Law by Deepika Rathi

MANAGEMENT AND ADMINISTARTION 7

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Chapter -7 MANAGEMENT AND ADMINISTARATION

Chapter VII Consist of Section 88 to Section 122 as well as the Company (Management &
Administration) Rules,2014

Applicable Section & Rules in this Chapter

Management & Administration Companies (Management &

[Section 88-122 Companies Act 2013] Administration) Rules,2014

Registers Annual Meetings Pre-requisites of

Sec.88,91 Return Sec.96- meeting Quorum, Resolutions
& 95 Sec. 92-94 102 & 121 chairman, voting Sec. 114-
Sec. 103-120 117

Registers

-Register of members – Rule 3 Form MGT -1

Section 88 -Register of debenture-holders/any other
Register of security-holder –
Members Rule 4 Form MGT-2
-Maintenance of Registers of members etc-
Rule 5
Section 89
-Index of names of members- Rule 6
Declaration i.r.o
- Foreign Register – Rule -7
Registers beneficial interest
in any share
Rule -9 Form MGT-4
MGT- 5, MGT-6
Section 90
Register of significant
beneficial owners

Section 91 Rule -10 – Procedure for

Power of close register of closing the Register of
members or debenture holders Members, debenture- holders
or other security holders and other security holders

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Register of Members Etc. [Section 88]
Section 88(1) Provide that every company shall keep and maintain the
• Register of Members
• Register of Debentures Holders (DH)
• Register of any other security holders (OSH)

Register of Members

Rule 3 :- Particulars in register to be maintained by

o Company Limited by shares shall maintained its register in → FORM MGT-1

o Company Not having share capital shall maintain its register in following
particulars-
 Security Holder details :
• Name of members
• Address (registered office address in case the member is a body
corporate
• Email Address
• Permanent Account Number(PAN) or Corporate Identity Number (CIN)
• Nationality
• In case of member, name and address of the nominee
 Date of becoming the member
 Date of cessation
 Amount of guarantee (if any)
 Any other interest (if any ) and
 Instructions if any given by the member with regard to sending of notices.
Etc.

For existing companies when transitioning to the Companies Act, 2013, member
details from the Companies Act, 1956 register are transferred to the new register
(Form MGT-1).
Any additional information required by the new Act 2013 can be added when provided
by members.

Register of Debenture Holders (DH) / Any Other Security Holders

Rule -4 : Maintenance of register of debenture holders

Every Company which issue debentures or any other security shall maintain a separate
register in FORM MGT-2.

Time Period for Entries in Register [Rule -5]

0 days 7 days
Date of approval by the Board
or Committee on allotment or Entry should be made in register
transfer of shares.

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Place of Maintaining Register [Rule -5]

Generally maintained at the registered office of the

company

If company wants to maintain at-

 Other place within the city, town or village in which Company shall
company is registered then OR pass Special
 Other place in India in which more than 1/10th of the resolution in
total members entered in the register of members General Meeting
resides.

Other Information Also to be Referred in Register [Rule -5]

o Any order passed by the competent authority attaching the shares or relating to
dividends AND
o Particulars of any Charge, Lien, Pledge or hypothecation of any securities of the
company is also required to be entered.

Updating of Change in Status of Members [Rule -5]

o If any change occurs in the status of

- Members
- Debenture Holder (DH)
- Other Security Holder (OSH)
o Whether due to
- Death or
- Insolvency or
- change of name or
- due to transfer to Investor Protection Fund (IEPF) or
- Due to any other reason
o Entries thereof shall be change in respective register.

Rectification in Register [Rule -5]

If the company makes corrections to the register under Section 88 due to an order
from the competent authority, the register must reflect a reference to that
specific order.

Index Name [Section 88(2) & Rule -6]

Index Name {Section 88 (2) & Rule 6}

o Every Register maintained U/s 88(1) Shall have an index of name.
o Exception: → Maintenance of Index is not necessary where the No. of Members is
less than 50.
o The company shall make entries in the index simultaneously with the entry for
allotment or transfer of shares.

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Register Index of Beneficial Owner to be maintained of Depository [Section 88(3)]

Register + Index of beneficial owners maintained by →Depository shall be deemed to

be corresponding register and index for purposes of this Act.

Foreign Register [Section 88(4) read with rule 7]

Maintenance of Foreign Register

o Meaning :→ “A Sperate Register maintained outside India of foreign security
holders (Share/Debentures/ Other security holders/ beneficial owners) to record
the transactions’’.
o Condition : → Article of Association must authorized. It is optional to maintained.
o Features :
 It is a deemed part of principal register and shall be maintained in same
format as the principal register.
 Foreign register is kept in any country outside the INDIA.
 Rectification of the register shall be binding by the decision of the
appropriate competent authority in this regard.

Opening of • File a Notice

 in FORM MGT- 3 Registrar of
Foreign Register
 Along with Prescribed Fees Companies
by the Company
• About the Situation (Address) of Office
0 days where Foreign Registered maintained 30 days

 Foreign register shall be maintained inthe same format as the principal register.

 Inspection & Closure of Foreign Register

Foreign Register shall be

- Open for Inspection and
- Copy of extracts may be taken therefrom and
- May be closed,
• provided before closing advertisement must be published in 2 newspapers
circulating in the place where foreign register is maintained.
• All the entries of Foreign Register must be merged in some Other Foreign
Register or Principal Register.

 If a company maintains a foreign register outside India, the decision of the

relevant competent authority concerning register corrections will be legally
binding.

 Making entries in Foreign Register : Shall be made after the Board of Directors
or its duly constituted committee approves the allotment or transfer.

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Transmission of a copy every entry :

Date of entry made in

Foreign Register
Transmit Registered
every entry Office
0 Days 15 Days
made
Foreign Company
 Company shall keep at the Registered Office a duplicate register of every
foreign register duly updated from time to time
 Duplicate Foreign Register shall be part of Principal Register
 While shares, debentures, or other securities are registered in a foreign
register, no transactions related to them should be recorded in any other
register during that foreign registration's validity.

• Discontinuance • File a Notice

• Any change in  in FORM MGT- 3 Registrar of
address of Companies
 Along with Prescribed Fees
Foreign Register • About such change or discontinuance
0 days 30 days

Penalty for Failure to maintain register in accordance with the provisions of section
88(1) & (2)

Company : Penalty Rs. 3 Lakhs Offence under this section is a

Every officer of the Company : Penalty Rs. 5Lakhs Compoundable Offence U/s 441

Details of Nominations in the Register

 Details of Nomination Shall be Filed in

 FORM MGT -1 (Share Holders)or
 FORM MGT -2 (Debenture Holders or Other Security Holder)

Authentication of Entries
 Entries in the Register maintained U/s 88 and Index included therein shall be
authenticated by
- Company Secretary or
- any other person authorized by the Board for the purpose
 Entries in the Foreign Register shall be authenticated by
• Company Secretary of the company or
• Person authorized by the Board by appending his signature to each entry.

Preservation of Register of members : Preserved → Permanently

o Kept in custody of → Secretary of company or any other person authorized by the
board for such purpose.

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Preservation of Register of debenture holders and other security holder :
Preserved → 8 years form the date of redemption of debentures or securities
o Kept in custody of → Secretary of company or any other person authorized by
the board for such purpose.

Deceleration in Respect of Beneficial Interest in any Share [Section 89]

 Meaning of Beneficial Interest (For the purpose of section 89 & 90) {Section
89(10)} “Right or entitlement of the person alone or with other person
• Whether Directly or indirectly
• Through contract or arrangement or otherwise
• In a share
i. To exercise any or all rights attached or
ii. To receive dividend or other distribution in respect of such shares”.
(In General sense:- The right to receive ultimate benefits on shares held by another
person.)

Section 89(1)
• Person whose name is
entered in Register
but not holding
beneficial interest
shall file a declaration
in
• Form MGT -4

Section 89(2)
• Person whose name
is entered in
Register and holding Within Within
beneficial interest 30days 30 days
shall file a
declaration in
• Form MGT -5 Registrar of
Companies
The company from the date of
Section 89(3)
receipt of declaration shall
• Any change in above
• Make a note of such declaration in
sections shall file
the Register concerned and
declaration either in
• File a return in Form MGT-6 to
• MGT-4 or
• MGT-5 as applicable

 Consequence of non-filling of declaration:→

o Any right with respect to such shares shall not be enforceable by the beneficial
owner or any person claiming through him.
• Such other Fund as may be approved by SEBI.

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 Exemption from filling of declaration u/s section 89 :→
o Trust created to setup
• Mutual Fund or
• Venture Capital Fund or
 Central Government may by notification any class(es) of person form complying with
the requirements with any of requirements of section 89 except sub-section (10)
{Newly inserted section}
o if it is considered necessary to grant such exemption in the public interest and
o any such exemption may be granted either unconditionally or subject to such
conditions as may be specified in the notification.

Note :→The above mentioned exemption shall be applicable to those Government

Company which has not committed a default in filing its
 Financial Statement under section 137 or
 Annual Return under section 92 With registrar
Penalty

Person Liable Nature of Penalty In case of Maximum up to

contravention continues
failure
To person Fails to make ₹ ₹ 200/- per ₹ 5 lakhs.
[Sec -89(5)] declaration under 50,000/- day
section 89 (1) (2) & (3)
of the Act.
Company Fails to file the return ₹ 5 lakhs.
[Sec-89(7)] to ROC within 30 days N/A ₹ 1,000/-per
Every officer in day ₹ 2 lakhs.
default

Register of Significant Beneficial Owners in a Company [Section 90]

Applicability of Section & Rules :
1. Section 90 of the Companies Act 2013
2. Companies (Significant Beneficial Owners) Rules 2018 &
3. Companies (Significant Beneficial Owners) Amendment Rules 2019

Definition of Significant Beneficial Owner :

As per section 90 of the Companies Act 2013

Every Individual
Alone or together or through one or more persons or
Who acting
trust (Including a trust & person resident outside India)
Holds beneficial of not less than 25% or such other percentage as may be
Interest prescribed

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In shares of a company or the right to exercise or the actual exercising of
significant influence or control as defined in clause (27) of section 2, over the
company.
o As per (Significant Beneficial Owners) Amendments Rules 2019
An Individual
i. Alone or together or through one or
Acting
ii. more persons or trust

Possess One or more of the following rights or entitlements

i. Holds indirectly or together with any direct holdings not
less than 10% of shares
ii. Holds indirectly or together with any direct holdings not
less than 10% of the voting rights in the shares
iii. Has right to receive or participate in not less than 10% of
the total distributable dividend or any other distribution in
a financial year through indirect holdings or alone, or
together with any direct holdings.
iv. Has the right to exercise or actually exercises, significant
influence or control in any manner other than through direct
holdings alone.

Crux of Definition of Significant Beneficial Owner (SBO)

1. SBO is an Individual
o who either alone or together with other individuals or trust
o Exercise rights or entitlements in the Reporting Company
o By way of
i. Holding 10% shares or
ii. 10% voting rights or
iii. Receive 10% or more dividend
iv. Both indirect and direct holdings or right taken or such individuals
exercise significant influence or control, indirectly or along with direct
holding.
o In Reporting Company
2. As per (Significant Beneficial Owners) Amendments Rules 2019 Individual who
does not hold any indirect right or entitlement as mentioned in (i) (ii) or (iii)
above will not be considered be a significant beneficial owner.

Significant Influence : Means Majority Stake : Means

Power to participate, directly i. Holding more than 1/2 of the
or indirectly o Equity share capital in the body corporate or
o in the financial and o Voting rights in the body corporate or
operating policy decisions ii.Having the right to receive or participate in more
of the reporting company than 1/2 of
o but is not control or jointly o The distributable dividends or
control of those policies. o Any other distribution by the body corporate.

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Proceeding of Section 90

The Reporting Company Shall take necessary steps to identify

its SBO.

In case of persons, being non- individuals In case of all other persons,

members of the company holding not less whether they are members or not.
than 10% of the shares or voting rights.

Whether the company has reasonable

cause to believe that, a person is a SBO
or has knowledge or any information
about SOB ?
The company shall give notice in Form BEN-
4 to every such person, seeking information YES NO
relevant for identifying the SBO.

The person provides the relevant The person fails to provide the
information information or provides information
which is not satisfactory
SBO is NO SBO is Identified
Identified
The company shall apply to the Tribunal
Cause that individual for the Order directing Restricting
file a declaration in rights attached with shares.
Form BEN-1 with the
company
Person aggrieved by order Can apply
within 1 year to Tribunal
On receipt of declaration
the Company shall file a
Return in Form BEN-2 with
the Registrar within 30 Otherwise after 1 year
days of received of shares are transferred
deceleration by SBO Whenever there is a to IEPF (U/s 125)
Change in significant {Investor Education
beneficial ownership of and Protection Fund}
an individual.
The Company shall
maintain a Register
Containing details of
SBO and charges
therein in Form BEN-3

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Non Applicability of Amendments Rules 2019 to
a. Investor Education & Protection Fund Authority
b. Holding Company which has complied with section 90 & Amendments Rules
(already Filed declaration BEN -2)
c. CG, SG and local authority
d. Entity wholly or partly controlled by CG and/or SG.
e. Investment Vehicles (Mutual Funds, alternative investment funds, Real Estate
Investment Trust and Infrastructure Investment Trusts registered with SEBI)
f. Investment Vehicles regulated by RBI, IRDA, Pension Fund Regulatory and
Development Authority.
Exemption to Government Company → Section 90 shall not apply to Government
Company Above Exemption shall to Only those Government Companies which has not
defaulted in filing of
a. Financial Statement U/s 137 or
b. Annual return U/s 92

Person Nature of Penalty In case of Maximum

Liable contravention continues failure up to
SBO Fails to make ₹ Further penalty ₹ 2 lakhs
declaration under 50,000/- of ₹ 1,000/- for
section 90 (1) of the each day after
Act. the first day
during which the
failure continues
Company Reporting company ₹1 lakh Further penalty ₹ 5 lakhs Contraven
fails of ₹ 500/ each tion by
• to maintain day after first Company
register of SBO day during which and
[Sec-90(2)] or such failure Officer in
• file return of SBO continues Default of
Every with ROC[Sec-90(4 ₹ Further penalty ₹ 1 lakhs provisions
officer & 4A)] or 25000/- of ₹ 200/ each of Section
in • denies inspection. day after first 90 and
default day during which SBO Rules
such failure is
continues compounda
ble
Note: Where the SBO or the Officer in Default intentionally furnishes any false or
incorrect information or suppresses any material information, then they will be liable
for fraud under section 447.

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Register of Significant Beneficial Owners in a Company [Section 90]
Closure of Register of Members/DH/OSH
[Section 91(1) & Companies (Management & Administration) Rules 2014]

• Company can close the register of Members/ Debenture Holders/ Other Security
Holders provided following conditions are fulfilled
 Sent a Prior Notice of 7 days (Or such other less time as specified by SEBI) to
every Member/s or Debenture-Holder/ Other Security Holders
 Prior Public Notice of 7 days must be published in 2 newspapers (English &
Vernacular) having wide circulation in the place where registered office of the
company is situated (Private Company is not required to issue a public notice)
and
 Published on website( if it’s a listed company)

• Maximum time period for closing Register

o 30 days at a stretch and
o 45 days in one full Financial Year

Penalty for Contravention [Section 91(2)]

• Register is closed without giving the notice or short notice

• Company and Every Officer in default is liable to
 Fine Rs. 5,000/- per day maximum up to Rs.1,00,000/-
 The offence is a compoundable offence under section 441.

Annual Return [Section 92 & 94]

Section 92

Particulars/Content of Annual Return

a. Registered office, principal business activities, particulars of its holding,
subsidiary and associate companies.
b. Shares, debentures and other securities and shareholding pattern
c. Omitted
d. Members and D ebenture-holders along with changes therein since the close of
the previous financial year.
e. Promotors, Directors, KMP, along with the changes therein since the close of the
Pervious Financial Year.
f. Meeting of Members or a class thereof , Board of Directors and its various
committee along with attendance details.
g. Remuneration of Directors & KMP
h. Penalty or punishment on Directors, Officers and details of compounding.
i. Matters relating to certification of compliance, disclosures.
j. Details as may be prescribed in respect of Foreign Institutional Investors and
details thereof.
k. Such other matters as may be prescribed.

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• Date on which Annual General Meeting held or
• In case AGM not held :- Last date on which AGM should
have been held (with reasons for not holding an AGM)

0 Days 60 Days

File

Company Registrar of
Companies

o Company Shall file a Annual Return in o Annual Return filed in MGT-7 shall be
• Form MGT-7 certified in FORM MGT-8 by CS in
• MGT- 7A in case of One Person practice in following cases
Company & Small Company • Listed Company
o Signed by • Other company Having
• Companies Other than OPC, Small  Paid-up share capital Rs. 10
Company, Startup Company : Crore or more
 1 Director + CS of the Company or  Turnover Rs.50 Crore or more
Practicing Company Secretary o Every company shall place Copy of
• OPC, Small Company Startup Company: Annual Return on the website of
 CS of the company or where no CS company if any &
Director of the Company o Web link of such annual return shall be
 The Above exceptions/ disclosed in Board Report. (In case of
modifications/ adaptations shall IFSC public company this provision of
be applicable to a private Section 92(3) shall not allowed)
company which has not
committed a default in filing its
financial statements under
section 137 or annual return
under section 92 with Registrar

Penalty for Contravention [Section 92(5)]

Person Liable Nature of Penalty In case of Maximum up to

contravention continues failure
Company Certifies otherwise Rs.2 lakhs N/A N/A
Secretary In than in accordance
Practice with this section
Company Company fails to Rs. 2 lakhs.
Every officer file the Annual Rs. Rs.1,00/-per day Rs.50,000/-
in default Return to ROC 10,000/- lakhs.

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Place of Keeping and Inspection of Registers Return Etc. [Section 94]

Place of Keeping
• Registers (Share Holders, Debenture Holders, Other Security Holders) &
• Annual Return

Registered Office of Any Other place in India

the Company Provided
• 1/10th or more members entered in register of
members, reside in that place in India &
• Special Resolution passed at General Meeting in
this regard.

Inspection
Register & Indices maintained and Copies of Returns shall be open for
• Inspection
• During business hours not less than 2 hours per day

Without payment of fees to With payment of fees

Members, Debenture Holders, Other as specified in Article of Association
Security Holders, other beneficial not exceeding Rs.50 per inspection to
owner Any Other person

Taking Extract
Any member, debenture holder or
security holder or beneficial owner

Can take the extracts Can also get copies thereof

during any business without OR with payment of fee not
payment of any fee exceeding Rs.10 each page

 Such copies or entries or return shall be supplied within 7 days of

deposit of fee.
 Central Government (RD) may order immediate inspection of documents/
extracts to be given to any person.

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Default in allowing inspection and taking extracts
 Company /Every Officer in default : Penalty Rs.1000/ per day Maximum up to Rs.1
Lakh
 Following particulars of the register or index or return in respect of the
members of a company shall not be made available for any inspection under sub-
section (2) or for taking extracts or copies under sub-section (3) of section 94
namely :-
 Address or registered address ( In case of a body corporate)
 E-mail ID
 Unique Identification Number
 PAN Number

Preservation of Registers
Should be in the custody of
• Company Secretary or
• Any other person authorized by the Board for such purpose

Register of Register of Copies of Annual Foreign Register

Members Debentures/ other Return/ Other Permanently unless
Permanently security holder Documents filed with its discontinued or
8 years form the ROC merged with
date of redemption 8 years form the principal register
date filing of
documents with ROC

Pre- Requisites of a Meeting

General Meeting

 It is a meeting of a Company’s Shareholder as per the provisions of the Act.

Two Types of General Meeting

Annual General Meeting Extraordinary General Meeting

 It is a mandatory yearly gathering of  Definition : ‘’A meeting of shareholders
Company’s interested shareholders which is not an AGM’’.
 Objective : To provide an opportunity to
members to discuss the functioning of  Objective : To discuss any matter of
the company and take steps to protect urgent importance which cannot be
their interests. postponed till the next Annual General
 They can discuss any matter relating to Meeting.
the conduct of affairs of the company.

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(b) Board Meeting : Meeting of the Board of Directors of the Company.
(c) Class Meeting : Meeting of special class of persons, like creditors, Preference
Share Holders, etc.
The pre-requisites of the meetings are, in general applicable to all kinds of meetings,
although the time limits may differ and there might be a specific mention of a certain
type of meeting in that section.

Notice of a Meeting [Section 101]

 Authority to Call General Meeting :

• General Meeting (AGM, EGM) has to be called by the Board

• Individual director does not have an authority to call a GM.
• Any Notice of GM given without the sanction of the Board is Invalid, however
same can be ratified by the Board

 Time to Sent Notice

All companies
other than section 21 Clear Days Prior
8 Company To General Meeting

All companies 14 Clear Days Prior

other than section To General Meeting
8 Company
General Meeting
 Meaning of 21 clear days :- Clear days does not include
o Date on which notice is served to members and
o Date of Meeting
 Meetings can be held at shorter notice if consent is obtained in writing or by
electronic mode in case of -
a. Annual General Meeting :- 95% of the members entitled to vote in that meeting.
b. Any Other Meeting :-
o Company having Share Capital: - Majority in number of members entitled to
vote & Representing 95% shares having voting rights.
o Company not having Share Capital :- Members representing 95% voting rights.
 Mode of Sending the Notice [Rule 18 Companies (Management & Administration)
Rule 2014] :
• A notice may be sent through
o E-mail as a
- Text or
- As an attachment to E-mail or
- As a notification providing electronic link or
- Uniform Resource Locator for accessing such notice
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o E-mail to whom ?
E-mail shall be addressed to the person entitled to receive such email
a. As per the records of the company or
b. As provided by the depository

o Opportunity to members to register and update E-mail with company

• The company shall provide an advance opportunity at least once in a
Financial Year to the members
- to register their E-mail addresses and
- to update their e-mail address

o Subject Line In Email

The subject line in E-mail shall state
- The Name of Company
- Notice of the type of meeting
- Place and the date on which the meeting is schedule

o Notice to place on website

The notice of GM shall be simultaneously placed on
a. The website of the company and
b. Such other website as may be notified by CG.
o Notice Sent by Post[Rule 35(6)]
• Where a notice of GM is sent by post it shall be deemed to be served at
expiration 48 hours after the letter containing the same posted.

 Contents of Notice [Section 101(2)] :

A valid notice must contain
• Day, date, hour, place of the meeting and
• Statement of business to be transacted in that meeting.

 Who is entitled to receive the notice of the General Meeting ? [Section 101(3)]
To
 Members
 Legal Representative of deceased member
 Assignee of the insolvent member
 Auditor/Auditors of the company
 Director
Note: -Accidental omission to give notice of GM shall not invalidate the
proceeding of GM. Company has to prove that omission was not deliberate.

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Explanatory Statement to be Annexed to Notice [Section 102]

Explanatory Statement of Section 102

Types of business to be transacted in
General Meeting

ORDINARY BUSINESS SPECIAL BUSINESS

At Annual General Meeting

Following business shall be Ordinary At Annual General Meeting
Business • All business transacted except that
1. Consideration of Financial specified as Ordinary Business in
Statement & Reports of BOD and General Meeting shall be deemed as
Auditor Special Business.
2. Declaration of any Dividend
3. Appointment of Directors in place of At Extraordinary General Meeting
those retiring • Every business transacted is a
4. Appointment & Fixing remuneration Special business.
of Auditors.
Explanatory Statement is not required Explanatory Statement must be
for transacting any item of Ordinary annexed to the notice for transacting
Business. Special Business.

Explanatory Statement must be annexed to the notice for transacting Special

Business which must specify-
a. Nature of concerns or interest (Financial or Otherwise) of-
i. Every director and manager
ii. Every other key managerial person
iii. Relatives of every director, manager and key managerial person
b. any other information and facts that may enable members to understand the
meaning, scope and implications of the items of business and to take decision
thereon.
c. if special business relates to, or affects, any other company, the extent of
shareholding in that other company of every promoter, director, manager and
every other KMP shall be disclosed, if the extent of shareholding is 2% or more
of the paid up share capital of that other company.
d. Where any item of business refers to any document, which is to be considered
at the meeting, the time and place where such document can be inspected shall
also be specified.

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Effect of Non Disclosure [Section 102(4)]

If as a result of Non –Disclosure or Compensate to the

extent of the
Insufficient Disclosure in explanatory
benefit received by
statement
him to
- Any benefit accrues to :→ Promoter,
Director, Manager, Other Key Managerial
Personnel or their relatives,
- such person shall hold such benefit in
trust for the company and
- shall without prejudice to any other
action being taken against him under
this Act or
under any other law for time being in
force be liable to
Company
Penalty for Contravention of (Section 102)
Every promoter, director, manager, or other key managerial personnel or other
officer in default :
 Penalty : ₹.50,000/- or
 5 times of benefits accruing to them

Quorum for Meeting [Section 103]

Meaning of Quorum : → “Minimum Number of members who must be present in order

to constitute a valid meeting”

Quorum U/s 103 for General Meeting shall be as follow

Private Company
2 Members Personally present shall be the Quorum

Public Company having

(1) Up to 1,000 Members 5 Members Personally Present shall be the
Quorum
(2) 1,001 to 5,000 Members 15 Members Personally Present shall be the
Quorum
(3) More than 5,000 Members 30 Members Personally Present shall be the
Quorum

Note :- Article may provide for larger number as the Quorum.

Explanation :- Personally present refers to the members entitled to vote in respect of

items of business on the agenda of the meeting.

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Adjourned Meeting due to want of Quorum

If the quorum is not present within half an hour from the time fixed for holding the
General Meeting than

(A) Any other Case (B) EGM called by

requisitionists U/s 100
 If the Board has not so determined the day, time and
place the meeting shall adjourn to same day time and
place in the next week.
Or
 The meeting shall adjourn to such day, time and place
as may be determined by the Board.
At least 3 days Notice of adjourned meeting shall
be given to the members either
o Individually or
o By publishing an advertisement in 2 Newspaper
(One in English and One in Vernacular Language).
 If at the adjourned meeting also quorum is not present
within half an hour, from the time fixed for holding
General meeting the members present shall be the
quorum.

Points prescribed by Secretarial Standard-2

1. Single individual can act as the authorized representative for multiple companies.
However, when determining the quorum for a meeting, at least two people must be
physically present. For example, in a public company with up to one thousand members
requiring a quorum of five members, an authorized representative of five companies
alone cannot constitute a quorum; they need at least one additional member to be
physically present.

2. Quorum shall be present not only at the time of commencement of the Meeting
but also while transacting business.

3. Members who have voted by Remote e-voting have the right to attend the General
Meeting and accordingly their presence shall be counted for the purpose of Quorum.

4. A Member who is not entitled to vote on any particular item of business being a
related party, if present, shall be counted for the purpose of Quorum.

5. The stipulation regarding the presence of a Quorum does not apply with respect to
items of business transacted through postal ballot.
Section 103 shall apply in case of a Specified IFSC public company, unless
otherwise specified in the articles of the company.

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Chairman of Meeting [Section 104]
 Election of Chairman by members
 Article of Association may specify otherwise
 Members personally present shall elect the Chairman
among themselves by show of hands.
 Demand of poll for election of Chairman

 If a poll is demanded on the election of the chairman, it shall be taken forthwith

in accordance with the provisions of this Act and
 The Chairman elected by show of hands shall continue to be the chairman of
meeting until -

 Some other person is elected as  Such other elected person

and
Chairman as a result of poll shall be the Chairman for rest
of the meeting.

 Power of Chairman
 Manages General Meeting
 Ensures that the required decorum of the meeting is maintained at all times till
the meeting is concluded.
 After conclusion of meeting executes the minutes of the meeting.
 Chairman has prima facie authority to decide all questions which arise at a
meeting and which require decision at the time.
 To fulfil his duty properly he must observe strict impartiality.
 Right to Cast Casting vote
 The Chairman has the power of casting vote in board meeting and GM if so
allowed in AoA.
{Means:- In the event of the equality of vote on particular business being
transacted at the meeting, the Chairman shall have a right to cast a second
vote}
 If not mentioned in AoA, than ordinary resolution on which there is equality of
votes is deemed to be dropped.

 Exemption to Private Company

 Section 104 shall apply, unless otherwise specified in respective sections or
the articles of the company provide otherwise.
 This exception shall be applicable to a private company which has not
committed a default in filing its
• Financial Statement U/s 137 or
• Annual return U/s 92

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Proxies [Section 105]

Meaning of Proxy: Role of Proxy

• Any Member or members of Company A proxy
• Who is entitled to attend and vote at • Has no right to speak at the meeting
a meeting of the company • Has right to attend the meeting
• Shall have right to appoint another • Not counted for the purpose of
person as a proxy quorum
o to attend and • Cannot vote on a show of hands
o Vote • Has right to vote on poll
at meeting • Can demand a poll u/s 109
• On his/their behalf in case unable to
attend the meeting.
Restrictions

A person can act as proxy for more than one member provided it should not more than-

• 50 members or
Which ever is less
• 10% of total voting power

• If one of the member has more than 10% voting rights then
o proxy cannot act as proxy of any other member
o Except such member .

Who can be proxy

• Generally → Member of Company or Non Member

• Section 8 Co. → Only Members
Non applicability of section 105

• Unless the article otherwise provide this section shall not apply to company having
no share capital.
Appointment of Proxy

The Instrument appointing proxy must be in

• FORM MGT-11
• Duly signed by the appointer or attorney.
• If appointer is Body Corporate –
 Should be under seal or
 Signed by officer or attorney.
Appointment Procedure

• Every notice calling a meeting of a company shall state with reasonable prominence
the right of every member to appoint a proxy at the meeting along with FORM
MGT-11.
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• Such form of Proxy shall be received 48 hours before the meeting will be valid,
even if the AOA provide for longer period.
• Such proxy shall be valid for adjourned meetings unless changed by member.
• Where more than 1 proxy form is submitted by the member to the company →
Proxy submitted later shall be considered by the company.(provided it is received
48 hours before the meeting)

Note: Notice of meeting shall clearly state that

• Members who have cast their vote by remote e-voting prior to the meeting may
also attend the meeting
• But shall not be entitled to cast their vote again.

Company in notice of meeting

shall
• State members right to
appoint of proxy &
• Provide FORM MGT-11

Member/s of Company shall

• In Form MGT -11
• Before 48 hours of meeting

Appoint

To
Attend

Meeting
Inspection of Proxies
• Allowed to any member
• During the period beginning with 24 hours before the commencement of GM &
ending with the conclusion of such GM.
• 3 days written notice prior to inspection need to be given to the Company by the
member.

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Penalty for default [Section 105(4)]

Person Nature of Penalty continues Non Applicability of

Liable contravention failure penalty
Every If the notice does ₹ N/A N/A
Officer in not state the proxy 5,000/
default may be appointed -
[Section 105(2)]
Every If an invitation to ₹ Officer shall not be liable
officer of appoint as proxy 50,000 N/A by reason only of the issue
the company and specified /- to member at his request in
who issue person is sent to writing of a form of
invitation as any member of the appointment naming the
aforesaid or company entitled to proxy or of a list of
authorizes attend and vote persons wiling to act a
or permit thereat proxy proxies, if the form or list
their issue [Section 105(5)] is available on request in
writing to every member
entitled to vote at the
meeting by proxy.
Company and If inspection of ₹ ₹ 1,000/- N/A
Officer in proxy is refused to 10,000 per day
default any member during /-
business hours

Voting [Section 106-109]

An Overview

Section -106 Section -107 Section -108 Section -109 Section -110

Restriction on Voting by show Voting by Voting by

Voting of hands Electronic Mode Voting by Poll Postal Ballot

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Restriction on Voting Right [Section 106]

Ground on which voting right may be restricted

 AOA may provide that no member shall exercise any voting right in respect of any
share registered in his name
• On which any amount is due from him on calls or
• On which any other sum payable to the company, or
• In regard to which the company has exercised the right of lien.

Note : - Also such member cannot sign a requisition for an EGM.

 Voting right shall not be restricted on any other grounds. [Section 106(2)]

Use of Vote Differently [Section 106(3)]

On poll taken at a meeting of a company,

• A Member entitled to more than one vote or
• His proxy where allowed or
• Other person entitled to vote for him as the case may be need not
a. Use all his votes or
b. Cast in the same way all the votes he uses.

What happens in case of voting by joint shareholders ?

The Joint Shareholder
 Must vote in consensus
 Otherwise, provision stated in Article shall be apply in this regard.
 In absence of any such procedure, order of seniority is determined on the basis
of the order in which their name appear in the register of members/ shareholder.
 The joint holders have right to instruct the company as the order in which their
name are to appear in the register.

Situation where the directors are also the shareholders of the company.
• Directors, who are also the shareholders of the company, stand in a fiduciary
relationship with the company in their capacity as directors.
• However, a director should vote as a common shareholder would vote in a general
meeting, and need not be influenced by the fact of his being a director.

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Voting by Show of hands [Section 107]

Sub-section 1 Sub-section 2

A resolution shall be decided on a show Declaration by Chairman in the minutes

of hands in first instance, unless- books shall be conclusive evidence that
the resolution is passed.
a. A poll is demanded u/s 109 or (Declaration of the result of a
b. Voting is carried out resolution that the resolution has been
electronically u/s 108 passed or failed as the case may be)

Voting through Electronic Means [Section 108]

Voting By Electronic Mode - SECTION-108 & Rule 20

of Companies (Management & Administration) Rule 2014

Applicability Exceptions

Mandatory option of E-Voting must be

o A Nidhi Company or
given to members of following class of
o A enterprise or institutional investor
companies
referred to Chapter XB or Chapter
o Company which has listed its equity
XC of SEBI Regulation Act 2009
shares on a recognized stock
Not required to provide the facility to
exchange and
vote by electronic means
o Companies having 1000 or more
members.

• A Member may exercise his right to vote through voting by electronic means on
resolution and
• Company shall pass such resolution in accordance with the provisions of this rule.

Notice of the meeting Notice containing the particulars

o Shall be sent to all members o Company is providing facility for E-

directors and auditors by voting and business may transacted
• Registered post/speed post/ through such voting.
registered email Id / courier o Voting through Electronic
service means/ballot/ polling paper. shall also
o Shall also be be made available at the meeting
• Hosted on website of the company member who has not casted their
and of the agency. vote can vote.
• Published in two newspaper o Members who have cast their vote by
(English & Vernacular) remote E-voting may attend the
meeting but shall not be entitled to
vote again.

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Other points to Indicate in Notice

Notice Shall
o Indicate the process and manner of voting
o Time schedule
o Details about Login ID
o Process of generating the Password and casting of vote

Additional Disclosures in Notice of E-Voting

a. Statement → That the business may be transacted through e-voting

b. Date, time of commencement and end of E-voting.
c. Cut off date
d. Person who become member after the dispatch of notice may obtain the login ID
& Password
e. Statement that
a. Remote voting shall not be allowed beyond the said, date & time
b. Manner for voting present at the meeting
c. Member may participate in GM even after casting vote through E-vote but
shall not be allowed to vote again.
d. Only persons whose name is recorded in register of Members or Beneficial
owners maintained by depositories as on the cut off date shall be entitled to
avail the facility of remote E-voting as well as voting in General Meeting.
f. Web address of Company & Agency where notice is displayed.
g. Name, Designation, Address, Email ID and Phone No. of the person responsible to
address the grievances of remote E-voting shall be stated.

Time Limit for E-Voting Appointment of Scrutinizer

o Must be open for minimum 3 days - Appointed by Board of Directors

o Must be close at 5 P.M. on the date after e- voting
preceding the date of GM - Can be 1 or more
- Practicing CA/CS/ Cost
Who can vote Accountant/ Advocate
- Should not be Employee of Company.
o Member having physical Shares or - Function is to count the votes in a
Dematerialized shares fair and transparent manner and
o Once vote casted on resolution cannot prepare a report.
be change subsequently
o E- voting shall be blocked after end of
remote E-voting

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Voting Procedure

Chairman shall at GM after discussion All members who are present at GM

on resolution shall but not have not casted their votes
- allow voting by ballot or polling paper by remote E-voting facility shall be
or by using an E-voting system. allowed to vote at General Meeting.

Counting Procedure
1

• Shall prepare a Report

• Report shall be
After conclusion
Within 3 countersigned by
of voting of
Days Chairman or Other
General Meeting
person authorized by him
Scrutinizer in this behalf
Count the Votes of the
meeting
Shall all time have
access the details Unblock the votes cast
of members who through remote E-voting
has casted their and count in presence of 2
vote in remote E- witness (not employed in
voting. the Company)

2
shall maintain a register either manually or electronically
o To record the assent or dissent
received with details of members.
o Register and all other papers shall remain in the safe
custody of Scrutinizer until minutes are prepared.

Scrutinizer After preparation approval and signing of minutes

Scrutinizer shall hand over the register and other related
papers to the company

Result + Report Shall be

of Scrutinizer placed at

Website

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Listed company Concerned Shall place
shall forward Stock its on their
results to Exchange own website

Demand for Poll [Section 109]

DEMAND FOR POLL - SECTION-109 & Rule 21 of Companies

(Management & Administration) Rule 2014

Before or on Declaration of Result of the voting any resolution by a show of hands

(A) (B)
At discretion of Chairman OR On Demand made by the Specified
A poll may be Ordered to be taken members in that behalf
by the Chairman of his own motion.

In case of Company having share capital In case of any other company

Any member(s) (present in person or Any member(s) (present in person
proxy) holding or proxy) having 1/10th of the total
o 1/10th of the total voting power or voting power
o Paid-up Share capital of not less than
Rs.5,00,000/- or such higher amount Note : Demand for Poll may be
as may be prescribed withdrawn by person who made the
demand, at any time.

Issue on which poll is demanded Time of taking poll

o Adjournment of General Meeting The poll shall be taken forthwith
o Appointment of Chairman of General
Meeting
Any other question The poll shall be taken at such time as
directed by the Chairman (but within 48
hours of demand of Poll)

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Chairman Appoint Scrutinizer
Where poll is
to be taken
of the or
meeting Scrutinizers

Duties of Scrutinizer
To
• Ensure proper conduct of the polling process.
• Maintain proper records.
• Submit a report to the Chairman of the Meeting→ containing details of votes
cast in the favour and against the resolution.
• Ensure compliance of section 109 and Rules.

Procedure of Voting (Rule 21)

Scrutinizer/s are provided with

• Register of Members,
• specimen signatures of the members,
• Attendance Register and
• Register of Proxies, other documents.
Scrutinizer
o shall arrange for Polling Paper and distribute them to the members and proxies
present.
• Polling Paper Form No. MGT-12
o Shall keep a record of the polling papers received in the response to poll.
o Votes shall be collected in a locked and sealed empty polling box. Such box shall
be open only after voting is complete by the Scrutinizer presence of 2 witness
(Not employee of the company).
o If a member who has appointed a proxy has voted in person, the proxy’s vote
shall be disregarded. In case of ambiguity about the validity of a proxy, the
Scrutinizers shall decide the validity in consultation with the Chairman.
o Voting shall include any Remote E-Voting if any & company shall provide all the
necessary support, technical and otherwise, to the Scrutinizers for the Purpose
of Counting such votes.

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Scrutinizer Within 7 days form date of Poll To Chairman of
Shall the Meeting

• Count the votes

• File a Report in Form MGT-13 Signed by Shall declare the result of voting on poll
Scrutinizer or Scrutinizers
• Report shall state
o Total votes cast Declared result shall be deemed to be
o Valid votes
the decision of the meeting on the
o Votes in favour & Against the
resolution
resolution
o Details of Invalid Votes & polling
papers

Applicability of Section 101 to 107 and 109 to Private Companies

 Section 101 to 107 and 109 shall apply unless otherwise specified in respective
sections or the articles of the Company provide otherwise.
 This exception shall be applicable to a Private company which has not committed a
default in filing
o Financial Statements U/s 137 or
o Annual Return U/s 92 of the Act
With Registrar of companies.

Postal Ballot [Section 110]

POSTAL BALLOT- SECTION-110 & Rule 22 of Companies (Management &

Administration) Rule 2014
 Meaning of Postal Ballot Section 2(65) : Means voting by post or through any
electronic mode.
Postal Ballot Mandatory for Certain Postal Ballot Optional for Certain
Business Business
 Every Company shall transact such  Any company may use postal ballot
items of business by Postal Ballot, as for transacting any item of business
Central Government may by other than
Notification declare to transacted only a. Ordinary Business and
by means of Postal Ballot. b. Any business in respect of
 However, any item of business which is which Directors or Auditor
to be mandatorily transacted by postal have a right to be heard at the
ballot - meeting.
o may be transacted at a General
Meeting by a company
o Which is required to provide the
facility to members to vote by E-
voting U/s 108.

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Resolution Deemed to be passed in General Meeting

 If a Resolution is assented to by the ‘requisite majority’ by means of postal ballot.

 It shall be deemed to have been duly passed at General Meeting convened in that
behalf.
Manner of Transacting Business By Postal Ballot

Central Government shall prescribe Where any Business is transacted

the manner of transacting business by postal ballot, such business shall
by postal ballot. not be transacted at General
Meeting.

Postal Ballot Mandatory for Certain Business

 Following items of business shall be transacted only by means of voting

through a Postal Ballot;-
a. Alteration of the Object Clause of MoA.
b. Alteration of articles for insertion or removal of provisions defining a private
company.
c. Change in place of Registered Office outside the local limits of any city town or
village.
d. Change in object for which a company has raised money form public through
prospectus and still has any unutilized amount out of the money so raised u/s
13(8).
e. Issue of shares with differential rights as to voting or dividend or otherwise.
f. Variation in the rights attached to a class of shares or debentures or other
securities.
g. Buyback of own shares by the company.
h. Election of ‘Small Shareholders’ Director u/s 151.
i. Sale of the whole or substantially the whole of an undertaking u/s 180(1)(a).
j. Giving loans, or extending guarantees or providing security in excess of the
limits specified u/s 186(3).
 However, the above items of business may be transacted at a GM by a Company
which is required to provide the facility to members to vote by electronic means
u/s 108, in the manner provided in that section.

Companies which are not required to transact any business through postal ballot

a. One Person Company

b. All other Companies having members up to 200.

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Voting and Counting Procedure

1 Notice to be send by the Company

File a notice of Postal ballot

containing
i. Draft resolution
ii. Reason for passing the Shareholders
resolution by the Postal Ballot
iii. A request to shareholders to
send to the company their
Company assent or dissent in writing on
a postal ballot within 30 days

Mode of sending Notice Notice to be placed on Company

i. Registered post or speed post. website
ii. Through electronic means like • The notice of the postal ballot shall
registered e-mail ID. also be placed on the website of the
iii. Through courier services. company forthwith after send to the
members.
• Such notice shall remain on such
website till the last date for receipt
of the postal ballot form members.

Issue of Advertisement
Advertisement shall be published in 2 newspaper (English, Vernacular) stating the
following matters-
a. A statement → business is to be transacted by postal ballot which includes voting
by electronic means
b. The date of completion of dispatch of notices
c. The date of commencement of voting.
d. The date of end of voting.
e. The statement → postal ballot received form the member beyond the said date
will not be valid.
f. Details on how to obtain a duplicate postal ballot in case not received.
g. Contact details of the person responsible to address the grievance.

2 Appoitment of Scrutinizer

Board of Appoint
Directors Scrutinizer
Shall

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Eligibility of Scrutinizer Safe Custody or Register and Other
• The Scrutinizer must be a person who Papers
can conduct the postal ballot voting Postal ballot received back from the
process in a fair and transparent shareholders shall be
manner. o Kept in the safe custody of the
• A person shall be appointed as a scrutinizer and
Scrutinizer only if he is willing to be o After the receipt of assent or
appointed. dissent of the shareholder in writing
• The Scrutinizer must be available for on a postal ballot, no person shall
the purpose of ascertaining the deface or destroy the ballot paper or
requisite majority. declare the identity of the
shareholder.
Last date of receipt
of Postal ballot

0 Days 7 Days
Scrutinizer shall submit his report

• Assent or dissent received after 30 days from the date of issue of notice shall be
treated as if reply from the member has not been received.

Register to be maintained by the Scrutinizer

• The Scrutinizer shall maintain a register either manually or electronically.
• Register shall contain, with respect to voting by shareholders by postal ballot-
i. His assent or dissent received
ii. His name, address, folio number or client ID
iii. Number of shares held by him nominal value of such shares and whether the
shares have differential rights
iv. Details of postal ballots which are received in defaced or mutilated form.
v. Details of postal ballots forms which are invalid.

Register and other papers to be in safe custody of Scrutinizer

• Postal Ballot received back form the shareholders and all the papers relating to the
postal ballot including voting by electronic means, shall remain in the safe custody of
the Scrutinizer until the Chairman considers, approves and signs the minutes.
• Thereafter Scrutinizer shall return the ballot papers and other related papers or
register to the company who shall preserve such ballot papers and other related
papers or register safely.

Resolution deemed to be passed at General Meeting

• If a resolution is assented by the requisite majority

• By mean (Postal Ballot+ E- voting)
• Shall be deemed to have been passed.

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Display the result on the website of Company

The company shall place on its website

o Result of postal ballot and
o Scrutinizer’ s Report
Four types of ballots may be received from the Shareholders

i. Ballots contains assents

ii. Ballots contains dissent
iii. Ballots wherein the member has voted partially assenting, partially dissenting or
using not all his shares in any particular way and
iv. Invalid ballots

Circulation of Members’ Resolutions [Section 111]

 As per section 111 of the Companies Act 2013 members may request any resolution
to be considered in an Annual General Meeting.
 The Company shall be bound to give notice to members of details of such resolution
and consider the same at the General Meeting.

 Prerequisites of a valid Requisitions

• Requisition must be in writing two or more copies & Signed by all the
requisitionists -
(i) In case Company having a Share (ii) In case Company having no Share
Capital Capital
By Member(s) holding ≥ 1/10th By Member(s) holding ≥ 1/10th
of Paid up Equity Share Capital of Total Voting power

• Where to deposit Requisition → at the Registered Office of the Company.

• Time limit to give Requisition to company -
Where requisition propose a resolution Where requisition requires circulation of
a statement
 The requisition shall be valid only if it  The requisition shall be valid only if it
is deposited at least 6 weeks before is deposited at least 2 weeks before
the Annual General Meeting. the date of AGM.
 However, if after the requisition is
deposited with the company an AGM is
called on a date within 6 weeks of the
date of deposit of the requisition.
• The requisition shall be deemed to
have been properly deposited.

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Note :- The Company is not duty bound to circulate the notice of the resolution
when the prerequisites are not complied with.
• Deposit of Money to Company -
 A sum reasonably sufficient to meet the company’s expenses must be
deposited or tendered by requisitionists along with requisition.
 When the money is tendered no payment is made but an unconditional offer is
made to pay money.
• Notice to members -

On receipt of Notice (as per section 100)

valid requisition Company Members
by members

Any Resolution
• Which may properly be moved and is intended to be moved at meeting
AND
• Circulate to members any statement with respect to the matters
referred to in proposed resolution or business to be dealt with at
that meeting.

• Exception from circulation of any statement - No need for the company to

circulate such notice when

Company
or Submit a Application to
Person
Aggrieved

CG (Regional Director)

Orders

1. 2.
The rights conferred are being Also order that Requisitionists shall pay to
abused to secure needless the company the cost incurred by the
publicity for defamatory matter company in making application to CG
notwithstanding that requisitionists were
not a party to the application.

• Default in contravention of the provisions –

o Company and Every officer in default – Penalty 25,000/-

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Representation of the President & Governors in Meeting of Company to which they
are Member [Section 112]

Section 112 of the Companies Act, 2013 provides that

- 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 and
- such other person shall be entitled to exercise the same rights and powers
including the right to vote to proxy and postal ballot, as the President or, as
the case may be, the Governor could exercise as a member of the company.

Representation of Corporations Meeting of Companies and Creditors [Section 113]

Section 113 of the Companies Act, 2013 seeks to provide that

- where a body corporate is a member or
- a creditor including a holder of debentures of the company and
- it authorizes any person as its representative at any meeting of the company
or any class of members of the company or at any meeting of creditors of
the company,
- such representative shall be entitled to exercise the same rights and powers
including right to vote by proxy and by postal ballot on behalf of the body
corporate which he represents

Resolutions [Section 114]

Section 114 Resolutions

Ordinary Resolution Special Resolution

Passed by simple majority Passed by 3 times majority

(i.e. more than 50%) (i.e. 75 % or more)

• Notice of the GM has been duly • The notice of the GM has been duly
given given.
• The vote cast in favour of the • The intention to propose the
resolution are required to exceed resolution as a special resolution
the votes cast against the has been duly specified in the
resolution. notice of GM or Other intimation
given to the members.
• The votes cast in favour of the
Resolution are required to be not
less than 3 times the votes cast
against the resolution.

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Manner of Casting Votes on both resolutions

Votes may be Votes may be Votes cast shall include the casting vote of
cast by way of cast by - Chairman if any.
- a. Members
a. Show of present in •Chairman has the power of Casting vote in Board
hands person or Meeting and General Meeting if so allowed in
b. Poll b. Proxies Article of Association of the company
c. Electronic (where •If not mentioned in AoA then Ordinary
Means allowed) Resolution on which there is equality of votes is
d. Postal ballot deemed to be dropped.
•Casting Vote’ is termed as Second Vote. (Sec-
104)

Characteristics of Special Resolution

1 Specified Majority - 3 times of the number of votes cast against

2 Resolution shall be set out in the notice

3 Proper Notice of 21 days is given for holding the General Meeting

Explanatory Statement should be annexed to the notice for

4 conducting special business

Resolutions Requiring Special Notice [Section 115]

 In order to consider certain types of resolutions stated in this section or Article

of Association of the Company Special Notice may required to be given by the
company to all its shareholders in prescribed manner.

 As per section 115 Special Notice is required to pass following resolutions

1. To appoint as Auditor a person other than a retiring auditor- Section 140(4)
2. To providing expressly that a retiring auditor shall not be re-appoint –
Section 140(4)
3. To remove a director before the expiry of his period of office- Section
169(2)
4. To appoint another director in place of the removed director- Section 169(5)

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Members Company

Application

To consider
resolution

Signed by a minimum On Receipt of Application

The Company Shall

Members Members Time Period to

Gives its Members
holding not Holding paid-up make application
less than 1%
• Notice of the Resolution at
share capital • At least 14 days prior least 7 days before the
of the Total OR not less than
Voting power to the General Meeting meeting (Exclusive the day
Rs. 5 Lakh • Maximum 3 months of dispatch of notice and day
prior to the General of the meeting).
Meeting
• Where not practicable to
• Excluding date of
give notice in same manner →
General Meeting and
Notice given Notice in 2 Newspaper
(Vernacular + English) and
• On website of company if any
• 7 days prior to GM

Resolutions passed at Adjourned Meeting [Section 116]

As per Section 116 where
o a resolution is passed at an adjourned meeting of a company or
o the holders of any class of shares in a company or
o the Board of Directors,
the resolution shall be treated as passed on the day it was actually passed and not on
any earlier date.

Resolutions and Agreement to be Filed [Section 117]

Company
• Passed Resolution
• Made a Agreement File FORM MGT 14 attaching 30 Days
0 Days
• Every Resolution passed Registrar of
(together with Explanatory Companies
Statement)
• Agreements made
• With prescribed fees

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Any resolution/ agreement that cause alteration of article → shall be annexed to
every copy of articles
Resolutions & Agreements to be filed with the Registrar
• Special Resolution
• Unanimous Resolution
• Board Resolution for appointment/ reappointment/ renewal of appointment of
MD
• Resolution of specific class of shareholders
• Winding up resolutions U/s 59 of Insolvency and Bankruptcy Code 2016.
• Resolution u/s 179
 This clause shall not apply to resolutions passed
- To grant loans or
- Give guarantee or
- Provide security in respect of loans U/s 179(3)(f)
In ordinary course of business by
a. A banking company
b. Any class of non banking financial company registered under Chapter
IIIB of RBI Act 1934 in consultation with the RBI.
c. Any class of housing finance company registered under National
Housing Bank Act 1987 in consultation with the National Housing Bank
• Other prescribed resolution/ agreements.
Penalty under the Act –Section 117(2)
Person Liable Nature of Penalty In case of Maximum up to
contravention continues failure
Company Company fails to ₹ 1,00/-each day ₹2 lakhs.
Every officer file the resolution ₹ 10,000/- after the first ₹ 50,000/-
in default and agreement u/s during which the lakhs.
117(1) within time failure continues
specified.

Minutes [Section 118]

Date of
Conclusion of
0 Days Prepare Minute Books 30 Days
of respective meeting
• General meeting
• Meeting of class of shareholders
• Meeting of class of creditors
• Board meeting
• Meeting of committee of Board
• Passing of Resolution by Postal
Ballot

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Contents of the Minute Book
 Fair and correct summary of business transferred.

 All appointments made should be included.

 In the case of a Board Meeting or a meeting of a committee of the Board, the

minutes shall also contain
• The names of the directors present at the meeting and
• In the case of each resolution passed at the meeting, the names of the
directors, if any, dissenting from, or not concurring with the resolution.

 Discretion of Chairman
 If in the opinion of Chairman
• matter are defamatory of any person.
• Irrelevant or immaterial to the proceeding
• Detrimental to the interests of the company Shall not be included
 Matter to be include or exclude in the minutes of the meetings shall be at
the absolute discretion of the chairman.

 Minute has evidential value.

 Presumption drawn form minutes

• Meeting was duly called and held
• All proceeding at meeting duly taken place
• Resolutions passed by postal ballot were duly passed
• All the appointments of directors, key managerial personnel auditor or company
secretary in practice is duly made.
•
 Report of proceedings of any general meeting shall not be circulated or advertise
at the expense of company unless included in minutes of the meeting.

 Every company shall observe Secretarial Standards with respect to general and
board meetings specified by ICSI approved by CG.
Penalty for Contravention
Person Liable Nature of contravention Penalty
Company Company fails to comply with Rs. 25,000/-
Every officer in default provisions of section 118 Rs. 5,000/-
 Distinct minute book for each type of meeting
• General meetings
• Creditors meeting
• Board meeting and
• Meetings of each of the committee of the Board.
 Each page shall be initialed or signed and last page should dated and signed.

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Signature by :
Nature of minutes book Signing Authority
Minutes of Board The Chairman of the said meeting or the Chairman of the
Meetings or/ Committee next succeeding meeting.
thereof.
Minutes of General • The Chairman of the said meeting within 30 days of
Meeting meeting or
• In the event of the death or inability of that Chairman,
by a Director duly authorized by the Board for this
Purpose.
Resolutions Passed by • The Chairman of the Board within 30 days of meeting
Postal ballot or
• If there is no Chairman of the Board or in the event of
the death or inability of the chairman of the Board, by
a Director duly authorized by the Board for this
Purpose.
 Place of keeping : Registered office
 Preservation : Permanently
 Custody : Kept in the custody of the Company Secretary or director duly
authorized by the board.
 Exemption to section 8 :
• Not apply as a whole except that minutes may be recorded within 30 days of
the conclusion of every meeting in case of companies where the articles of
association provide for confirmation of minutes by circulation.
• Exemption available to only those Section 8 Companies who has not committed
a default in filing of
o Financial Statements u/s 137 or
o Annual general meeting u/s 92

Inspection of Minutes Books of General Meeting [Section 119]

Electronic form permitted for maintenance inspection and copies of documents etc.

Any document, record, register, minutes, etc.

- Required to be kept by a company may be kept in electronic form
- Allowed to be inspected by any person, may be inspected in electronic form
- To be given to any person by a company, may be given in electronic form

Rule 27 of Companies (Management and Administration) Rules 2014 following class of

companies may maintain their records in electronic form.

Every listed company A company having not less than 1,000

shareholders, debenture holders and
other security holder.
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Records shall be maintained in such manner as Board of Directors may think fit.
Provided
a. The records must be kept in compliance with the Act and its associated rules,
maintaining consistent formats
b. Ensure that the adequate information required by the Act or its rules is properly
documented for future reference.
c. Records must be easily readable, retrievable, and reproducible in printed format.
d. Records can be digitally dated and signed as required by the Act or its rules.
e. Digitally dated and signed records must remain uneditable and unalterable.
f. Records must allow updates in accordance with the Act or rules, with each update
date recorded.
Rule 28 : Person Responsible for maintenance and Security of Electronic records
• The Managing Director
• Company Secretary
• Any other director or officer of the company as the Board may decide.
Further responsible person shall :-
a. Protection: Ensure adequate protection against unauthorized access, alteration, or
tampering of records
b. Loss Prevention: Safeguard records from loss due to media damage or failure.
c. Non-repudiation: Prevent signatories from disowning electronically signed records.
d. Security and Validation: Secure and validate computer systems, software, and
hardware for accuracy, reliability, and consistent performance
e. Integrity Detection: Enable computer systems to identify invalid and altered
records.
f. Accuracy and Accessibility: Maintain accurate, accessible, and reproducible
records.
g. Readability: Ensure records are always retrievable in a readable and printable
format.
h. Non-rewritable Format: Store records in a non-rewritable, non-erasable format
like PDF.
i. Backup: Create authenticated, dated backups of updated electronic records at
least daily, securely stored as per Board decisions.
j. Access Control: Limit record access to authorized personnel designated by the
Board.
k. Reproduction: Guarantee complete, authentic, true, and legible reproduction of
non-electronic original records in electronic form.
l. Organization and Indexing: Arrange and index records for easy location, access,
and retrieval.
m. Security Measures: Implement necessary measures to ensure the security,
integrity, and confidentiality of records.

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Rule 29: Inspection and Copies of records maintained in electronic form

• Electronic records must be accessible for inspection in their digital format, and
• company should offer copies of these records in electronic form at a cost not
exceeding Rs. 10 per page.

General Meeting

General Meeting

Annual General Meeting Extra-Ordinary General Meeting

Section 96 Section 100 Read with rule 17

Annual General Meeting [Section 96]

Applicability of Section 96
• Every company, whether public or private, except One Person Company,
• shall hold an annual general meeting every year and that the gap between two
AGMs shall not be more than 15 months.
• Every company whether public or private shall hold an Annual General Meeting
every year
• Exception :→ One Person Company

Time limits for holding Annual General Meeting

Date of Closure of
First Financial Year

First AGM
0 days 9 months
Annual
General
Meeting Date of Closure of
Financial year
Subsequent
AGM
0 days 6 months

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Maximum gap between two AGM

one AGM held next AGM held

Should not exceed 15 months

0 days 15th month

 If it is company cannot hold Annual General Meeting within above prescribed time
then the Registrar has the authority to grant an extension for holding the
meeting, but only for specific reasons up to maximum of 3 months .
 Note : Registrar cannot extend the time for holding the company's first annual
general meeting.

• AGM shall held during business hours between 9 a.m. and 6 p.m.
• Cannot be held on National Holiday.
• Place of holding AGM
 Listed Company
o Registered office of the company or
o Any other place in the same city where registered office is located.
 Unlisted Company
o Any place of India→ if prior consent is obtained from all the members in
writing or electronically.

• Section 8 Company
o The time , date and place of each annual general meeting are decided upon
before-hand by the board of directors having regard to the directions if any,
given in this regard by the company in its general meeting
o This exception shall be applicable to only those section 8 companies which has
not committed a default in filing of its
- Financial statement u/s 137
- Annual Return u/s 92

• Government Company
o Timing of calling Annual General Meeting → 9 a.m. and 6 p.m.
o Day → on any day which is not a National holiday
o Place of meeting
 Registered office of the company or
 At such other place within the city, town or village in which the registered
office of the company is situated or
 Such other place as the CG approved in this behalf.
o This exception shall be applicable to only Government Companies which has not
committed a default in filing of its
- Financial statement u/s 137
- Annual Return u/s 92

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Power of Tribunal to call Annual General Meeting [Section 97]

AGM not held as

per the provisions Application
of section-96

Tribunal may direct notwithstanding

any thing contained in
• this Act or
• Article of the Company

The Tribunal may The Tribunal

• Call a General Meeting or • may give such direction as it may
• Direct the calling of a GM think fit, including a direction
which shall be deemed to be an that 1 member present in person
AGM of the company or proxy shall be quorum.

Power of Tribunal to call Meetings of Members Etc. [Section 98]

Suo moto
If for any reason it is On application
impracticable to call a by any director
Tribunal
meeting of a company other
than AGM On application
by any member
who is entitled
to vote at
meeting
Order a meeting of the • Give such ancillary or consequential
company to be called, held and directions as the think expedient,
conducted in such manner as And
• Including directions modifying or
the Tribunal Think Fit. supplementing in relation to the calling
holding and conducting of the meeting
NOTE :- Any meeting called held the operation of the provisions of this
and conducted in accordance with Act or article of the company
any order U/s 98(1) shall be • Direction may include that 1 member
deemed to be the meeting of the present in person or proxy shall be
company duly called, held and quorum of the meeting.
conducted.

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Punishment for Default in Complying with the Provisions of Section 96 to 98
[Section 99]
Person Liable Nature of contravention Penalty In case of continues
maximum up to failure
Company Company Contravention of
Every officer in section 96 to 98 {i.e. ₹ 1,00,000/- ₹ 5,000/- for each
default default in holding a day during which the
meeting of the company as default continues
AGM or on the directions
issued by the Tribunal}

Report on Annual General Meeting [Section 121]

Conclusion of AGM
of Listed Company Registrar of Companies

0 Days 30 Days

Listed company shall Signed by either of following File Reoprt in

prepare a Report on each manner- MGT 15
AGM confirming that-  By the Chairman of the meeting
• AGM was convened, held or
and concluded as per the  In case of inability to sign, by
provisions of this Act the -
and Rules made - Any 2 directors of the
thereunder. company one of whom shall
• Report shall be prepared be Managing Director if any
in addition to the and
minutes of the AGM. - The Company Secretary of
the Company

Content of Report
i. The day, date, hour and venue of the AGM
ii. confirmation with respect to appointment of Chairman of the meeting
iii. number of members attending the meeting
iv. confirmation of quorum
v. confirmation with respect to compliance of the Act and the Rules, secretarial
standards made there under with respect to calling, convening and conducting the
meeting
vi. business transacted at the meeting and result thereof
vii. particulars with respect to any adjournment, postponement of meeting, change in
venue and
viii. any other points relevant for inclusion in the report

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Penalty for default
Person Nature of Penalty In case of Maximum up to
Liable contravention continues failure
Company Company fails to ₹ 1,00,000/- ₹ 5,00/-each day ₹ 5 lakhs.
Every file the report after the first ₹ 1 lakh.
officer in within 30 days of ₹ 25,000/- during which the
default conclusion of AGM. failure continues

Extra Ordinary General Meeting [Section 100]

Who can call an EGM ?

By the Board By Requisitionists

By the Board Suo moto On the requisition of members

•The board may whenever Company having share Company not having Share
deems fit call an EGM of capital Capital
the Company.
By members holding By members holding at
•An EGM of the company
1/10th of paid up share least 1/10th of total
other than the wholly owned
capital voting power
subsidiary of a Company
incorporated outside India Requisition by Members
shall be held at a place • Should be set out all the matters for consideration
within India. at EGM.
•In case of IFSC Private • Signed by all requisitionists.
Company & IFSC Public • Sent to registered office of company
Company the Board may On Receipt of requisition Board shall
subject to the consent of all • Within 21 days from the date of receipt of a valid
the shareholders convene requisition
its EGM at any place within • proceed to call a meeting on a day not later than 45
or outside India. days form the date of receipt of such requisition

Section 100(4)
• If the Board does not call a meeting within 21 days from the date of receipt of valid
requisition (to be held not later than 45 days from the receipt of requisition)
• than the requisitionists may themselves call a meeting within a period of 3 months form
the date of requisition.
• Meeting under this section shall be called & held in same manner in which the meeting is
called and held by the Board.
• Reasonable expenses incurred shall be reimburse by the requisitionists .
• In case of default in holding meeting the same expenses shall be deducted from the
salaries of directors.

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PROCEEDING OF HOLDING EGM ON REQUISITION OF MEMBERS

3 months

45 days

21 days

0 days Within 21st day Within 45th day Within 3 months

Requisition Board must Board must • On failure of

deposited to proceed to ensure Board to call
the Company by calling EGM conduct of EGM EGM
the members • EGM to be held
by the members

Rule 17 Companies (Management and Administration) Rules 2014

i. Requisition to convening of EGM iii. If Special Resolution is to be

should be provided proposed notice shall be given as
- In writing or required U/S 114(2).
- Through E-mode
- At least 21 days prior to the iv. The requisition shall be signed by-
proposed date of EGM • All the requisitionists or
ii. Notice shall specify • A requsisitionists duly authorized
- Place by all the requisitionists or
- Date • By sending an electronic request
- Day and attaching therewith a
- Hour and scanned copy of a duly signed
- Contain the business to be requisition.
transacted at the meeting . v. No Explanatory Statement is
Requisition should convene required to be annexed.
meeting
- At registered office or vi. The notice shall be given to those
- In same city or town where members whose names appear in
registered office is situated the Register of Members within 3
Meeting should be convened on days of receipt of a valid
any day except National Holiday. requisition.

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vii. The requisitionists shall be entitled to receive list of members from the
company.The list shall be made as on 21st day from the date of receipt of the
requisition for calling EGM together with such changes as have occurred upto
45th day from the date of receipt of requisition for calling the EGM.
viii. The notice of EGM shall be given by-
i. Speed post or
ii. Registered post or
iii. Electronic mode
• Any accidental omission to give notice or
• The non receipt of such notice by any member shall not invalidate the
proceeding of the meeting.

Applicability of this Chapter to One Person Company [Section 122]

1 Non Applicability of The provisions of section 98 and section 100 to 111 shall
some Sections not apply to OPC
2 Manner of Passing Shall be transacted in manner as provided under Sub
Ordinary Resolution at Section (3) below.
AGM
3 Manner of Passing  In case of OPC for the purpose of transacting any
Resolutions in General business (whether Ordinary or Special) at AGM or
Meetings EGM by mean of Special Resolution or Ordinary
Resolution it shall be sufficient if –
• Resolution is communicated by the member to
the company.
• Resolution is entered in minute book and
• Minute book is signed and dated by the
member.
 the date of signing the minutes book by the
members shall be deemed to be the date of the
meeting for all the purposes under this act.
4 Manner of transacting  In case there is only one director in OPC any
business in Board business which is required to be transacted at a
Meeting Board Meeting it shall be sufficient if –
• Resolution is entered in minute book and
• Minute book is signed and dated by such
director.
 the date of signing the minutes book by the
members shall be deemed to be the date of the
meeting for all the purposes under this act.

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