can also prescribe the business to be transacted at the meeting. Motion Pictures Association, In re: (1974) 44 Comp Cases 298 (Del).
Single Member.-Except in such case, as is mentioned in the Explanation to subsection (1), a single member cannot constitute a meeting. [Re, London Flats Ltd., (1970) 1 Comp LJ 28].
Filing.-A certified copy of the order of the Company Law Board under this Section should be filed with the Registrar of Companies concerned along with Form No. 2 1.
Companies having paid-up share capital of less than Rs. 2 Crores but equal to or more than Rs. 10 lakhs are required to obtain a Compliance Certificate from a secretary in whole-time practice to be filed with the Registrar of Companies mentioning therein inter alia that the annual general meeting for the financial year ended on a specified that was held on a particular date after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose and the extraordinary meetings were held during the financial year after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose as per paragraphs 6 and 7 of the Form of Compliance Certificate appended to the Companies (Compliance Certificate) Rules, 2001.
Variation within the same class, if possible.-The articles of a company invariably make provision for meetings of different classes of shareholders, with a view to enabling a specified majority of a class to bind all of them to a variation of the rights of the class.
Section 106 of the Companies Act provides that where the share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued share capital of that class or with the sanction of a Special Resolution passed at a separate meeting of the holders of the issued shares of that class
(a) if provision with respect to such variation is contained in the memorandum or the articles of the company; or
(b) in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of the issue of the shares of that class.
Regulation 3 of Table 'A' of Schedule I to the Act, contains a standard article for the variation of rights of a particular class of shares. This regulation reads as follows:
(1) If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of sections 106 and 107, and whether or not the company is being wound up be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of Special Resolution passed at the separate meeting of the holders of the shares of that class.
(2) To every such separate meeting, the provisions of these regulations relating to General Meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class in question.
The provisions of the particular article must be carefully observed in convening and holding a class meeting, special care being exercised in ensuring that the necessary quorum is present. Carruth v. Imperial Chemical Industries Ltd., 1937 AC 707. It was held, in a case (Homans v. Hotchkiss Ordnance Co., (1899) 1 Ch 115) that where no quorum was present at a class meeting convened pursuant to an article similar to the one in Table 'A', and the meeting, therefore, stood adjourned in accordance with the provisions in that respect relating to General Meetings, the quorum prescribed by the articles for the holding of a class meeting was still required at the adjourned meeting, and those members present who held less than one-third of the shares of the class were not a sufficient quorum.
Any modification of the rights conferred either at the time of issue of the series of the particular class of shares, or any commutation, abrogation or alteration of the conditions of the issue may be deemed to be a variation of the terms or rights and may attract the provisions of section 106 of the Act subject, however, to the provisions contained in the articles of the company. What amounts to variation of rights and privileges of a class of share has always been a matter of drawing a fine line and a very delicate legal issue. The usually accepted notion is that if the variation of right(s) attached to a class of shares is somehow prejudicial to that class, it amounts to a variation. But enhancement of right(s) of such class of shares which is rather beneficial to the class as a whole is not prejudicial to the class and may not be deemed to amount to variation of right and may not attract the provisions. A variation which merely affects the enjoyment of a right without modifying the right itself does not come within this section. In re : Hindustan General Electric Corporation, AIR 1959 Cal 679: 62 Cal WN 889.
The variation contemplated by section 106 is not any variation adding to or enhancing rights of any class of shareholders. A cancellation of preferred shares by repayment of the capital paid upon those shares and in accordance with the right attached to those shares does not involve a variation of the rights of any other shareholders of the company. In re: Saltdean Estate Co. Ltd., (1968) 3 All ER 829 : (1969) 39 Comp Cases 387. Sub dividing of any class of shares which has the effect of diminishing the voting power of other shares cannot be said to affect the right attached to any shares. Greenhalgh v. Arderne Cinenias Ltd., (1946) 1 All ER 5 12. Abrogation or decreasing and affecting the right to vote is really a variation pre , judicially affecting the rights of' the class of shareholders so affected, but from the above legal decisions, it may be concluded that simple variation of' voting power though attached to the particular class of' shares did not give rise to a cause of action under the aforesaid section as it is felt that mere variation of voting rights within the normal activities of the company does not amount to variation of rights.
It' a variation is affected in a manner satisfying the provisions of the section and in accordance with the memorandum and the articles, the variation becomes complete and effectual and no further step is necessary. In re: Rampuria Cotton Mills Ltd., 63 CWN 11: AIR 1959 Cal 253. Where a variation of the right(s) of a class of shares is part of a scheme of' arrangement carried through Court of law under section 391 of the Act, the provisions of either section 106 or the relevant articles do not have any application. In re: Hindustan General Electric Corporation, AIR 1959 Cal 679: 62 Cal WN 889. Thus, the conditions to the issue of a class of' shares, together with the conditions as laid down in the Memorandum or the Articles of Association of a company are the criteria to be followed to find out as to whether or not there has been any variation of' rights attached to that class of shares. In the event neither the memorandum nor the articles of the company provide any clause in record to variation of rights, then the applicability of section 106 of the Companies Act becomes a non-issue.
Section 107 of the Act provides a remedy against unfair use of the power to modify the rights of any class of shareholders. It provides that holders of 10 per cent or more of the shares of the class may apply to the Court to get the variation cancelled if they are affected by the variation and in such a case the variation will not be effective unless confirmed by the Court. This application must be made to the Court within twenty-one days from the date of the consent given or the resolution passed. The shareholders presenting the above application to the Court should be the persons who have not consented to or voted in favour of the resolution for the variation. On getting the order of the Court, a copy of it must be filed with the Registrar of Companies within thirty days of the service of the order on the company.
Annexure 'B' to the Companies (Central Government's) General Rules and Forms, 1956, prescribes the procedure to be followed in any class meeting.
The guidelines in regard to the meeting of the debenture- holders are usually contained in the trust deed entered into between the trustees for the debenture-holders and the company covering the issue of a particular series of debentures. Otherwise the company can also follow the guidelines laid down in Annexure C to the Companies (Central Government's) General Rules and Forms, 1956, referred to in rule 7 of the said Rules. The practice followed with regard to the meeting of the debenture-holders is as follows :
(a) The trustee or the trustees or the company respectively may at any time convene a meeting of the debenture- holders. Whenever the company is about to convene any such meeting, it shall forthwith give notice in writing to the trustees of the place, day and hours thereof and of the nature of the business to be transacted. The trustee(s) shall convene such meeting upon a requisition in writing of the holders of one-fifth or more of the nominal amount of the debentures for the time being outstanding.
(b) At least clear 21 days' notice specifying the place, day and hour of the meeting should be given prior to any meeting of the debenture- holders and such notice should be given by post to all the debenture-holders. It is not necessary to specify in any such notice the nature of the business to be transacted at the meeting thus convened.
(c) In any such meeting, persons holding or representing by proxy or attorney one quarter of the nominal amount of the debentures for the time being outstanding shall form a quorum for the transaction of business and no business shall be transacted at any meeting unless the requisite quorum be present at the commencement of the business.
(d) Some person nominated by the trustee(s) shall be entitled to take chair at any such meeting and if no such person be nominated or if at any such meeting the person nominated shall not be present within ten minutes after the time appointed for holding the same, the debenture- holders present shall choose one of their members to be the Chairman. The trustee(s) and his solicitors and any Director and any member may attend any such meeting.
(e) If within half an hour from the time appointed for any such meeting of the debenture-holders a quorum is not present, the meeting shall stand adjourned to the same day in the next week at the same time and place and if at such adjourned meeting also a quorum be not present, the meeting shall stand dissolved.
(f) Every question submitted to a meeting of the debenture- holders shall be decided in the first instance by a show of hands and in case of an equality of votes, the Chairman shall both on a show of hands and at the poll have a casting vote in addition to the vote or votes (if any) to which he may be entitled as a debenture- holder or as a proxy or attorney of a debenture- holder.
(g) At any General Meeting of the debenture-holders, unless the Chairman considers it expedient that a poll should be taken or unless a poll be demanded by at least three debenture-holders present in person or by proxy or attorney, a declaration by the Chairman that a resolution has been carried or carried by any particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
(h) If at any meeting, the Chairman considers it expedient that a poll should be taken or a poll be demanded by three or more debenture- holders present in person or by proxy or attorney, it shall be taken in such manner and either at once or after an adjournment as the Chairman directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
(i) The Chairman may with the consent of any such meeting adjourn the same from time to time and from place to place.
(j) Any poll demanded at any such meeting on the election of the Chairman or on any question or adjournment shall be taken at the meeting without adjournment.
All meetings of the debenture-holders are in the nature of General Meetings and generally the above procedure outlined above is followed. The matters that are dealt with at the General Meeting of the debenture-holders are usually the following:
(i) sanctioning the release of any of the mortgaged premises;
(ii) handing over the possession back to the company;
(iii) sanctioning any abrogation, modification or compromise of the right of the debenture holders against the company or against the mortgaged premises whether such rights shall arise under the debenture or otherwise but concerning their rights;
(iv) according assent to any abrogation of modification of the provisions contained in the trust deed proposed by the company and recommended by the trustee(s); and
(v) according assent, subject to such conditions and stipulations as may be prescribed, to the issue of further debentures ranking either pari passu or otherwise to the series of existing debentures.
The company should record the minutes of all resolutions and proceedings of the General Meeting of the debenture-holders in the books to be provided at the expense of the company and the same should be signed by the Chairman thereof either immediately or by the Chairman of the next succeeding meeting of the debenture-holders.
While the Chairman is the key figure in conducting a meeting, enjoying as he does, certain privileges and preferences at the meeting, the Secretary is the king pin whose duty covers the whole gamut of the process of General Meeting either before the meeting itself or after it is over and he is the man behind all the arrangements for the smooth conduct of a meeting by the Chairman.
The Companies (Amendment) Act, 1988, has brought the definition of 'Secretary' in line with the definition of 'Company Secretary' in the Company Secretaries Act, 1980. Section 2(45) now defines 'Company Secretary' a person who is a member of the Institute and includes any other individual possessing the prescribed qualifications and appointed to perform the duties which may be performed by a Secretary under this Act and any other ministerial or administrative duties.
Every company having a paid-up share capital as may be prescribed by the Government from time to time shall have a whole-time Company Secretary and where the Board of Directors of any such company comprises only two Directors, neither of them shall be the Secretary of the Company (section 383A). The Central Government has prescribed that every company having a paid-up share capital of Rs. 50 lakhs and above shall have a whole-time Company Secretary.
Companies (Amendment) Act, 2000 has inserted proviso to sub-section (1) of section 383A w.e.f. 13-12-2000 to provide that every company having a paid-up share capital of Rs. 10 lakhs or more but less than Rs. 2 crorest must file a certificate with the Registrar of Companies from a secretary in whole-time practice in such form and within such time and subject to such conditions as prescribed by the Companies (Compliance Certificate) Rules, 2001.
If a company fails to comply with the provisions of sub-section (1) of section 383A, the company and every officer of the company who is in default will be punishable with fine of upto Rs. 5001- for every day during which the default continues.
In the list of duties of a Secretary under several sections of the Act, his main function appears to consist of reporting matters to the Registrar or other authority, to certify certain documents either for filing or for records, and nowhere the Act specifically fixes his duties or functions in regard to the General Meeting. Functions of a Secretary, no doubt, varies between one company to another but some of the duties, such as convening of a General Meeting and helping the Chairman in conducting such a meeting are common to all Secretaries of all companies. Although the duty of a Secretary largely consists of ministerial or administrative duties, the duty to maintain several registers required under the Companies Act or helping the Board in its functions to organise meetings etc. may as well be considered as statutory duty.
The usual duties of a Secretary in relation to a General Meeting start much before the date of the meeting. His duties in this regard are threefold, beginning with
(a) formalities to be completed in regard to approval of the notice of the meeting etc., that is, functions prior to the meeting and continuing with;
(b) functions at the meeting and ending with;
(c) formalities subsequent to the meeting.
His functions in regard to an Annual General Meeting and other meetings are
(1) The issue of notices for the Statutory Meeting (section 165); Annual General Meeting under section 166 or if asked by the Company Law Board under section 167; calling of Extraordinary General Meeting on requisition (section 169); class meetings pursuant to the provisions of the Memorandum or the Articles of Association of the company and of the debenture- holders in terms of the provisions in the trust deed covering the issue of the debentures. These duties he performs on express authority of the Board of Directors. As regards form of a notice in convening any of the meetings as mentioned above except an Annual General Meeting convened under the direction of the Company Law Board (section 167), the Board of Directors at a prior Board meeting decide the contents of the notice and the business to be transacted thereat. Except with the express authority of the Board of Directors, the Secretary cannot issue a notice of a General Meeting including class meetings and debenture-holders' meeting.
(ii) It is his duty to see that each notice of a General Meeting specifies the place (which should be either the registered office or some place within the local limit of the registered office of the company), the day and hour of the meeting and a statement of items of business to be conducted thereat (section 172). A General Meeting must be held on a working day of the company and should begin at convenient business hours.
(iii) The statutory requirements under section 173 in regard to ordinary business, special business, notice of an ordinary resolution and Special Resolution are to be strictly observed in drafting the notice of the meetings.
(iv) The circulation of notice of a resolution pursuant so section 188 of the Act, dealing with the notice and, if necessary, circulating notice under section 257 through press with the approval of the Board of Directors; serving notice of every General Meeting to the Auditors of the company (section 172) and the Pubic Trustee, where applicable, in terms of section 153 B read with section 187B.
(v) A proviso added to section 172(2) enumerates the provisions of section 53 in regard to service of notice through press advertisement requires.
That where the notice of a meeting is given by advertising the same in a newspaper circulating in the neighbourhood of the registered office of the company under sub-section (3) of section 53, the statement of material facts referred to in section 173 need not be annexed to the notice as required by that section but it shall be mentioned in the advertisement that the statement has been forwarded to the members of the company. In order to avoid any lapse on the issue of notice to the members of the company, it has become customary for a company to publish the contents of a notice of the Annual General Meeting or other meeting in a newspaper circulating in the neighbourhood of the registered office of the company in the manner as provided in section 172.
(vi) Section 53(3) provides that a document advertised in a newspaper circulating in the neighbourhood of the registered office of the company shall be deemed to be duly served on the day on which the advertisement appears, on every member of the company who has no registered address in India and has not supplied to the company an address within India for the giving of the notices to him.
(vii) Any medium or big company's shares are usually listed with one or more recognised Stock Exchanges in India. It is the duty of the Secretary to notify the ,exchange' at least two days in advance of the date of the meeting of its Board of Directors at which the recommendation of declaration of a dividend or a right or a bonus issue of the passing over of dividend is due to be considered as per the listing Agreement.
It is also his duty to intimate to the 'Exchange' by a letter or if the meeting is held outside the local limit, then by telegram, immediately after the meeting of the Board of Directors (preferably within the next twenty-four hours of the meeting) held to consider any of the items mentioned herein below :
(a) All dividend recommended or declared or the decision to pass any dividend or interest payment;
(b) the total turn-over, gross profit/loss, provisions for depreciation, tax provisions and net profits, for the year (with comparison with previous year) and the amounts appropriated from reserves, capital profits, accumulated profits of past years or other special source to provide wholly or partly for the dividend, even if this calls for qualification that such information is provisional or subject to audit. It is also necessary to notify the 'Exchange' at least twenty-one days in advance of the date on and from which the dividend will be payable and to arrange to issue the dividend warrants which shall be encashable at par at all the branches of its bankers, simultaneously so as to reach the shareholders on or before the date fixed for payment of dividend.
(c) before the notice of the relevant General Meeting but immediately after the meeting of its Board of Directors, the Secretary should arrange to intimate the 'Exchange' the decision of the Board in regard to following matters :
1. Short particulars of any increase of capital whether by issue of bonus shares through capitallsation, or by way of right shares to be offered to the shareholders or debenture- holders, or in any other way;
2. Short particulars of the re-issue of forfeited shares or securities, or the issue of shares or securities held in reserve for future issue, or the creation in any form or manner of new shares or securities or any other rights, privileges or benefits to subscribe to;
3. Short particulars of any other alteration of capital, including calls;
4. Any other information necessary to enable the holders of the listed securities of the company to appraise its position and to avoid the establishment of a false market in such listed securities.
(viii) It is also necessary to arrange sending out of notices of the General Meeting in time pursuant to the provisions of section 171 read with section 53, giving clear twenty-one days' notice for convening an Annual General Meeting, that is excluding the time for service of a notice of General Meeting (forty-eight hours) if sent by post in accordance with the provisions of section 53(2)(b). In large companies, the envelopes containing notices convening the Annual General Meeting (also for other General Meeting) are either addressographed or computorised, and it is necessary to ensure that changes of address, dividend request and other instructions are noted on the plates or a new card prepared well in advance of the last day for sending out the notices.
(ix) Where the meeting is to be held at a place other than the registered office of the company, adequate arrangement should be made by the Secretary for holding of the meeting beforehand.
(x) In some cases, the Secretary of the company is entrusted not only with the collection of relevant facts and figures for the preparation of the aforesaid reports, but also probably deputed to prepare the Directors' Report for the approval by the Board. Section 217 dealing with the requirement for the preparation of the Board's report enumerates certain information to be statutorily included. These are :
(a) the state of company's affairs;
(b) the amounts, if any, which it proposes to carry to any reserves in such balance-sheet relative to report;
(c) the amount, if any, which it recommends should be paid, by way of dividend.
(d) material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the balance-sheet relates and the date of the report.
Preparation of Director's Report.-These are some of the items of the long list of requirements for the preparation of a Directors' Report under section 217. The Board's report shall also have to include a statement giving full particulars of employees, if employed throughout the year who were in receipt of remuneration of not less than Rs. 24 lakhs or such other amount as may be prescribed and if employed for a part of the financial year who were in receipt of remuneration of Rs. 2 lakh p.m. or such other amount as may be prescribed, under the Companies (Particulars of Employees) Rules 1975.
By the Companies (Amendment) Act, 1988, the companies are now required to disclose the prescribed particulars regarding conservation of energy, technology absorption, foreign exchange earnings and outgo. The particulars of those employees who are drawing remuneration higher than the remuneration drawn by managerial personnel and holding not less the 2% of the equity share capital have also to be disclosed in the Directors' Report. If the Secretary is entrusted with the preparation of the Chairman's speech, he should give the details and adopt the features of general type, such as fiscal policy affecting the particular trade, national and international and current political considerations in general having regard to the general impact on the industry as a whole.
By the Companies (Amendment) Act, 1999 w.e.f. 31-10-1998, companies are also required to specify in the Board's report the reasons for the failure, if any, to complete the buy-back within the time specified in sub-section (4) of section 77A. By the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, companies are further required to include in the Board's report a Directors' Responsibility Statement indicating therein the matters specified in sub-section (2AA) of section 217.
(xi) The agenda of a General Meeting, in addition to covering the matters referred to in the notice of the meeting, should contain the names of proposers and seconders of motions, if available at the time of preparation of the agenda and the copies should be distributed to the Directors who are present at the General Meeting as also the proposers and seconders and those who have a direct interest in the proceedings.
(xii) Secretary should keep ready at the meeting all statutory books of general meetings, such as, register of directors' shareholdings, minutes book, register of members (where necessary), etc. along with sufficient blank pads, poll cards, printed copies of the accounts and Chairman's report and Chairman's Speech copies of Memorandum and Articles of Association and the documents which are mentioned in the explanatory statements, if any.
(i) Recording of attendance of the members-It is the duty of the Secretary that persons who are entitled to attend the meeting are only accommodated inside the meeting hall. He should arrange to receive the attendance slips from the members attending the meeting at the gate and, if occasion arises, the signature in the attendance slips verified with the signature of the members recorded with the company. Though very difficult, he may arrange the proxies to be segregated from the general members for the systematic conduct of the meeting. The arrangement should also include preparation of lists of members and the proxies at the gate itself from the information collected from the attendance slips and making available the list to the Chairman of the meeting before the meeting starts.
(ii) After the Chairman takes the chair, the first thing for the Secretary to perform is to read the notice of the meeting, but this formality is usually obviated by the members present by their acceptance of the 'notice' for the meeting as read. The Secretary is to present at the commencement of every Annual General Meeting the register of directors' shareholdings and shall allow the register open and accessible to any member during the commencement of the meeting [Section 307(7)].
(iii) Either the Secretary himself or any other person appointed by him, should read the full Auditor's Report to the members, before the company in General Meeting. In addition, he should also see that any member may have an easy access to the Auditor's Report for inspection. As the reading of the Auditor's report is a statutory obligation pursuant to section 230, (although time consuming) the Chairman and the assembly of the members should go through the formalities laid down in section 230.
(iv) Reading of Chairman's report in the meeting is not compulsory but it is helpful if the Chairman's report, in printed form, is circulated to the members before the meeting. It is more or less customary to give publicity of the Chairman's report through press. The secretary should take steps to book space in relevant newspapers beforehand and release the text of the report immediately after the meeting.
(v) It is helpful to keep a stenographer or arrange for tape recorders to record in detail of the proceedings of a General Meeting. The questions put by the members and the answers given therefor by the Chairman may form part of the proceedings, though not the minutes. The selection of parts of such proceedings as minutes, however, depends largely on the Chairman of company.
(vi) The Secretary should, as far as possible, assist the Chairman of the meeting in conduct of the meeting and, if necessary, point out the provisions of the relevant sections of the Companies Act and the Articles of Association in matters being dealt with at the meeting. He should also assist the Chairman to count the votes cast by show of hands etc. for and against any resolution and advise him the results thereof. In case poll is demanded by the members, he should advise the Chairman the relevant provisions of the Act and the articles therefor.
There are several other matters for which the ultimate responsibility lies on the Chairman, although the Secretary's assistance and advice are often sought to sort out any problem so as to ensure that the meeting is a valid meeting, that all necessary formalities have been complied with, that a quorum is present, and that a resolution passed at the meeting has been validly passed.
The Secretary's duty in relation to a General Meeting continues till all the papers/documents are filed or reported and proceedings of the meeting are minuted and recorded in the minute book(s) besides
(1) The questions put by the members and the answers given thereto by the Chairman neatly reproduced should be sifted and approved by the Chairman of the meeting. The ,Chairman has discretion with regard to the inclusion of such materials as part of the proceedings of the meeting. [Sec. 193(5) Explanation].
(ii) The matters discussed and resolutions passed at the meeting collected together, and /then the minutes of the meeting should be recorded immediately after the meeting. In preparing the minutes, the Secretary should see that these recordings are expressive, in concise form, of the business transacted at the meeting; the names of the proposers and seconders of each motion is recorded with a note to the effect that the motion was put to the vote by the Chairman and duly carried. The draft minutes should be approved by the Chairman before writing them in the minute books.
(iii) The Secretary should see that in recording the minutes of a General Meeting, the provisions of section 193 are strictly observed. He should take care to see that in no case the minutes of the proceedings or any of General Meeting are attached to the pages of the register maintained for recording the minutes, that is, the entire minutes of the proceedings and the resolutions passed thereat are completely entered in writing up the book within thirty days of the conclusion of every such meeting; that each page of such minute book is initialled or signed by the Chairman of the meeting and the last page of the record of proceedings of each meeting in such books is dated and signed. The minute books should be in bound form and their pages consecutively numbered.
(iv) The Secretary is responsible for seeing that an annual return of the company (having a share capital) is filed in the prescribed form within sixty days from the day on which Annual General Meeting is held (Section 159 of the Act). The said return shall be in the form set out in Part II of Schedule V of the Companies Act, 1956, or as near thereto as circumstances admit and where the return is filed, even though the Annual General "Meeting has not been held on or before the latest day by which it should have been held in accordance with the provisions of the Companies Act, the company should file with the return a statement specifying the reasons for not holding the Annual General Meeting. Every sixth year's return must be a full return. [Section 159 (i) proviso].
(v) The Annual Return, where it is to be filed by a company whose shares are listed on a recognised Stock Exchange, the copy of such Annual Return shall also be signed by a Secretary in whole-time practice. A Secretary in whole-time practice is one who has been given a Certificate of Practice by the Institute of Company Secretaries and who is not in full time employment (S. 45A).
(vi) Filing of distribution schedule under the listing agreement-Most of the medium and large sized companies , shares are listed with any one or more than one of the recognised Stock Exchanges in India for dealing in shares of the company. The listing agreement provides a provision under which a company is obliged to file with the Stock Exchange immediately after each Annual General Meeting a schedule in the form prescribed by the Stock Exchange showing the distribution of its securities listed on the exchange as on the date of the Annual General Meeting and the names and holdings of large holders as required therein.
(vii) The filing of return is one of the duties of the Secretary which should be done preferably within one month of the holding of the Annual General Meeting of the company. Separate forms should be completed for each class of security, e.g., debentures, preference shares, ordinary shares, etc. Similarly, separate forms should be completed for shares of the same class which are not identical in all respects. Shares are identical in all respects only if
(a) they are of the same nominal value of the same amount per share has been called up;
(b) they are entitled to dividend at the same rate and for the same period so that distribution of the dividend payable on each share will amount to exactly the same sum net and gross; and
(c) they carry the same rights in all other respect.
In the case of a firm or limited company where the shares have distinctive numbers, the holding of each partner or the Directors of the company should be shown separately. The distribution schedule which has been prescribed for the purpose of reporting the shareholdings of the members is more or less the same for all for recognised Stock Exchanges in India because of the standardization maintained among the different Stock Exchanges. For the form of distribution schedule, see Annex. 4.
(viii) Secretary's function to supervise the filing of various returns immediately after the Annual General Meeting or Extraordinary General Meeting is quite elaborate:
(a) pursuant to section 220, he is to see that after the balance-sheet and the profit and loss account as laid before the company at the Annual General Meeting, three copies of these are filed with the Registrar within thirty days from the date duly authenticated under the signature of either the Managing Director, Manager or Secretary of the company or by a Director together with three copies of all the documents which are required by this Act to be annexed or attached to such balance-sheet or profit and loss account.
(b) pursuant to section 192, a Secretary is to arrange filing of a copy of every resolution (together with a copy of the statement of material facts annexed under section 173 to the notice of the meeting in which such resolution has been passed) or agreement in Form No. 23" to which this section applies within thirty days of the passing or making thereof and under the signature of an officer of the company.
Filing of Resolution. -According to the clarification given by the Department of Company Affairs to the FICCI, thirty days would start from the date on which all information has been received by the company. Section 92 applies to
(i) Special Resolutions;
(ii) resolutions which have been agreed to by all the members of a company but which, if not so agreed to, would not have been effective for the purpose unless they had been passed as Special Resolutions;
(iii) any resolution concerning appointment, re-appointment or renewal of the appointment or variation of the terms of appointment of a Managing Director either passed at a General Meeting or Board of Directors' meeting of the company;
(iv) resolutions or agreements passed or agreed upon at a meeting of the particular class of shareholders;
(v) resolutions according consent to the exercise of power to the Board of Directors by the members of the company at a meeting under clauses (a), (b) and (d) of sub-section (1) of section 293;
(vi) resolutions approving the appointment of sole selling agents under section 294 or section 294AA; I
(vii) copies of the terms and conditions of appointment of sole selling agent(s);
(viii) resolutions requiring a company to be wound up voluntarily passed pursuant to sub-section (1) of section 484.
Where the Special Resolution is passed in connection with the alteration of the Articles of Association, a copy of the resolution should be annexed to every copy of the articles issued after the passing of the resolution. The company need not annex a copy of the resolution to its articles unless it has received clearance to the proposal contained in it and where it does not issue a copy of the articles after the passing of the resolution. [Letter No. 8/35(192)/6 I-PR, dated 31-1-1962].
Secretary's duty in regard to a General Meeting starts usually from the making of an arrangement of a Board meeting to consider the annual accounts, Directors and the Auditors' report thereon and a notice to convene a General Meeting including approval of the contents thereof.
Usually the Secretary is authorised by the Board to sign the notice which forms part of the booklet containing balance-sheet and the profit and loss accounts. The Secretary is the person who usually arranges for the printing and circulation of the notice of a General Meeting along with the accounts of the company in stipulated time.
Notices are also to be given to the Auditors, the bankers, and the concerned Stock Exchange if the shares of the company are listed. Necessary arrangement is also to be made to record all proxies coming at least forty-eight hours before the time of the meeting and for newspaper insertion regarding closing of the registers of the members/debenture holders in terms of section 154 of the Companies Act, 1956.
All transfers/change of address or any other change during the notice period should be very carefully noted and arrangement should be made to complete the register of members/debenture-holders immediately and for preparation of the new addressograph to send out copies of the accounts to the newly registered members.
A General Meeting, be it an Annual General Meeting or any other General Meeting or a meeting requisitioned by the members pursuant to section 169 of the Act, may be called by giving not less than twenty-one days' notice in writing. The provisions of section 171 should be read with the provisions of section 53 of the Act dealing with the procedure for service of documents on members by the company and if the document is a notice of a General Meeting or any of the aforesaid meetings the service shall be effective only at the expiration of forty-eight hours after the letter containing the same is posted. Annual General Meeting or any other General Meeting may be called after giving shorter notice with the concurrence of the members of the company
(i) in the case of an Annual General Meeting, by all the members entitled to vote thereat; and
(ii) in the case of any other meeting, by members holding 95 per cent of the paidup share capital with a right to vote at the meeting or members holding not less than 95 per cent of the total voting power where the company has no share capital.
Motion is the proposition placed before a meeting for the members' consideration. When a proposition in the form of a motion is placed, the members present are free to ask any question relevant to the issue (or even as often happens outside the realm). But when a meeting is convened and held under the orders of the Court, any motion for amendment of resolution not coming within the terms of the Courts' order may be rejected by the Chairman. Bello v. Co-operative Navigation Co., (1924) 26 Bom LR 907.
In every General Meeting of the members or class meeting and meeting of the debenture-holders, the meeting starts with the Chairman being elected unless there is a Chairman of the Board of Directors who is usually entitled to be the Chairman in any General Meeting or the class meeting of the members as per provisions of the articles.
The Chairman should enquire of the Secretary who is present at the meeting if quorum is present in accordance with the articles of the company/provisions of the Companies Act, 1956. With the quorum being present, the Chairman may proceed with the business placed before the meeting for which due notice was served on members.
After the preliminaries, the Chairman invites comments of the members on the reports and accounts placed before the members. This is the stage for discussion, and members in a well attended meeting, invariably rise and speak in support of or in opposition to the accounts 'or ask for various other information including comparative performance by other companies belonging to the same industry. The duties of a Chairman are to preserve order in the face of various odds and take a cautious and patient view as far as practicable in order to properly ascertain the sense of the meeting with regard to any question before it. National Dwelling Society v. Sykes, (1894) 3 Ch 159.
Discussions being over, the Chairman would as k the proposer of the motion to read out the business before the members viz., 'that the profit and loss account and the balance sheet as at along with the Directors and Auditors reports' thereon be received and adopted'. Sometimes, some of the members may want to modify the formal motion by counter motion or amendment which may or may not be in order. Here, the Chairman has to exhibit his tact and presence of mind, especially if the meeting is divided into distinctly two groups, one in favour of the motion and the other against it.
A motion has to be proposed by a member before it is placed by the Chairman for the consideration of the members. Usual procedure that is followed in every General Meeting is to get each motion seconded. Of course, legally it is not necessary that any motion put to a meeting should be seconded either by the Chairman or by any member. Berar Trading Co. Ltd. v. Gajanan Gopal Rao Dixit, (1972) 42 Comp Cases 48. If the Chairman acts bona fide, a motion can be put before the members without its having been proposed by a member, provided that the members clearly understand the matter on which they are voting.
A Chairman conducts the meeting by virtue of his being the Chairman and irrespective of whether or not he is a member of the company.
After a motion has been placed before the meeting, the members present can put any question to the Chairman relating to the motion under consideration. If the members are satisfied with the explanation given by the Chairman or he has no comments to offer, the Chairman puts the proposal in the form of resolution for passing by the members by show of hands. Section 177 of the Act lays down that at any General Meeting a resolution put to vote shall, unless a poll is demanded under section 179, be decided on a show of hands. Regulation 56 of Table 'A' of Schedule I to the Act provides that on a show of hands, every member present in person shall have one vote on the principle of 'one man one vote'. In a voting by show of hands, the duty of the Chairman, unless the articles otherwise provide, is to count the hand held up and to declare the results accordingly, without regard to the number of votes that a member holding the hand possesses. Unless the articles of a company otherwise provide, a proxy shall not be entitled to vote except on a poll (section 176). The Chairman should be cautious enough to see that no proxy participates in exercising voting right of the proxy holders by show of hands. Even if articles provide for proxies voting on a show of hands, if a proxy is himself a member, he cannot be counted except for himself as a member on a show of hands as on a show of hands each hand can be taken into account for one vote only, although it may be the hand of the member for himself or as a proxy for an absent member. If a proxy is a nonmember, his hand will not be counted for the member whom he represents, because of the provisions of section 9 of the Act, allowing the Act to override memorandum and the articles of a company.
Where a corporation is represented by a person (section 187), the corporate body is deemed to be 'present in person' within the meaning of either the articles or the Companies Act, 1956 and its vote will be counted on a show of hand. In re : Kelantan Coconuts Estates, 1920 WN 274. In the case of an interested Director, although he is not entitled to vote as Director in a Board Meeting, in respect of any contract in which he is interested (section 300), he is, nevertheless, entitled to vote in furtherance of his own interest when voting as a shareholder at a General Meeting. North West Transportation Co. v. Beat6, (1887) 12 App Cases 589.
As between shareholders and company, the only person entitled to the right of voting is the person whose name is entered in the register as a shareholder. Neither an executor of a deceased member nor the receiver of an insolvent member can exercise the right, unless he gets himself registered as a member. In re : Tata Iron and Steel Co. Ltd., AIR 1938 Bom 80.
In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be entitled to vote only on poll and the company shall accept such vote to the exclusion of the votes of other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members. But, it should be ensured that proxy form is executed on behalf of all the Joint holders.
Pursuant to the provisions of section 178 of the Companies Act 1956, the Chairman, on a show of hands, would declare results of the voting and passing of the resolution. But, immediately after the declaration of the results by the Chairman, on a show of hands, a poll can be demanded by the required number of members having voting rights.
A poll indicates voting by the members on the basis of their holding of shares in the share capital of the company, having voting rights as against the principle of 'one man one vote' by show of hands which is considered as a rough and ready method of taking the sense of the meeting. Pursuant to section 179 of the Act, demand for poll may be made
(i) before or on the declaration of the result of the voting on any resolution on a show of hands by the Chairman;
(ii) a poll may be ordered to be taken by the Chairman of the meeting of his own motion and shall be ordered to be taken by him on a demand made in that behalf by
(a) In the case of a public company having a share capital by any member or members present in person or by proxy and holding shares in the company
-which confer a power to vote on the resolution not being less than one-tenth of the total voting power in respect of the resolution, or
-on which an aggregate sum of not less than Rs. 50,000/-has been paid up;
(b) in the case of a private company, by one member having the right to vote on the resolution and present in person or by proxy if not more than seven such members are personally present andby two such members present in person or by proxy if more than seven such members are personally present; or
(c) in the case of any other company by;
(d) any member or members present in person or by proxy and having not less than one tenth of the total voting power in respect of the resolution.
(iii) The demand for a poll may be withdrawn at any time by the person or persons who made the demand.
It is mentioned that a poll can be demanded by persons of required number or any person(s) holding proxies. In the case of a public company where proxy is held by a single person for five or more members, there is nothing in the Companies Act 1956, to prohibit his demanding a poll in his capacity as proxy for all these five members. The words used in section 179(l) of the Act are 'before or on the declaration on the result of voting etc.' which signify that a poll may be demanded before the result of the vote by show of hands. Thus, the wording enables a poll being demanded and ordered to be taken even without going through the formalities of show of hands. CF. Holmes v. Lord Keys, (1958) 2 All ER 129 : (1958) 28 Comp Cases 419. As regards right to vote, standard articles of any company would make follow' Ing provisions:
(a) No member shall be entitled to vote at any General Meeting unless all calls or other sums presently payable by him in respect of shares in the company have been paid (Regulation 59 of Table 'A'). The disability under this regulation has been held to attach also to a buyer or re-allottee of the shares forfeited so long as the calls on the shares remained unpaid. Rendt Gold Mining Co. v. New Balties Erstelling Ltd., (1903) 1 KB 461 (CA).
(b) Where the shares having voting rights are held by the trustees, only the first name will be allowed to exercise his vote.
(c) A member of unsound mind or in respect of whom an order has been made by any Court having jurisdiction in lunacy may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll, vote by proxy (Regulation 58 of Table 'A').
(d) No objection can be raised as to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any objection made in due time should be referred to the Chairman of the meeting, whose decision is final and conclusive. (Regulation 60 of Table 'A').
(e) On a poll, each member or proxy is entitled to one vote for each share (having voting right) held as per the register of members.
Paragraph 6.3.1 of Secretarial Standard-2 provides that a member present in person or by proxy shall, on poll, have votes in proportion to his share of the paid up equity capital of the company, subject to differential rights as to voting, if any, attached to certain shares as stipulated in the articles of association or by the terms of issue of such shares.
Section 179 dealing with demand for poll has been amended by the Companies (Amendment) Act, 1988, considering wide dispersal of shareholdings. The amendment has been made to ensure that the shareholders having some minimum specified interest should alone demand a poll.
Earlier the Act provided that a poll can be ordered by the chairman of the meeting on demand made by the person or persons specified below:
(a) in the case of a public company by at least five members having the right to vote on the resolution and present in person or by proxy,
(b) in the case of a private company by one member having the right to vote on the resolution and present in person or by proxy if not more than seven such members are personally present and by two such members present in person or by proxy if more than seven such members are personally present,
(c) by any member or members present in person or by proxy and having not less than one-tenth of the total voting power in respect of the resolution, or
(d) by any member or members present in person or by proxy and holding shares in the company conferring a right to vote on the resolution being shares on which an aggregate sum has been paid-up which is not less than one-tenth of the total sum paid up on all the shares conferring that right.
Now the poll can be demanded
(a) in the case of a public company with share capital by any member or members present in person or by proxy, holding 1/10th of the voting power or holding shares up to the paid-up value of Rs. 50,0001-;
(b) in the case of private company with share capital, by one member present in person or by proxy (if there are up to 7 members) or two members (if there are more than 7 members);
(c) in the case of any other company, any member holding 1/10th of the voting power.
A private company which is not subsidiary of a public company, if it makes its own provisions by its articles as regards the matters in this section, is not bound to follow the provisions of this section
The Company Law Board has held that where a valid demand of poll has been made and the chairman refused it, the business on the agenda for which poll was demanded and which was carried through by show of hands became invalid. Namita Gupta v. Cachar Native Joint Stock Co. Ltd., (1999) 98 Com Cases 655 (CLB).
Paragraph 6.3.1 of Secretarial Standard-2 [ICSI] provides that while a proxy cannot speak at the meeting, he has the right to demand or joint in the demand for a poll.
When at a General Meeting poll is demanded in respect of more than one resolution, each resolution must be put to the poll separately. Blair Open Hearth Furnace Co. Ltd. v. Reigart, (1913) 108 Law Times 665.
Section 180 of the Act provides for the time of taking, that is,
(i) a poll demanded on a question of adjournment shall be taken forthwith;
(ii) a poll demanded on any other question (not being a question relating to the election of a Chairman which is provided for in section 175) shall be taken at such time not being later than forty-eight hours from the time when the demand was made, as the Chairman may direct.
Though the Chairman may fix the time of taking the poll, he cannot, as long as votes are coming in, close the poll on the ground that the period of time allotted by him is over. But after waiting for some time and affording reasonable time to the voters to cast their votes, if no more voters are turning up, he, may declare the poll closed. If he closes the voting time improperly or allows insufficient time to the possible voters to cast their votes, the poll will be invalid.
Where there is a break-down of the voting arrangement on a poll or on the date fixed for taking poll, the incident or the accident shall not be taken as plea to end the taking of poll, even if the forty-eight hours' period would have expired by then. The Chairman, in such circumstances, must appoint and notify another date for the poll and give an opportunity to voters to have the poll taken on that appointed date. He cannot refuse to grant the poll. M.K. Srinivasan v. Watrap Subramania 1yer, AIR 1932 Mad 100.
Section 182 of the Act prohibits any restrictions on the exercise of voting rights. Thus a public company or a private company which is subsidiary of a public company, shall not prohibit any member from exercising his voting right on the ground that he has not hold his share or other interest in the company for any specified period preceding the date on which the vote is taken, or on any other ground except the restriction put on voting due to calls in arrears.
Paragraph 8 of Secretarial Standard-2 provides for conduct of poll. Sub-paragraph 8.1 provides that when a poll is demanded on any Resolution, the Chairman should get the validity of the demand verified and should order the poll forthwith, if it is demanded on the question of appointment of the Chairman or adjournment of the Meeting, and, in any other case, within forty eight hours of the demand for poll. Sub-paragraph 8.2 provides that in the case of a poll which is not taken forthwith, the Chairman should announce at the Meeting the date, venue and time of taking the poll and duration of the poll to enable Members to have adequate and convenient opportunity to exercise their vote. The Chairman should also announce that any Member who so desires may be present at the time of counting of votes. Sub-paragraph, 8.3 provides that each Resolution on which a poll is demanded should be put to vote separately. Sub-paragraph 8.4 provides that the Chairman should appoint two scrutineers to ensure that the scrutiny of the votes cast of poll is done fairly, accurately and properly. At least one of the two scrutineers should be Member who is not an officer or employee of the company.
Based on the scrutineers' report, the Chairman should declare the result of the poll, with details of the number of votes cast for and against the Resolution and the final result as to whether the Resolution has been carried or not. Sub-paragraph 8.5 provides that the result of the poll should be displayed on the notice board of the company at its Registered Office and its Corporate/Head Office, if such office is situated elsewhere, and also placed on the website, if any, of the company. In the case of listed companies with more than 5,000 Members, the result of the poll should also be published in a leasing newspaper circulation in the neighbourhood of the Registered Office of the Company.
Section 183 of the Act confers right to a member proxy to vote differently. Thus on a poll taken at a meeting of a company, a member or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes in the same way for all the resolutions. The purpose of this section is to afford a trustee of a trust which holds shares in a company to vote differently according to the wishes of the beneficiaries, or it may happen that the same trustee(s) is a member of more than one trust and it may be inappropriate for the trustee whose name appears on the list of members to use all the votes belonging to the different trusts in the same way. The total votes split trustwise may be exercised by the trustee according to the wishes or interest of the beneficiaries. It is only on a poll that this distributive method of voting is possible, for on a show of hands no member can register more than one vote. Mahaliram v. Fort Gloster Jute Manufacturing Co. Ltd., (1954) 24 Comp Cases 311.
On acceptance of the demand for poll, whether taken immediately or at an adjourned meeting and with the beginning of the process, each member/proxy should be given a poll card to record his vote in favour of or against the proposed resolution. A specimen of a poll card (in a very simple form) is given in Annex. 5. In this specimen instead of writing the full resolution or resolutions, provision has been made only to provide for the number of the proposed resolution as it appears in the notice of the meeting. The card is provided with two columns under the heading 'For' and 'Against'. In case the member votes in favour of the resolution, he can tick mark the portion meant for that and put in his name and signature in that portion. The process will be the same in case he votes against the resolution, with the difference that he will put in his tick mark to indicate that he is against the resolution.
When at a General Meeting poll is demanded in respect of more than one resolution, each such resolution must be put to the poll separately. Blair Open Hearth Furnace Co. Ltd. v. Reigart, (1913) 108 Law Times 665. Of the two scrutineers appointed one shall always be a member present at the meeting provided such a member is available and willing to be so appointed. Such a member should neither be an employee or officer of the company.
Section 184 of the Companies Act, 1956, casts the duty on the Chairman of the General Meeting to appoint two scrutineers to scrutinise the votes given on the poll and to report thereon to him. The Chairman shall have power, at any time before the result of the poll is declared, to remove a scrutineer from office and to fill vacancies in the office of scrutineer arising from such removal or from any other cause. Of the two scrutinisers appointed under this section, one shall always be a member (not being an officer or employee of the company) present at the meeting, provided such a member is available and willing to be appointed.
Quite often, the Chairman, on demand of a poll adjourns the meeting for the purpose of taking poll within the statutory period of forty-eight hours. This adjournment is necessary to allow the secretarial staff time for the preparation of taking poll. Some companies maintain list of members showing the names and addresses of the members and their holding of shares. This type of list or register may be conveniently kept ready at the beginning of the meeting. The list usually serves two purposes, namely
(a) to check the attendance slips collected at the time before the meeting commenced; and
(b) to make a scrutiny of the entitlements of the votes of the members/proxies while counting number of votes 'for' or 'against' the proposed resolution.
The only lacuna of the procedure is that the list or the register cannot be used as a record for specimen signature also, as it is usually done in the case of register of members.
The scrutinisers will first collect the attendance slips and arrange them alphabetically if the turn-out of the members is heavy. They will then check up with either the list or register or the register of members and find out whether the attendance slips are correct. Thereafter they will put the serial code and the name of the members on the poll cards following the serials as appear either in the list or the register of members. Proxies are also to be similarly treated, with the only difference that both the names of the members and the proxy should be recorded on the poll cards. At the back of the poll cards, the number of shares held by the members may also be put from the basic records and the cards distributed serially to the members present. The members/proxies exercising their votes for or against the resolution should put their specimen signature on the cards as recorded with the company. In case of any doubt, the scrutineers may arrange checking the specimen signature as recorded with the company in the register of members. If any member or proxy has split his vote differently, then it is to be carefully looked into. The scrutineers or the secretarial staff employed by the company may then arrange collection of the poll cards recording votes for or against the motion, and record immediately in sheets of paper the codes and the numbers of votes for or against the motion. The two scrutineers should come closer to help each other. Thus, after collection of the poll cards, one of the scrutineers may keep with him only those cards casting vote in favour of the motion and the other against the motion. A member voting as proxy for another will record his own name and signature indicating the name of the proxy. The two scrutineers, after preparation of the lists may exchange the papers and the poll cards for each other's scrutiny to ensure correct recording of the votes 'for' and 'against' the motion. After satisfying themselves that the list recording votes 'for' and 'against' have been correctly recorded, the scrutineers appointed by the Chairman of the meeting shall submit in writing the result of the poll to the latter. The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken. There is no set form in which the report of the poll result is to be submitted by them. Neither Table 'A' of the Schedule I of the Companies Act nor any of the sections provide for any such form. A suggested form of report to be made by the scrutineers to the Chairman of the meeting is given in Annexure 6.
Usually, the poll procedures are not embodied in the articles of a company and, therefore, these may vary from company to company in minor details. As regards the manner of taking poll and results thereof, section 185 of the Act provides that the Chairman of the meeting shall have power to regulate the manner in which a poll shall be taken, and that the result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll is taken. The Chairman, however, cannot substitute his opinion or decision on the report of the results of the poll made by the scrutineers. He may check the cards and the statements recording the votes 'for' and 'against' once again and if there is any patent or latent mistake, he may cause the scrutineers to change the results in accordance with his findings and the altered results will be results of the voting on the resolution(s) placed before the meeting,
In regard to a meeting, where poll is taken, it should be considered as a continuing one until the ascertainment of the result of the poll. Holmes v. Lord Keys, (1958) 2 All ER 129: (1958) 28 Com Cases 419.
Statutory limitation of time to take a poll within forty-eight hours must be honoured, but once a poll has started, there is no limitation of time up to which the process of poll is to be continued. If poll could not be concluded in one day, the same may be repeated in the day next following if such day is not a holiday. Thus, a meeting reconstituted after poll is continuance of the same meeting and the poll itself is part of the meeting. Jakson v. Hamlyn, (1953) 1 All ER 887.
In conducting a General Meeting, the Chairman should take utmost precaution that the whole proceedings of the meeting remain unbiased and at no stage tinged with motive of protection of interest of the majority. The majority cannot refuse the minority a fair hearing. A shareholder is entitled to be heard in reasonable terms and for a reasonable time. The question whether a denial of his right vitiates a resolution depends on the circumstances of each case. Wall v. London & Northern Assets Corporation, (1898) 2 Ch 469.
Should an amendment be moved, this should be disposed of before the original question is voted upon. The following points regarding the amendments should be noted:
(a) An amendment which is not strictly within the scope of the notice convening the meeting is out of order.
(b) Amendments substantially altering the motion or a new motion cannot be put through without proper notice but a poll may be ordered to sense the tune of the meeting as to whether such amendment should be accepted or not. In the meantime, pending poll, the Chairman may direct that, 'this meeting do proceed to the next business'.
(c) A motion should be considered out of order if it aims to prevent the consideration of the reports and accounts with a view to either adopting or rejecting them. Thus, it will be out of order to accept a motion 'that the report and accounts be received, but not adopted'.
(d) Only one amendment at a time should be considered, and an amendment put when another amendment is under consideration should be ruled out of order.
(e) If the Chairman improperly refuses to put a valid and reasonable amendment, the resolution carried will be invalidated. Henderson v. Bank of Australia, (1890) 45 Ch D 330.
When the views of the minority have been fairly heard, the Chairman may move the closure and, if the motion is carried by the meeting, he may declare the discussion closed and put the question to vote. It was observed in a case (Wall v. London & Northern Assets Corporation, (1898) 2 Ch 469) that where a minority complained of the Chairman stopping discussion as to closure, it should be contended that the Chairman, supported by the majority, could not put a termination to the speeches of those who were desirous of addressing the meeting. The meeting should allow a small minority or even a member or two to tyranise over the majority.
A standard clause is added in almost all articles to the effect that the Chairman of the meeting shall have a casting vote and in case of equality of votes, both on a show of hands and on a poll, he will be entitled to casting vote in addition to the vote to which he may be entitled as a member. The clear emphasis is the Chairman's reserve power to take things to a conclusion and this casting vote is exercisable in appropriate cases by him even if he is not a member of the company. If the articles do not have any provision with regard to the casting vote of a Chairman. he cannot exercise a casting vote.
It may be observed that the casting vote is a special entitlement of a Chairman of a meeting and such vote can be used only in such cases where there is an equality of valid votes either on a show of hands or on a poll. This special right, however, should be used sparingly if the Chairman's reputation for impartiality is to be preserved. A motion may be lost if he declines to exercise his casting vote in favour. The Chairman may give a contingent or hypothetical casting vote to come into force if it should subsequently appear that there is an equality of valid votes. Bland v. Buchanan, (1920) 2 K13 75.
Paragraph 6.4 of Secretarial Standard-2 [ICSI] provides that if the articles of association so provide, the chairman shall have a casting vote.
Section 178 of the Act confers a statutory power to declare that a resolution has been carried or lost and unless a poll is demanded, if it is to be deemed conclusive evidence of the fact in the case of any resolution, either ordinary or special. The question as to how many votes were in fact given cannot afterwards be discussed. Arnot v. United African Lands Co., (1901) 1 Ch 518 : 17 TLR 245. But a declaration which is erroneous on the face of it in point of law is not conclusive. In re : Caratal New Mines, (1902) 2 Ch 498 (1900) 3 All ER (Rep) Ext 1259.
Results by voting by poll is declared by the Chairman by mentioning so many votes in favour and so many votes against and calling the resolution as carried or not carried.
Where a resolution is passed at an adjourned meeting of
(a) a company; or
(b) the holder of any class of shares in a company; or
(c) the Board of Directors of a company,
the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed and shall not be deemed to have been passed at any earlier date. Resolution passed at an adjourned meeting is not to be taken as passed on the date of the original meeting. This, in substance, contradicts the accepted dictum that an adjourned meeting is a continuation of the original meeting and that at an adjourned meeting only such business that has been left incomplete at the original meeting, can be dealt with unless new notice is properly given as required by sections 171, 172 and 173 of the Act.
But at the same time any resolution passed at an adjourned meeting cannot be given retrospective effect from the date of the original meeting but has to be given effect from the date of its passing.
SCHEDULE - IX
(See Article 62 of the Table 'A' and also Section 176(6))
FORM OF PROXY
.................. Name of Company
I/We of in this district of being a member/members of the above-named company, hereby appoint .................................................. of in the district of or failing him ... ..................... of in the district of as my/our proxy to vote for me/us on my/our behalf at the annual general meeting/general meeting (not being an annual general meeting) of the company to be held on the day of and at any adjournment thereof.
Signed this day of
Form for affording members an opportunity of voting for or against a resolution
................. Name of Company
I/We of in the district of being a member/members of the above-named company, hereby appoint ......................... of in the district of as my/our proxy to vote for me/us on my/our behalf at the annual general meeting/general meeting (not being an annual general meeting) of the company, to be held on the day of …… 20… and at any adjournment thereof.
Signed this day of 2002
This form is to be used in favour of/against the resolution. Unless otherwise instructed the proxy will act as he thinks fit.
FORM OF PROXY
Name of the Company .............................................................................
Registered Office.... .
I/We of being a member of the above-named company, hereby appoint the following as my/our Proxy to attend and vote [on a poll] for me/us and on my/our behalf at the Annual General Meeting/General Meeting of the Company, to be hold on at a.m./p.m. and at any adjournment thereof:
1. Mr./Mr…………………………………………… (Signature), or failing him
2. Mr./Mr……………………………………………. (Signature), or failing him
3. Mr./Mr……………………………………………. (Signature), or failing him
I/We direct my/our Proxy to vote on the Resolutions in the manner as indicated below:
Resolution No. I
Resolution No. 2
Resolution No. 3
Resolution No. 4
Number of Shares held Signature of Proxy
Affix 30 Paise
Signed this day of 2003 ...............................
Reference Folio No/DP ID & Client ID Signature of Member
Delete if the Articles give a proxy-holder the right to vote even on a show of hands.
1. The Proxy, to the effective should be deposited at the Registered Office of the Company not less than FORTY-EIGHT HOURS before the commencement of the Meeting.
2. A Proxy need not be a member of the Company.
3. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote of the other joint holders. Seniority shall be determined by the order in which the names stand in the Register of Members.
4. This form of Proxy confers authority to demand or joint in demanding a poll.
5. The submission by a member of this form of proxy will not preclude such member from attending in person and voting at the Meeting.
6. This is optional. Please put a tick mark (P) in the appropriate column against the Resolutions indicated in the Box. If a member leaves the 'For' or 'Against' column blank against any or all the Resolutions, the proxy will be entitled to vote in the manner he/she thinks appropriate. If a member wishes to abstain from voting on a particular Resolution, he/she should write "Abstain" across the boxes against the Resolution.
7. In case a member wishes his/her votes to be used differently, he/she should indicate the number of shares under the columns 'For' or 'Against' as appropriate.
ANNEXURE - 2
Form of an attendance slip
RUSHABH MANAGEMENT & INFOSYS.
301, Pitru Ashirwad,
Opp. CNS Bank
Anand – 388 001
Please complete this attendance slip and hand it over at the entrance of the venue of the meeting
I hereby record my presence at the Annual General Meeting held on the 2002 at the compound of the ............. at Anand – 388 001.
Name of the shareholder ......................... (in block letters)
Signature of the shareholder/proxy ..........................
Reference Folio .........................
ANNEXURE - 3
Form of list of members for the use at a Statutory Meeting
RUSHABH MANAGEMENT & INFOSYS
List of members for submission to the Statutory Meeting
(Pursuant to sub-section (6) of section 165 of the Companies Act, 1956)
Names of the Address Occupation Number of Distinctive
members shares held by number of
each member shares
ANNEXURE – 4
Form of distribution schedule
(To be made out for each class of security)
(Name of the Company)
Distribution of ……….. as on ……………. 2002
(kind of security)
Total nominal value Rs . .........................................
Nominal value of each share/unit Rs ......................
Total number of shares ...........................................
Paid-up per share Rs ...............................................
Number of share Share (or debenture) holding of Number of shares or de
holders (or deben- nominal value of bentures amount in Rs.
Up to 10,000
1, 00, 001 and above
Name of the highest holders Number of shares (or debentures)
amount in Rs.
Names of the Directors, Managing Director and Manager
Official relation ship to the company
Number of shares (debentures) amount in Rs.
(Signature of Managing Director)
Dated, the 2002
Note : Separate forms should be completed for each class of securities, i.e., debentures, preference shares, equity shares, etc. Similarly, separate forms should be completed for shares of the same class which are not identical in all respects. Shares are identical in all respects only if
(i) they are of the same nominal value and the same amount per share has been called up;
(ii) they are entitled to dividend at the same rate and for the same period so that at the next ensuing distribution of the dividend payable on each share will amount to exactly the same sum net and gross; and
(iii) they carry the same rights in all other respects.
ANNEXURE - 5
Form of poll card
RUSHABH MANAGEMENT & INFOSYS
ANNUAL GENERAL MEETING HELD ON:
Votes cast on Resolution No. (SEVEN)
Membership No. Membership No.
Remarks : Scrutineer(s)
If the meeting is an Extraordinary General Meeting score off the word 'Annual'.
ANNEXURE - 6
Form of report by the scrutineers
REPORT BY THE SCRUTINEERS
On the results of the poll taken as
on 2002 Resolution No
RUSHABH MANAGEMENT & INFOSYS
We, ABC and BCD, having been appointed by you as the Scrutineers to arrange poll on proposed Resolutions Nos. 3 and 5, forming part of the notice dated …….the …….2002 vof the Annual General Meeting of the company held on ......................... 2002 have scrutinised the poll papers. We have verified the signatures thereon with the specimen maintained by the company. We have also examined the proxies. We have found all the ballot papers in order. The results on poll on the above proposed resolutions which are as under:
Proposed Resolutions Votes in favour Votes against
No. 3 3,52,720 36,500
No. 5 2,17,390 1,71,830
Place: Anand Sd/ABC Sd/-BCD
Date: 2002 Scrutineer Scrutineer