BUSINESS LAW & Ethics The Companies Act,2013 Page |1

The Companies Act, 2013

MEETING | NOTICE | PROCEDURE | QUORUM |
VOTING | MINUTES
1.8
MEETINGS OF A COMPANY

 NOTICE OF MEETING [SECTIONS 101 & 102]

 Meaning :

The term 'notice' is derived from the Latin word 'Notitia' this means ‘knowledge’. A meeting

cannot be validly held unless a proper notice of it has

been given.

Three things in connection with the notice have to be

considered namely:-

 Length of notice;

 Contents of notice; and

 To whom it must be given

 Length of Notice [Section 101(1)]:

 A general meeting of a company can be called by giving not less than 21 days’ notice either

in writing or through electronic mode in such manner as may be prescribed.

 However, a company may, by its Articles, provide a period longer than 21 days for convening a

meeting. It must be noted that 21 days imply 21 clear days i.e., 21 days excluding the day of the

service of notice and the day on which the meeting is to be held.

 For companies covered under section 8, general meeting of a company can be called by giving not

less than 14 clear days’ notice.

 If the notice is sent through post then service of notice shall be deemed to have been effected in

the case of notice of meeting on the expiry of 48 hours since the posting of the

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same.

 It may be noted that a general meeting may be called up by giving a notice shorter than 21 days,

if consent is accorded thereto in writing or by electronic mode, by not less than 95% of the

members entitled to vote at such meeting. The consent of the members may be obtained either

at the meeting or before the meeting.

 The expression "electronic mode" shall mean any communication sent by a company through its

authorized and secured computer programme which is capable of producing confirmation and

keeping record of such communication.

QUORUM OF GENERAL MEETING [SECTION 103]

 Meaning :

 Quorum is the minimum no. of members required to be present at a general meeting of the

company to validly transact any business. Quorum is the minimum number of members of a

company where presence is necessary for the

transaction of business.

 Generally, preference shareholders are not

counted in quorum, unless there is some

matter affecting their rights.

 In the case of joint shareholders, only one

shareholder, as per the order in which their name appears in the Register of Members, shall be

counted towards quorum;

 Proxies are not counted in quorum as section provides for personal presence of members.

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 Provisions:
(In Case of Public Company)

Number of members as on date of meeting Quorum for meeting

Up to 1000 5 members personally present
> 1000 but ≤ 5000 15 members personally present
> 5000 30 members personally present

 In the case of a private company, 2 members personally present, shall be the quorum for a

meeting of the company.

 CONSEQUENCES OF ABSENCE OF QUORUM [SECTION 103(2)]:

 If the quorum is not present within “half-an-hour” from the time appointed for holding a

meeting of the company—

 the meeting shall stand adjourned to the same day in the next week at the same time and

place, or

 to such other date and such other time and place as the Board may determine; or

 The meeting, if called by requisitionists (under section 100), shall stand cancelled.

 In case of adjournment, “notice” is required to be given to the members:

 Where there is adjournment or of change of day, time and place of meeting, the company is

required to give not less than three days' notice to the members either individually or by

publishing and advertisement in the newspapers (one in English and one in vernacular

language) which is in circulation at the place where the registered office of the company is

situated.

 Section 103(3) lays down that if at the adjourned meeting also, quorum is not present within

half an hour from the time appointed for holding the meeting, the members present shall

constitute quorum.

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 Any resolution passed without a quorum is invalid.

 In fact, if no quorum is present there is no meeting and the proceedings are invalid.

 But if all the members of a company are present in person, the proceedings will be valid

even if the quorum required is more than the total number of shareholders.

CHAIRMAN OF MEETING [SECTION 104]

One of the essentials of a valid meeting is that it must have a presiding officer endowed with authority

to conduct its affairs in an orderly fashion. A Chairman derives his authority from the assembly over

which he presides.

 APPOINTMENT UNDER SECTION 104:

 If the articles of association of a company do not contain any provision for the appointment

of chairman, such appointments shall be made by the members personally present at the

meeting who shall elect one of themselves to be the chairman thereof on a show of hands.

 If a poll is demanded on the election of the Chairman, it shall be taken immediately.

 If some other person is elected as a result of poll, he shall be the Chairman for the rest of the

meeting.

PROXIES [SECTION 105]

 Meaning:

The word "proxy" has two different meanings.

 Firstly, it means the agent appointed by the member of a company to attend and vote on his behalf at a

meeting of members.

 Secondly, it means the document by which such an agent is appointed.

 The relation between the member appointing proxy and the proxy so appointed is that of principal and

agent and thus this relationship is governed by the relevant provisions of Indian Contract

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Act, 1872.

 Who has right to appoint proxy:

 In the case of a company having a share capital every member of the company who is entitled to

attend and vote at the meeting can appoint a proxy.

 In the case of a company not having a share capital, this right is available only if the articles make a

specific provision for it. A proxy need not to be member of the company.

 Generally, the preference shareholders are not entitled to appoint a proxy as they are not entitled to

vote at the meeting.

 It may be noted that a member of a company registered under section 8 (Non- Profit Company) shall

not be entitled to appoint any other person as his proxy.

 Person acting as a proxy:

 A member holding more than ten percent, of the total share capital of the Company carrying voting

rights may appoint a single person as proxy and such person shall not act as proxy for any other

person or shareholder.

VOTING [SECTION 106-109]

 Methods

 Voting by show of hands – (Section 107);

 Voting by electronic means – (Section 108);

 Voting by demand of poll – (Section 109);

 Voting by Postal Ballot – (Section 110).

 Restriction on voting rights [Section 106]:

 A company shall not prohibit any member from exercising his voting right on any

ground except:

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 Any calls or other sums presently payable by him have not been paid, or

 In regard to which the company has exercised any right of lien.

 Show of Hands [Section 107]:

 Here, 1 member = 1 vote

 The method of voting by show of hands shall be adopted first for deciding the fate of motion

(proposal made to a company meeting to bring attention to a business matter.).

 It may be noted that proxies are not allowed to vote on a show of hands.

 After counting the votes in favor and against the resolution, the Chairman may declare that on show

of hands, the resolution has been carried on or it has been lost.

 A declaration by the Chairman of the resolution of the voting by show of hands and an entry to this

effect in the minute’s book of the proceedings of the meeting shall be a conclusive evidence of such a

declaration.

 Voting through Electronic Means [Section 108]:

 This new concept of e-voting is a method of voting via electronic means.

 The Central Government has prescribed that every listed company or a company having ≥ 1000

shareholders, shall provide to its members facility to exercise their right to vote at general

meetings by electronic means.

 The expressions "voting by electronic means" or "electronic voting system" means a 'secured

system' based process of display of electronic ballots, recording of votes of the members and

 the number of votes polled in favour or against, such that the entire voting exercised by way of

electronic means gets registered and counted in an electronic registry in a centralized server with

adequate 'cyber security.

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 Procedure-

A company which provides the facility to its members to exercise voting by electronic means shall comply

with the following procedure, namely:-

 Notice of meeting- The notice of the meeting shall be sent to all the members, directors and

auditors of the company either-

 by registered post or speed post; or

 through electronic means, namely, registered e-mail ID of the recipient; or

 by courier service;

 The notice shall also be placed on the website, if any, of the company.

 The notice of the meeting shall clearly state -

 that the company is providing facility for voting by electronic means and the business

may be transacted through such voting;

 that the facility for voting, either through electronic voting system or ballot or polling

paper shall also be made available at the meeting and

 Members attending the meeting who have not already cast their vote by remote e-voting

shall be able to exercise their right at the meeting;

 that the 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;

 The notice shall -

 indicate the process and manner for voting by electronic means;

 indicate the time schedule including the time period during which the votes may be cast by

remote e-voting;

 provide the details about the login ID;

 Specify the process and manner for generating or receiving the password and

for casting of vote in a secure manner.

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 The company shall cause a public notice by way of an advertisement to be published, immediately on

completion of dispatch of notices for the meeting.

 Demand for Poll [Section 109] :

A poll can be ordered at any time before or after the declaration of the result on the voting of any

resolution by show of hands.

 Here, 1 share = 1 vote

 A poll can be demanded by any of the following persons :-

 Chairman himself;

 Members and proxies.

 The Chairman shall order a poll to be taken, if any demand is made in this behalf:-

 In the case of a 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 ≥ 1/10th of the total voting power in

respect of the resolution; or

 On which an aggregate sum of ≥ ₹ 5,00,000 has been paid up;

 in the case of any other company, by any member or members present in person or by

proxy and having ≥ 1/10th of the total voting power in respect of the resolution.

 The demand for a poll may be withdrawn at any time by the person or persons who made the

demand.

 Time of taking poll:

 A poll demanded on any other question shall be taken at any time within 48 hours of the

time of making a demand.

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Passing of resolution by Postal Ballot [section 110]

 Introduction:

 'Postal Ballot' means voting by post or through any electronic mode.

 The concept of postal ballot is a welcome step.

 Usually, at an AGM, attendance is by a few hundred members. The AGM of some companies are

held in remote places, where the registered offices of such companies are situated. This makes it

inconvenient for the members to attend in large number. Further, members do not evince much

interest in attending EGM.

 The postal ballot brings the voting at the doorsteps of members. Hence, a very large number of

members can conveniently participate in voting on the resolutions of the company.

 Provisions :

 Transaction of business through postal ballot:

According to section 110, the following items of business shall be transacted only by means of voting

through a postal ballot-

 alteration of the objects clause of the memorandum and in the case of the company in

existence immediately before the commencement of the Act, alteration of the main objects

of the memorandum;

 alteration of articles of association in relation to insertion or removal of provisions which,

under section 2(68), are required to be included in the articles of a company in order to

constitute it a private company;

 change in place of registered office outside the local limits of any city, town or village as

specified in section 12(5);

 change in objects for which a company has raised money from public through

prospectus and still has any unutilized amount out of the money so raised

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under section 13(8);

 issue of shares with differential rights as to voting or dividend or otherwise under section 43;

 variation in the rights attached to a class of shares or debentures or other securities as

specified under section 48;

 buy-back of shares by a company under section 68;

 election of a director under section 151 of the Act;

 Sale of the whole or substantially the whole of an undertaking of a company as specified

under section 180;

 giving loans or extending guarantee or providing security in excess of the limit specified

under section 186:

 It is mandatory for a company to pass resolution by postal ballot in respect of such items

of business as the Central Government may, by notification, declare to be transacted only

by means of postal ballot.

 It is, however, discretionary for a company to pass any resolution by way of postal ballot

other than –

 Ordinary business items; and

 Any business in respect of which directors or auditors have a right to be heard at any

meeting.

 It may be noted that One Person Company (OPC) and other companies having members up to

200 are not required to transact any business through postal ballot.

RESOLUTIONS

Every decision of the company either in the board or in the general meeting is taken by means of resolutions.

Resolution is of two types – ordinary resolution and special resolution.

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MINUTES OF PROCEEDINGS OF MEETINGS [SECTIONS 118 & 119]

 The minutes are a record of business transacted at meetings.

 Every company muse keep minutes containing a fair and correct summary of all proceedings of general

meetings (including the resolutions passed by postal ballot) and those of Board meetings or those of

meetings of Committee of the Board or meeting of the Creditors, in books kept for that purpose.

 The minutes books must have their pages consecutively numbered, and the minutes must be recorded

therein within 30 days of the meeting, along with the date of such recording. They have to be written

directly on the numbered pages.

 Pasting or attaching of papers is not allowed.

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ANNUAL GENERAL MEETING (AGM) [SECTIONS 96, 97, 99 & 121]

 Introduction:

 Every company, other than One Person Company (OPC), shall, in each year hold (in addition to

any other meetings) a general meeting as its Annual General Meeting.

 According, to General Clauses Act, 1897, a 'year' means a period of 12 months running from l"
st
January to 31 December. Thus, holding of an

 Annual General Meeting, in every calendar year is a statutory requirement.

 The proper authority to call Annual General Meeting is the Board of Directors.

 PERIOD OF HOLDING AN ANNUAL GENERAL MEETING

First Annual General Meeting Subsequent Annual General Meeting

 The first annual general meeting shall be held  The subsequent annual general meeting shall be

within a period of 9 months from the closing of held within a period of 15 months from the last

first financial year. AGM.

 If a company holds its first annual general meeting  Subsequent annual general meeting shall be held

as aforesaid, it shall not be necessary for the within a period of six months of closure of

company to hold any annual general meeting in relevant financial year. Such meeting should be

the year of its incorporation. conducted every calendar year.

 No extension by authority possible  The Registrar may, for any special reason shown,

grant an extension of time for holding the

subsequent AGM up to 3 months.

 BUSINESS TRANSACTED AT AN ANNUAL GENERAL MEETING:

Both Ordinary Business and Special Business can be transacted at an Annual General Meeting.

Following matters are related with the Ordinary Business:-

 The consideration of the accounts, balance sheet and the reports of the Board of Directors and Auditors;

 The declaration of dividend;

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 The appointment of directors in the places of those retiring; and

 The appointment of and the fixing of remuneration of, the auditors.

 Any business other than the above mentioned business, which can be transacted at an Annual General

Meeting, shall be deemed to be Special Business. It may be noted that in the case of Extra-ordinary General

Meeting (EGM), all businesses are special businesses. [Section 102]

 DAY FOR HOLDING AN ANNUAL GENERAL MEETING:

 Every Annual General Meeting shall be called on a day, which is not a National Holiday. 'National Holiday'

means and includes a day declared as National Holiday by the Central Government.

 Where the Central Government declares a day to be a National Holiday, after the company has issued the

notice convening the meeting, it shall not be deemed to be a national holiday in relation to that meeting.

 It may be noted that the Central Government may exempt any company from the aforesaid provisions

subject to such conditions as it may impose.

 TIME FOR HOLDING AN ANNUAL GENERAL MEETING:

 Every Annual General Meeting shall be called at a time during the business hours i.e., between 9 a.m. and 6

p.m. It may be noted that Annual General Meeting convened during business hours may continue even

after business hours.

 It may be noted that the Central Government may exempt any company from the aforesaid provisions

subject to such conditions as it may impose.

 TIME FOR HOLDING AN ANNUAL GENERAL MEETING:

 Every Annual General Meeting shall be held either at the registered office of the company or at some other

place within the city, town or village in which the registered office of the company is situated.

 Annual general meeting of an unlisted company may be held at any place in India if consent is given in

writing or by electronic mode by all the members in advance. (Amended as per notification dated 3rd

Jan,2018)

 It may be noted that the Central Government may exempt any company from the aforesaid provisions

subject to such conditions as it may impose.

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Prof. Nitin Bhardwaj