Q I: E-Text

Module 5
Meetings of Companies

Module Overview: The module on ‘meetings of companies’ encompass the concept of meetings and
its significance for an incorporated entity. The module will particularly delve into the concept of the
various company meetings, their significance in the conduct of companies’ business and relevance for
the stakeholders of the company. The module will further cover the procedural compliances with
respect to holding the meetings as per the provisions of the Companies Act, 2013.

Subject Name: Law

Paper Name: Corporate Law
Module Name: Meetings of Companies
Module ID: 5
Prerequisites: For the purposes of this module, an understanding of the structure and functioning of a
company is required.

Learning Objectives: This module will focus on the following objectives:

To conduct the business of a company and to decide upon its future strategies,
various stakeholders meet to decide upon the same. This module will facilitate
the students to understand the concept of company meetings and their benefits.

Different stakeholders in a company interact through various platforms. Hence

various kinds of meetings are convened in a company to transact the business in a
company. This module will illustrate these kinds of company meetings like the
members’ meetings, directors’ meetings, creditors meetings etc. and their
importance.

Not every kind of stakeholder gathering constitutes a valid meeting. Only those
meetings which are convened in compliance and consonance with the provisions
of the Companies Act, 2013 and rules made thereunder are considered valid from
the point of decision making. The module will deliberate upon the said provisions
and rules.
Keywords: Board Meeting, Committee Meetings, Annual General meeting, Extra-ordinary general
meeting, Class meeting, Notice of a meeting, Quorum, Resolutions.

Learning Outcomes: This module will enable the students to:

Understand the concept of company meetings and

their significance in the conduct of business of a
company

Understand various kinds of company meetings

and their importance

Understand the procedure to be complied with as

per the Companies Act, 2013 and the rules while
conducting and convening a valid meeting

Introduction: The business of a company is conducted through the decisions which are taken by the
members, directors and in certain cases by the creditors or some class of members by exercising their
powers in relation to the company. For taking such decisions, the members or directors, as the case
may be, have to meet, in order to transact valid and binding business. This implies, that a member
and/or a director unilaterally cannot take a decision, there must exist at least two persons for having a
meeting (under certain exceptional circumstances, there can be one-person meetings as well). 1The
term ‘meeting’ has not been defined under the Companies Act, 2013 or any previous company
legislations like the Companies Act, 1956. This term has a possibility of having a variety of shades
and hues.2 Hence, traditionally a meeting constitutes gathering or coming together of two or more
persons for any lawful purpose.

Regulations for a valid meeting: Every meeting or gathering of stakeholders of a company would
not be regarded as a valid meeting for the purpose of taking binding decisions. Only those meetings
which are convened and held in accordance to the provisions of the Companies Act, 2013 and the
1
Sections 97 and 98, Companies Act, 2013 provide for the statutory exemption to the general rule that one
person constitutes a valid meeting .
2
SP Arora v Roshnara Club (1992) 8 CLA 30 (Delhi); KR Chandratre, Company Meetings: Law, Practice and
Procedures, (Second ed. Lexis Nexis 2009) 42
rules appended thereto like the Companies (Meetings of Board and its Powers) Rules, 2014 and
Companies (Management and Administration) Rules, 2014 are considered to be valid meetings.

Company Meetings: A number of meetings are convened in a company and are generally classified
as members’ meetings, directors’ meetings and other meetings. Members’ meetings include the
annual general meeting, which is the mandatory meeting of the members that every company is
required to convene each year. However, there exists no embargo on holding more than one general
meeting of the members, which are called the extra-ordinary general meetings. The meetings of the
directors are called the Board meetings and the meetings of the committees of the directors are the
Committee meetings. Other meetings include creditors meetings and class meetings.

The focus of the Companies Act, 2013 has been on enhancing transparency, shareholders’ democracy
and protection of the interest of the investors. It has made few changes for regulating meetings for
example, the requirement of holding a statutory meeting of members at the time of commencement of
business of a company for any public company (required under the Companies Act, 1956) has been
done away with, the concepts of video-conferencing and e-voting have been introduced.

The following chart enumerates the various meetings that can be held in a company and classifies
them into members’ meetings, directors’ meetings and other meetings.

Annual General
Members’ Meetings
Meetings Extra-ordinary
General Meetings

Board Meetings
Directors’
Meetings Committee
Meetings

Class Meetings
Other
Meetings Creditors’
Meetings

1. Members’ meetings
 a. Annual General Meeting (Section 96): One of the opportunities annually given to the
members of a company is to take part in the business of the company by exercising their
power to take decisions. For this purpose, each year every company is required to hold at least
one meeting of its members’ which is known as an annual general meeting (AGM). An
exemption from holding an annual general meeting is only given to a one-person company.

The first general meeting of a company must be held within nine months from the date of closing the
financial year of the company , and then the company need not hold any annual general meeting in its
year of incorporation. The subsequent annual general meetings shall take place within six months of
the date of closing of the financial year. The time prescribed for the first annual general meeting
cannot be extended, however, the time period for subsequent annual general meetings may be
extended to a maximum of three months with the leave of the Registrar of companies.

Following chart depicts the date, time and venue for holding an annual general meeting. Here the
Central Government is empowered to exempt, subject to conditions, any company from the holding
such meeting in accordance with the date, time and venue as prescribed.

Date Time Venue

any day During Business Hours registered office of the
must not be a National 9 a.m. and 6 p.m. company
Holiday. Here “National at some other place within the
Holiday” means and includes a city, town or village in which
day declared as National the registered office of the
Holiday by the Central company is situate
Government.

When a company defaults in holding an annual general meeting as required, the Tribunal has the
power to call such meeting upon receipt of an application from any member of the company. The
Tribunal may even direct to hold a one-member meeting. 3 Such meetings shall be deemed as an

3
Section 97: In case any default exists in holding the annual general meeting of a company under section 96, the
Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application
of any member of the company, call, or direct the calling of, an annual general meeting of the company and give
such ancillary or consequential directions as the Tribunal thinks expedient. Here such direction by the Tribunal
may even include that one member himself or through proxy shall be deemed to constitute a meeting. The
meeting so held would be deemed as an annual general meeting under the provisions of the Act.
annual general meeting as per provisions of this Act. Upon such default, the company and every
officer in default would be liable for punishment as prescribed.4

i. Business to be transacted at an annual general meeting (section 102)

The business transacted at the annual general meeting is called the ordinary business (this is the
reason a general meeting is also referred to as an ordinary meeting). Items of ordinary business
constitutes consideration of financial statements, Board reports and auditor’s report, declaring
dividends, appointment of directors and appointment and salary fixation of the auditors of the
company.

b. Extra-Ordinary general meeting (Section 100): All other general meetings convened and held in
a company besides the annual general meeting are regarded as extraordinary general meetings. All the
business transacted at an extra-ordinary general meeting is called special business (all other
businesses except ordinary business). The following diagram illustrates, who all can call an extra-
ordinary general meeting:

The Tribunal

The Who
Requisitionists may call The Board
themselves an EGM?

The Board on
requisition of
the
shareholders

The shareholders making a requisition must possess at least one-tenth of the paid up share capital of
the company and where the company is without the share capital, the shareholders must possess at
least one-tenth of the voting powers of the company. Such share-holders, requisitioning a general
meeting, must sign upon the matters required to be addressed at the meeting. The Board upon receipt

4
Section 99: In case any default is made in holding a meeting of the company in accordance with section 96 or
section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of
the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case
of a continuing default, with a further fine which may extend to five thousand rupees for every day during which
such default continues.
of such valid requisition must call a general meeting within 21 days. The date of the meeting in any
case must not be later than 45 days from such requisition.

In case these dead-lines are not met by the Board, the shareholders making requisition may go ahead
to call and hold a general meeting themselves. They can do so within 3 months from the requisition
date. All the reasonable expenses incurred by the shareholders on holding such meeting, are to be
reimbursed to them by the company by deducting such amounts from the fees of the defaulting
directors.

In LIC of India v. Escorts Ltd5, the Supreme Court observed that every shareholder of a company
possesses a right to call/requisition an extra-ordinary general meeting, subject to the provisions of the
Act. Once the requisition is made in compliance of the prescribed law, the shareholder cannot be
restrained from calling such meeting.

In another case, Rathnavelu Chettiar v. M.Chettiar6, the shareholders gave a requisition in compliance
of the provision of the Act for removing the MD of the company. Where the directors failed to call a
meeting within the prescribed time, the shareholders themselves requisitioned the meeting. The venue
of the meeting was decided as the registered office of the company. However, on the day of the
meeting, the registered office was locked, thus the meeting was held at some other place. The court
held such meeting to be a validly convened meeting.

The Tribunal may also, under certain circumstances order to hold and convene a meeting (other than
an annual general meeting). Here the Tribunal may on its own motion or upon the application made
by any director or members having voting rights may call such a meeting. The Tribunal may give
necessary directions for conduct of the meeting including the permission for holding one -member
meeting in person or through proxy (section 98).

Notice of the meeting (Section101)7

For calling a general meeting a notice is required to be given to every member of the company or to
his legal representative (in case of a deceased member), every director and auditor of the company.
Such notice must be given to the aforesaid parties at least 21 clear days before the meeting. The notice
can be sent either in writing or through electronic means. 8 The requirement of 21 days’ notice can be
done away with, if at least 95 percent of the members voting at the meeting agree to a shorter notice
for such meeting.

5
(1986) 1 SCC 264
6
AIR 1951 Mad. 542
7
Sections 101 -107 of the Companies Act 2013, as regards the meetings and voting, shall apply to private
companies, unless otherwise is provided by the articles of the company vide Notification No. GSR 464(E) dated
5.6.2015.
8
Rule 18 of the Companies (Management and Administration) Rules, 2014 prescribes for the manner of sending
the notice through the electronic mode.
The notice of a meeting must provide for the date, time and venue of the meeting along with the
statement of the business to be dealt at the meeting. 9 It is necessary to send such notice of the meeting
as prescribed, however inadvertent failure to send notices or in case any member or other persons do
not receive the notice shall not per se affect the validity of the meeting.

Quorum (Section 103)

For holding a valid meeting, a minimum requisite number of members must attend the meeting to
transact the business, which constitutes quorum of the meeting. Following charts, provides at a
glance, the quorum required to be present at general meetings:

Quorum of a
general
meeting

Public Private
Company Company

five members personally fifteen members thirty members

present ( when personally present (when personally present
membership of the the membership of the Co. (when the membership two members
company as on the date of as on the date of meeting is of the Co. as on the date personally present
meeting is upto one more than one thousand of the meeting is more
thousand) but up to five thousand) than five thousand)

Adjournment of a meeting
Where the requisite number of members are not present within half an hour of the allotted time of the
meeting, such meeting is adjourned to be held on the same day next week at same time and venue or
as scheduled by the Board. The only exception to the rule is, when the meeting is called by the
requisitionists, in such a case the meeting is not adjourned for the want of quorum and is cancelled. In
other cases, members present within half an hour of the adjourned meeting shall constitute the
quorum.

Chairman of a meeting (section 104)

A chairman is elected by the members personally present at a meeting by the show of hands. Such
chairman is required for orderly conduct of the meeting. In case a poll is demanded for electing a

9
The Statement so annexed contains the items of the special business proposed to be dealt at the meeting. Such
business items constitute the agenda of the meeting (section 102).
Chairman, the provisions of the Act shall apply and the earlier chairman shall continue unless a new
one is appointed.

Proxies (section 105)

Members entitled to attend and vote at the meeting, may participate in the decision making process by
voting in the meeting, either personally or through a duly appointed proxy 10. The proxy is another
11
person , whom a member appoints to attend and vote at the meeting on his behalf. However, such a
proxy does not possess the right to speak at such meeting on behalf of the member, nor is he entitled
to vote except in case of a voting by poll. Section 105 of the Act, further deliberates upon the
provisions for appointing a proxy. A member can revoke his proxy by a notice in writing. 12

A member can appoint more than one proxies for the same meeting, in case he possesses different
shares of that company. But in case, the said member appoints more than one proxies for the same
bunch of shares, then all the proxies shall be jointly and severally liable. 13

Voting at a meeting (section106)

A member can participate in the decision making process of the company by voting at the meetings.
Such a right to vote can only be restricted by the articles of a company, where it stipulates that the
shares in respect of which any call money or sums remains due or shares upon which the company has
exercised any lien, such shareholders do not have right to vote. 14

Voting by show of hands (Section 107)

When a resolution is to be passed at a general meeting, voting takes place by show of hands unless the
members ask for a poll or voting happens electronically. Such voting is evidenced though the
Chairman’s declaration and an entry to this effect in the minutes of the meeting.15

Voting through electronic means [Section 108 read with Rule 20 Companies (Management and
Administration) Rules, 2014]

10
A proxy shall be duly appointed when lodged in writing and duly in Form MGT 11, at least 48 hours before
the time allotted for the meeting.
11
Only in cases of an association not-for profit this another person (i.e. proxy) must be a member only.
12
There exists a principal-agent relationship between a shareholder and his proxy. Narayanan Chettiar v
Kaleeswara Mills Ltd. AIR 1952 Mad. 515; Swadeshi Polytex Ltd. v. VK Goel (1988) 63 Com Cases 688 (Del.)
13
B. Ramachandra Adityan v T.N. Merchantile Bank Shareholders Welfare Association (2010) 96 CLA 580
(Mad). In cases of any conflict amongst various proxies in relation to voting, the Chairman of the meeting is
empowered to take the final and binding call.
14
Right to vote is a shareholders’ personal right. In Re. Imperial Chemical Industries Ltd. (1938) 8 Com Cases
181. An aggrieved shareholder is only empowered to question the restriction in relation to his voting rights, no
other member can do so on his behalf. BN Vishwanathan v Tiffin’s Barytes Asbestos and Paints Ltd. (1951) 23
Com Cases 29 (Mad).
15
Here the Chairman’s declaration is treated as a conclusive evidence, meaning thereby that the entry in the
minutes of the meeting is conclusive as between the parties bound by them in the absence of any fraud. In Re,
ED Sasoon United Mills, AIR 1929 Bom. 38. However where a poll is demanded and when the declaration
doesn’t take into account the votes casted in favour or against, the declaration shall not be treated as conclusive.
Dhakeshwari Cotton Mills v NK Chakravorty (1937) 7 Com Cas 417.
The Central Government may prescribe in accordance with the Rule 20, certain class or classes of
companies and also the manner in which a member may vote by the electronic means.

Demand for a Poll (Section 109 read with Rule 21 Companies (Management and
Administration) Rules, 2014): A poll may be either ordered by the chairman suo moto or may be
demanded by such number of members prescribed under this section. 16

Where a resolution is to be passed through poll, the Chairman shall require the assistance of certain
persons for scrutinising the poll and the votes and to prepare a report in accordance with the Rule 21
of Companies (Management and Administration) Rules, 2014). The Chairman has the power to
regulate the poll in accordance with the said rules.

Postal Ballot (Section 110 read with Rule 22 Companies (Management and Administration)
Rules, 2014): A Central Government notification may declare certain business items (excluding the
items of ordinary business) to be dealt vide the postal ballot. A resolution passed by the required
majority by a postal ballot shall be deemed to be passed at a duly convened general meeting.

Ordinary and Special resolution (Section 114)

Decisions in a company are taken by passing resolutions to that regard. The resolutions can be
ordinary, special and resolutions requiring special notice, depending upon the nature of the decision to
be taken.

Ordinary resolution is said to be passed when the votes cast by the eligible members in favour
exceed the votes casted against any resolution. Here the members can either vote in person or through
proxy. The Chairman of the meeting possesses a casting vote in case of a tie.

Whereas a special resolution is said to be passed for a resolution when a notice duly given for the
purpose clearly specifies that the resolution to be passed is a special one. Such resolutions require that
the votes by the eligible members must be three times in favour in comparison to the votes cast
against the resolutionss. . Here the person can either vote in person or through a proxy.

16
Following number of members may demand a poll:
a. in the case a company having a share capital, by the members present in person or by proxy, where allowed,
and having not less than one-tenth of the total voting power or holding shares on which an aggregate sum of not
less than five lakh rupees or such higher amount as may be prescribed has been paid-up; and
b. in the case of any other company, by any member or members present in person or by proxy, where allowed,
and having not less than one-tenth of the total voting power the demand made for the poll may be withdrawn by
the persons making it, anytime.
 Resolution
requiring
special notice

Resolutions

Ordinary Special
Resolution Resolution

Resolutions requiring special notice (Section 115 read with Rule 23 Companies (Management
and Administration) Rules, 2014)
There are certain resolutions which require special notice. According to section 115, any such notice
required to be given shall be brought at the instance of member(s) holding not less than one percent of
total voting power (in case of company not having share capital) or member(s) holding shares on
which an aggregate sum of not exceeding five lakh rupees, paid up on the date of notice. Rule 23,
further provides the time and means of sending such special notice. 17

Minutes of the meeting (section 118 read with Rule 25 Companies (Management and
Administration) Rules, 2014)
Companies are required to maintain and keep the records of the proceedings of every meeting called
the minutes of the meeting, which are to be prepared according to the provisions of this Act and the
Secretarial Standards.18 The minutes of each of the meeting are to be recorded succinctly including all
17
Rule 23 Companies (Management and Administration) Rules, 2014 prescribes for Special Notice.- (1) A
special notice required to be given to the company shall be signed, either individually or collectively by such
number of members holding not less than one percent of total voting power or holding shares on which an
aggregate sum of not less than five lakh rupees has been paid up on the date of the notice. (2) The notice
referred to in sub-rule (1) shall be sent by members to the company not earlier than three months but at least
fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on
which the notice is given and the day of the meeting. (3) The company shall immediately after receipt of the
notice, give its members notice of the resolution at least seven days before the meeting , exclusive of the day
of dispatch of notice and day of the meeting , in the same manner as it gives notice of any general meetings.
Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, the
notice shall be published in English language in English newspaper and in vernacular language in a vernacular
newspaper, both having wide circulation in the State where the registered office of the Company is situated
and such notice shall also be posted on the website, if any, of the Company. (4) The notice shall be published
at least seven days before the meeting, exclusive of the day of publication of the notice and day of the
meeting. There appears to be certain contradiction in the section 115 and the Rule 23 and in such a case the
rule shall be interpreted in the light of the section.
18
Here secretarial standards concerning the general and Board meetings specified by the Institute of Company
Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by
the details like the new appointments made. The minutes prepared in the loose sheets must be signed
by the Chairman within 30 days of the meeting in the form of a book with pages consecutively
numbered. The minute book of each kind of company viz. the general meetings, creditors’ meetings
are to be kept separately.

The minutes of the meetings shall have an evidentiary value for the proceedings mentioned therein.

2. Directors’ Meetings

a. Board Meetings [Section 173 read with Rules 3 and 4 of the Companies (Meetings of Board
and its Powers), 2014]

The Board of directors of a company are responsible for overseeing the management of the company
and thereby exercise their power of day-to-day decision making by convening and holding Board
meetings.

Within 30 days of their incorporation, the companies must hold their first board meeting. Thereafter,
the companies must hold at least four board meetings in a year, where there must not be more than
120 days’ gap between two consecutive meetings. 19

One of the striking features of the present legislation is that it allows the directors to take part in the
board meeting through video-conferencing or any other audio-visual means. However, there is an
embargo from dealing certain matters through the video-conferencing or audio-visual mode. 20

A notice of at least seven days must be given to each of the director for a board meeting. In case of
urgency a shorter notice may be given where at least one independent director is present at such
meeting.

The notice of a board meeting must be sent to all the directors, otherwise the proceedings of the
meeting and the resolution passed thereat may be declared as invalid by the Court of law. 21

Also, it has been held in the case of Dankha Devi Agarwal v. Tara Properties Private Limited22 that a
decision taken in a meeting without due notice of such meeting for removal or induction would be
instance of oppression and mismanagement.

the Central Government are referred.

19
These conditions are relaxed in case of a one- person company, small company and a dormant company where
in these companies are required to hold only one board meeting in six months of the calendar year and the
consecutive gap between two meetings must not be less than 90 days.
20
Rule 4 Companies (Meetings of Board and its Powers), 2014, enumerates such matters, they are:
(i) the approval of the annual financial statements;
(ii) the approval of the Board’s report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for consideration of accounts; and
(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
21
Parmeshwari Prasad Gupta v Union of India, 1974 SCR (1) 304
22
AIR [2006] SC 3068
At least two directors or one-third of the total strength (higher of the two) constitutes quorum for a
board meeting. Here the directors, both personally attending or through the audio-video means would
be counted for the purposes of the quorum (section 174).

b. Committee Meetings
The Companies Act, 2013 provides for four mandatory committees of the board of directors under the
Act which are namely, Audit Committee, Nomination & Remuneration Committee, Stakeholders
Relationship Committee and Corporate Social Responsibility Committee. The committees so
formulated are not to be appointed by every company but they get triggered or are required to be
formulated based on certain thresholds.

i. Audit Committee meeting is required to be convened by every listed company and only those
public companies which have a paid up share capital of Rs. 10 crore or more or have a turnover of Rs.
50 crore or more or have aggregate outstanding loan, debenture and deposit exceeding INR 50 Crore
or more. The terms of reference of such a committee include monitoring auditor’s appointment,
remuneration and his performance etc. Every minutes of the meeting of the Audit Committee shall be
noted in the ensuing meeting of the Board of Directors and also, a distinct minutes’ book shall be
maintained for the meeting of the Committee. The Chairman of the Audit Committee is required to
address the concerns of the shareholders at the Annual General Meeting.

ii. Nomination and Remuneration Committee meeting 23 are also a mandate for every listed
company and only those public company which have a paid-up share capital of Rs. 10 crore or more
or have a turnover of R. 100 crore or more having aggregate outstanding loan, debenture and deposit
exceeding INR 50 Crore or more. The committee is required to ensure that the level and composition
of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality
required to run the company successfully.

iii. Stakeholders Relationship Committee meetings are required to address the grievances of the
stakeholders of the company. This committee is to be constituted by every company which has the
strength of more than 1000 shareholders, debenture-holders, deposit-holders and any other security
holders at any time during the financial year.

iv. Corporate Social Responsibility Committee meeting shall take all decisions as regards the CSR
policy of the company in its meetings. Such committee shall consist of at least three directors, of
which at least one director shall be an independent director.

3. Other Meetings

The Rules of the Nomination and Remuneration Committee shall be framed pursuant to Section 178 of the
23

Companies Act, 2013 read with Rule 6 of Companies (Meeting of Board and its Powers) Rules, 2014.
a. Class Meetings: These meetings are generally convened and held for a particular class of
shareholders/members only. For this reason, only the members holding shares of a particular class
may attend and vote at the meeting as the resolution so passed would be binding upon such class of
members. Such meetings are convened and held whenever the rights and privileges of the class of
shareholders are altered or affected. The articles of companies provide for the procedures to be carried
out at the class meeting and a special resolution to passed for taking any decision. For instance, under
section 48 of the Act dealing with the variation of shareholders’ rights, provides that where share
capital of the company is divided into different classes of shares, the rights attached to the shares of
any class may be varied with the consent in writing of the holders of at least three-fourths of the
issued shares of that class or by means of a special resolution passed at a separate meeting of the
holders of the issued shares of that class. Similarly, at the time of approval of the proposed scheme of
merger or arrangement as per section 232 of the Act, the tribunal may on an application, order a
meeting of or the members or class of members, as the case may be, who may be affected by such
arrangement.

b. Creditors’ meetings: Creditors owe claims against the company, and may be secured or unsecured
creditors. Meetings of the creditors are required to be called in a company at two instances. Firstly, at
the time of approval of the proposed scheme of merger or amalgamation, wherein section 232 of the
Act, lays down that the Tribunal may order a meeting of or creditors or any class of creditors in case
they are affected by such merger or arrangement. Secondly, when the company goes in for voluntary
winding up, as per section 306 of the Companies Act, 2013.

Summary: In this module, you learnt about kinds of meeting of companies and must have realised
their importance for company, its shareholders and other stakeholders.