A meeting may be generally defined as a gathering or assembly or getting together of a number of persons for transacting any lawful business. There must be at least two persons to constitute a meeting.
Therefore, one shareholder usually cannot constitute a company meeting even if he holds proxies for other shareholders. However, in certain exceptional circumstances, even one person may constitute a meeting. It is to be noted that every gathering or assembly does not constitute a meeting. Company meetings must be convened and held in perfect compliance with the various provisions of the Companies Act, 2013 and the rules framed there under.
SECRETARIAL STANDARD ON GENERAL MEETINGS OF COMPANIES:
Secretarial Standard 2 (SS-2) on General Meeting issued by the Institute of Company Secretaries of India (ICSI) and approved by central government is to be mandatorily adhered by all companies as per the provision of Section 118 (10) of Companies Act, 2013. The objective of secretarial standard is to promote good corporate governance.
SCOPE OF SECRETARIAL STANDARD: Secretarial Standard is in conformity with the provisions of the Act. The term “Act” has been defined in SS-2 to mean the Companies Act, 2013 (Act No. 18 of 2013) or any previous enactment thereof, or any statutory modification thereto or re-enactment thereof and includes any Rules and Regulations framed thereunder.
Member’s meetings: A company is required to hold meetings of the members to take approval of certain business items, as prescribed in the Act. The meetings to be held for seeking approval to ordinary business and special business are called annual general meeting and extraordinary general meeting. In certain cases, a company may have to hold a meeting of the members of a particular class of members.
- Annual General Meeting (section 96): Annual general meeting (AGM) is an important annual event where members get an opportunity to discuss the activities of the company. Section 96 provides Every company is required to call at least one meeting of its shareholders each year. This meeting is known as the annual general meeting. The first annual general meeting of a company must be held within nine months from the date of closing of the first financial year, and then no meeting will be necessary for the year of incorporation. Thereafter one annual general meeting must be held every year. The gap between one meeting and the next should not be of more than 15 months. There is no provision in the Act for deferment of the first Annual General Meeting.
If a company fails to hold this meeting two consequences will follow.
- Firstly, any member can apply to the Tribunal and the latter will order the calling of the meeting. An application can be made by any member under Section 97 of the Act? The Tribunal can give any ancillary or consequential directions which it thinks expedient in relation to the calling and conducting of the meeting. A meeting held in pursuance of this order will be deemed an annual general meeting of the company.
- Secondly , the failure to call this meeting either generally or in pursuance of the order of the tribunal is an offence punishable with fine. The penalty is imposed upon the company as well as every officer “who is in default”.
In Sree Meenakshi Mills Co Ltd v Registrar of Joint Stock Companies: A company was prosecuted for failure to call an annual general meeting. One general meeting was called in December 1934. This was adjourned to March, 1935 and then held. Subsequent meeting was held in February, 1936. The prosecution was for not holding a meeting in 1935. It was contended on behalf of the company that a meeting was held in that year. But the court held that the meeting of March, 1935, was the adjourned meeting of 1934. “There should be one meeting per year and as many meetings as there are years.” The company was accordingly convicted.
Business to be transacted at annual general meeting: Section 102(2)
- provides that all other businesses transacted at an Annual General Meeting except the following are special business:
- the consideration of financial statements and the reports of the Board of Directors and auditors;
- the declaration of any dividend;
- the appointment of directors in place of those retiring;
- the appointment of, and the fixing of the remuneration of, the auditors.
Importance of General Meeting:
Annual general meeting is an important institution for the protection of shareholders of a company. The ultimate control and destiny of a company should be in the hands of its shareholders. It is, therefore, desirable that the shareholders should come together once in a year to review the working of the company. This meeting affords that opportunity. It is at this meeting that some of the directors will retire and come up for re-election” and the shareholders will be able to exercise real control by “refusing to re-elect a director of whose action and policy they disapprove” Again, auditors retire at this meeting enabling the shareholders to consider whether they should be re-appointed or replaced.? Dividends are declared at this meeting. Chairman delivers a speech listing the advances of the company during the year. Directors have to present annual accounts for the consideration of the shareholders. A failure to present the accounts is a punishable offence.20 The shareholders can ask any questions relating to the accounts or affairs of the company.
2. EXTRAORDINARY GENERAL MEETING: (Section 100): There are so many matters relating to the business of a company, which requires approval or consent of members in general meeting. It is always not possible for consideration of such matters to wait until the next annual general meeting.Clause 42 of Table F Schedule-I provides that all general meetings other than annual general meetings shall be known as extraordinary general meetings. Extraordinary General Meeting can be held :
- By the Board Suo motu [Section 100 (1)]: The Board may, whenever it deems fit, call an extraordinary general meeting of the company, as per SS-2 such Extraordinary General Meeting may be held at any place within India.
- By Board on requisition of members [Section 100 (2)]: The Board shall, call an extraordinary general meeting on receipt of the requisition from the following numbers of members:
- In the case of a company having a share capital: members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting;
- In the case of a company not having a share capital: members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power of all the members having on the said date a right to vote.
Matter set out for consideration in requisition: The requisition made as above, shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company.
Time period for calling the meeting: The Board is required to proceed to call a meeting within 21 days from the date of receipt of a valid requisition, to convene a meeting which should be held within 45 days of such deposit of the requisition with the company.
- By requisitionists [Section 100(4)]: If the Board does not within 21 days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than45 days from the date of receipt of such requisition, the meeting may be called and held by the requisitonists themselves.
- Notice to be signed: The notice shall be signed by all the requistionists or by a requistionists duly authorized in writing by all other requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.
- No explanatory statement annexed to the notice: No explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.
- ‘Mode of giving notice: The notice of the meeting shall be given by speed post or registered post or through electronic mode. Any accidental omission to give notice to or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting.
3. By Tribunal |Section 98 (yet to be notified)]: Section 98 provides that if for any reason it is impracticable to call a meeting of a company or to hold or conduct the meeting of the company, the Tribunal may, either suo motu or on the application of any director or member of the company who would be entitled to vote at the meeting:
- Order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and
- Give such ancillary or consequential directions as the Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company.
4. Class Meeting: Such meeting is convened by a particular class of shareholders only and only if they think that their rights are being altered or if they want to vary their attached rights, as mentioned u/s 48 of Company Act 2013, and u/s 232 also, if under Mergers and Amalgamation scheme, meetings of particular shareholders and creditors can be convened if their rights/privileges are being varied to their interests in such company.
The essentials of a valid meeting are that the meeting should be :
- Properly convened:
- The meeting must be called by proper authority; and
- Proper notice must be served in the manner specified under Section 101 and 102 of the Act.
- Properly constituted:
- Proper quorum must be present in the general meeting (Section 103 of the Act)
- Proper chairman must preside the meeting (Section 104 of the Act)
- Properly conducted:
- The business must be validly transacted at the meeting i.e. resolutions must be properly moved and passed, and voting by show of hands and on poll.
- Proper minutes of the meeting must be prepared. (Section 118 of the Act)