Meetings under the Companies Act of 2013
Meetings under the Companies Act of 2013: A business can be defined as a legal institution that involves a group of persons interested in the running of a business. A company’s management needs the efforts of several people who debate and ponder on issues before a decision is made. The decisions are also made in meetings that are… Read More »
Meetings under the Companies Act of 2013: A business can be defined as a legal institution that involves a group of persons interested in the running of a business. A company’s management needs the efforts of several people who debate and ponder on issues before a decision is made. The decisions are also made in meetings that are a structured conversation between the company’s administration, typically the directors and in some cases, representatives who address the affairs of...
Meetings under the Companies Act of 2013: A business can be defined as a legal institution that involves a group of persons interested in the running of a business. A company’s management needs the efforts of several people who debate and ponder on issues before a decision is made. The decisions are also made in meetings that are a structured conversation between the company’s administration, typically the directors and in some cases, representatives who address the affairs of the company and operations.
Vatsala Sood explains the provisions and guidelines for meetings under the Companies Act, 2013.
I. Introduction
A business is a vast organisation where the members of the company have to decide any matter using due thought and prudence. The Companies Act, 2013 lays out different provisions requiring meetings to be held in order to make decisions after vigilant deliberation. These regulations guarantee that corporations operate smoothly and promote their efficient operation [1].
II. Annual General Meeting (Sec. 96)
In compliance with Section 96 of the Annual General Meeting of companies, every company other than a one-person company shall conduct annual general meetings as an annual general meeting other than any other form of meeting, and the company shall ensure that there is no difference of more than 15 months between two annual general meetings. [2].
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First Annual General Meeting
As far as the first AGM is concerned, it should be held within nine months of the closing date of the first financial year. Now one of the main quandaries is with regard to the company’s first financial year as several significant reforms were taken about in the 2013 company act.
Under the current terms of the Companies Act, 31 March of the following year will be the financial year of the company incorporated until 1 January of the following year and in all situations, the year ended on 31 March. From the following scenario, one can understand this.
In the event that a corporation is founded on 5 January 2016, the company’s first financial year will conclude on 31 March 2017, and it can conduct its AGM on or before 31 December 2017 with respect to Section 96, which deals with the annual general meeting.
In the same scenario, if the corporation is established on 20 December 2015 or on some date prior to 1 January 2016, the first financial year will be ended on 31 March 2016, regardless of whether or not the term is 1 year and in such a situation, the AGM should be held on or before 31 December 2016 (i.e., within 9 months from the end of the first financial year which is within 9 months from the closure of first financial year).
In all other situations, the AGM should take place within 6 months of the closing date of the financial year. The registrar can also prolong the duration of the AGM, otherwise the first AGM, by a period not exceeding 3 months for a particular reason. Under the Act, the AGM can be held between 9 a.m. and 6 p.m. on every day, including Saturdays, Sundays and public holidays, with the exception of national holidays (26 January 15 August and 2 October).
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Notice for Annual General Meeting
No less than a clear notice of 21 days should be given for a general meeting, either in writing or by electronic means. However, after providing a shorter notice, a general meeting can be held if the approval of not less than 95% of the members entitled to vote at such a meeting is given in writing or through electronic means.
The notice of such a meeting should consist of the location, day, date and time of the meeting and should also include a resolution specifying the business to be carried out at the meeting. The note should be distributed to each member of the company, to the legal representative of the deceased and to the insolvent member’s assignor, to the auditor and to the company’s director. Section 101 of the Companies Act 2013 talks about with the issuance of an Annual General Meeting Notice [3].
III. Quorum of Meeting
As provided for in section 103 of the Companies Act, in the case of a public corporation, the quorum of the company shall be five directly present in the event that the overall number of members at the meeting date does not surpass 1000, 15 in the case of more than 1000 but less than 5000, and 30 in the event of more than 5000 members at the meeting date.
In the event of a private corporation, only 2 members can make up the quorum of the meeting if they are directly present. It was also provided that if the quorum is not completed within half an hour of the scheduled time of the meeting, the meeting will be adjourned until the following week on the same day.
If in the adjourned meeting, the quorum is not filled within half an hour, then the existing members will represent the quorum needed for the meeting. In the case of a conference by requisition pursuant to section 100, in the event of a lack of quorum, the meeting stand was cancelled as provided for in section 103 (2) [4].
IV. Extraordinary General Meetings (Sec.100)
Under Section 100(1) of the Companies Act, the Board can call an extraordinary company meeting whenever it deems appropriate. Section 100(2) points out the process for calling, in the event of a proposal, an extraordinary general meeting.
In the case of a company with equity capital (essentially a company owned by shares), the number of shareholders who hold not less than one-tenth of the firm’s paid-up share capital on the date of receipt of the requisition should be voted on as the company has the right to vote on that date and in the case of a company which does not have share capital (essentially the company limited by the company). [5]
One of the fundamental aspects of the call for a motion for a meeting is that if the board fails to continue to call for a meeting within twenty-one days of the receipt of the request for the consideration of that matter on a day not less than forty-five days from the date of receipt of such a request, then the meeting cab will be called by the requests themselves in compliance with the process in which the meeting will be held by the board and the company will bear the involved costs.
A statutory meeting and annual general meeting address the issues that form the ordinary business of the corporation. A special business extraordinary general meeting is necessary to address the issues apart from ordinary business, i.e., any meeting that is held rather than the statutory and annual general meetings is called an extraordinary meeting.
In general, special general meetings are held to address issues that are severe and should not wait for debate at the annual general meeting. The Extraordinary General Meeting can be held by both the company’s directors and the owners who own at least one-tenth of the company’s paid-up share capital. Shareholders may apply to the board of directors to call a meeting. If the meeting is not scheduled even after the shareholders’ order, then the shareholders can convene the meeting [6].
The Company Law Board has the right, in compliance with Section 186 of the Companies Act, to call an extraordinary general meeting, but not an annual general meeting. The company’s shareholders are enabled to convene a meeting within 3 months if it is not convened by the Company Law Board within 21 days of the order.
Issues such as alteration of provisions of the Memorandum of Agreement, amendments to the Articles of Association, schemes in relation to share capital are generally debated at an extraordinary general meeting. Any issue that needs to be addressed in an immediate way often calls for extraordinary general meetings.
In the event that, for such reasons, the Extraordinary General Meeting cannot be held, then the Company Law Board can call the meeting on its own authority. A notice needs to be served in advance and may contain material such as the reason of such meetings, the involvement of directors, executives or shareholders in the matters that prompted the meeting to need to be held. The special resolution approved at the meeting must be submitted to the registrar within 15 days [7].
V. Power to Call Board Meetings
A company’s Secretary or a director has the authority to schedule board meetings. By following the process provided for by the Companies Act, 2013, the board meetings can be called by the Secretary or a manager. Under the guidance of the Chairman/Managing Director, the meeting will be called. Any director will be requested to convene a board meeting and then a board meeting may be summoned by the chairman, secretary or any director upon such order.
A notice needs to be served in advance for such a meeting and it should be performed under the jurisdiction of the company. If a notice is issued without any authorization for a board meeting, so it would be deemed to be an improper notice. If a director decides to convene a meeting of the board to discuss such pressing concerns, he must do so with the approval of the company’s managing director.
In Sanjiv Kothari v Vasant Kumar Chordia, it was found that if a meeting is held at the registered office by the managing director at the behest of the director on the same date to address the same concerns posed by the director, then the director must attend that meeting and should not schedule any other meeting at a different venue on the very same date [8].
VI. The Procedure Followed by these Meetings
In order to function effectively, all meetings conducted in companies have to obey some well-defined rules and procedures. Certain distinctions can occur, but the standard approach is the same. Some procedures have to be compulsorily followed:
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Issuance of notification
The board of directors and all the concerned members have to be informed beforehand about the meeting to ensure their presence. It can be a long term or short notice depending on the situation [9].
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Contents of notice
The notice must indicate the location, date, period, outline of the subject to be addressed and some brief business details. The date of issuance needs to be properly signed by the convener [10].
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Quorum
The party responsible for alerting the meeting shall ensure that the meeting has been notified in advance to an appropriate quorum to be present at the meeting, as provided for in the Act. Throughout the meeting, the quorum must be preserved [11].
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Chairman
Any meeting must be presided over by a chairman. The chairman of the meeting is usually the chairman of the Board of Directors. He is responsible for starting and completing the consideration of resolutions at the meeting. It is his duty to ensure that the meeting runs smoothly. By voting with hands, the chairman may also be chosen [12].
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Resolutions
In each meeting, these are the decisions made. There are also procedures and laws to be observed as they are taken into account and voted upon. These are given in various sections. [13]
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Voting
There may be subjects on which there is no universal opinion and it is important to vote. The chairperson can call the issues (if undecided) for a vote after a thorough debate. The Companies Act, 2013 has defined conditions for voting in various meetings. The voting process is overseen by the chairman [14].
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Adjournment and Minutes
The meeting is ended upon due thought and debate, which is called adjournment and consequently dissolution as members disperse. These discussions must be recorded in official company documentation mentioning the essence of each meeting called the minutes of the meeting. As stated in the Companies Act 2013, any significant aspect of the meeting has to be included.[15]
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Report
Companies, as in the case of the AGM, are mandated to submit a meeting report detailing the operation of the meeting. It is important to file a copy with the registrar of the same [16].
VII. Conclusion
A company is an association of individuals. All business matters must be determined by the members of the association. The discussions that take place in order to negotiate about the organization’s problems are known as company meetings. The Companies Act provides provisions relating to the company’s meetings.
Meetings to negotiate on ordinary business and special business or extraordinary undertakings take place in compliance with different procedures and regulations. The meetings can take place to decide on matters that lie before the company at various levels.
As part company owners, shareholders have the right to hold a meeting to pass a motion. Meetings are chaired by the chairperson of the meeting. The convention of a conference includes a compulsory quorum. The discussions that take place to negotiate on the company’s goals are the company’s meetings. Thus, the Companies Act, 2013 provides a detailed explanation with respect to the conduct and procedure of a Company’s Business Meetings to ensure a standard protocol adhering to the best standards of justice, reasonability and accountability.
References
[1] Bergman, M. M., Bergman, Z., Teschemacher, Y., Arora, B., Jyoti, D., & Sengupta, R. (2019). Corporate responsibility in India: Academic perspectives on the Companies Act 2013. Sustainability, 11(21), 5939.
[2] Section 96 of Companies Act, 2013
[3] Section 101 of Companies Act, 2013
[4] Section 103 of Companies Act, 2013
[5] Kalidas, R. (2020). The Law and Practice relating to Company Meetings. Bloomsbury Publishing.
[6] Section 100 of Companies Act, 2013
[7] Section 186 of Companies Act, 2013
[8] Shri Sanjiv Kothari v. Shri Vasant Kumar Chordia, Shri, 2005 61 SCL 68 CLB
[9] Section 101 of Companies Act 2013
[10] Section 101 of Companies Act 2013
[11] Section 103 of Companies Act, 2013
[12] Section 104 of Companies Act, 2013
[13] Section 114-117 of Companies Act, 2013.
[14] Section 105-110 of Companies Act, 2013.
[15] Section 118 of Companies Act, 2013
[16] Section 122 of Companies Act, 2013
Vatsala Sood
Student at Symbiosis Law School, Pune
