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notes for company law KSLU notes
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Ø Meetings – Meaning Ø Kinds of company meetings Ø Meetings of committees of directors Ø Requisites of valid general meeting Ø Quorum Ø Proxy Ø Voting Ø Chairman Ø Resolutions Ø Resolutions by Postal Ballot Ø Adjournment Ø Minutes
Note: In this chapter, unless otherwise stated ‘Rule’ means the Companies (Management & Administration) Rules, 2014.
Que. No. 1] Enumerate the different types of meetings under the Companies Act, 2013. CS (Executive) – June 2013 (4 Marks)
Ans.: Meetings under the Companies Act, 2013 may be classified as: I. Shareholders Meetings: u Annual General Meetings [Section 96] u Extraordinary General Meetings
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MEEtinGS 187
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MEEtinGS 187
Que. No. 2] Every Company must hold annual general meeting in every calendar year. CS (Inter) – Dec 2000 (8 Marks), Dec 2006 (5 Marks) CS (Executive) – June 2014 (5 Marks) The gap between two AGM can never exceed 15 months.
CS (Executive) – June 2015 (5 Marks)
Ans.: Annual general meeting (AGM) is an important annual event where members get an opportunity to discuss the activities of the company.
Annual General Meeting [Section 96(1)]: Every company, other than OPC is required to hold an AGM every year. Following are the key provisions regarding the holding of an AGM:
Holding of AGM:
Que. No. 3] Write a short note on: Extension of validity period of AGM
Ans.: in case, it is not possible for a company to hold an annual general meeting within the prescribed time, the Registrar may, for any special reason, extend the time within which any AGM shall be held. Such extension can be for a period not exceeding 3 months. [Proviso to Section 96(1)]
no such extension of time can be granted by the Registrar for the holding of the first AGM.
It has been clarified by the Ministry of Corporate Affairs that delay in completion of audit of the annual accounts of the company does not ordinarily constitute a ‘special reason’ justifying the extension of time for holding its annual general meeting.
Que. No. 4] Accounting year of Devdatta Ltd. ends on 30th June, 2014. It is required to hold an AGM by 31st December, 2014. Due to some reason, the AGM could not be held in December, 2014. On an application, the ROC granted permission to hold the meeting in February, 2015. The AGM was duly held in February, 2015. Has the company complied with the requirements of holding AGM every year? Will it amount to contravention of the provisions of Section 96? CS (Inter) – Dec 2004 (5 Marks), June 2007 (5 Marks) CS (Executive) – Dec 2011 (4 Marks)
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Que. No. 7] An AGM of a public company was called on a fixed day. After sending notice of the meeting, the government notified that day of meeting as a national holiday. Can the meeting proceed as scheduled? CS (Inter) – June 1999 (4 Marks)
Ans.: An AGM can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a national holiday.
An AGM can be held 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 situate.
if any day is declared by the Central Government to be a national holiday after the issue of the notice convening such meeting, it shall not be deemed to be a national holiday. Hence, there is no contravention and meeting can proceed as scheduled.
Que. No. 8] XYZ Ltd. wants to hold its annual general meeting on Sunday, the 30th June to facilitate the shareholder to attend. Advice the legal position. CS (Inter) – June 1999 (4 Marks)
Ans.: An AGM can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday.
An AGM can be held 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 situate.
As 30th^ June is not national, XYZ Ltd. can hold its AGM on 30th^ June even if it is Sunday.
Que. No. 9] An adjourned AGM falls on a holiday. Is there any contravention of the Companies Act, 2013? CS (Inter) – Dec 2004 (3 Marks)
Ans.: An AGM can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday. There is no contravention if an adjourned meeting acciden- tally comes to be held on a national holiday.
Que. No. 9A] There are seven shareholders in a private limited company having registered office in Chennai. Six shareholders are French nationals and belong to the same family holding an aggregate of 95% voting rights. These shareholders are unable to come down to Chennai and wish to hold the company’s annual general meeting in Paris. Advise whether the meeting can be held in Paris. CS (Executive) – Dec 2016 (4 Marks)
Ans.: As per Section 96(2) , an AGM can be held 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 situate.
The Central Government is empowered to exempt any company from these provisions, subject to such conditions as it may impose.
thus, private company can held AGM outside india if it applies to the Central Government for relaxation of provisions of Section 96 of the Companies Act, 2013.
Que. No. 10] What are the consequences if default is made in holding AGM?
Ans.: Consequences for making default in holding AGM are as follows:
(1) Power of Tribunal to call AGM [Section 97]: if any default is made in holding the AGM of a company, any member of the company may make an application to the tribunal to call or direct the calling of, an AGM of the company and give such ancillary or consequential directions as the tribunal thinks expedient. Such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
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(2) Punishment for not holding AGM [Section 99]: if any default is made in complying or holding AGM of the company, the company and every officer of the company who is in default shall be punishable with fine which may extend to **1 lakh** and in case of continuing default, with a further fine which may extend to
5,000 for each day during which such default continues. Judicial Views: u Where the AGM has been stayed the orders of CLB/tribunal, there is no default in holding AGM. [Ador-Samia Ltd. vs. Indocan Engineering Systems Ltd.] u if at the time of holding the AGM there is only one shareholder (the other having died), no offence is committed when the AGM is not held. [State of Kerala vs. West Coast Planners Agencies Pvt. Ltd. (1958) 28 Com. Cas. 13]
Que. No. 11] What do you understand by ‘ordinary business’ and ‘special business’? State the matters of ordinary business to be transacted at an annual general meeting. CS (Inter) – June 2001 (4 Marks)
Ans.: Ordinary & Special Business [Section 102(2)]: All businesses transacted at an AGM except the following are special business: (i) Consideration of financial statements & reports of the BOD and auditors (ii) Declaration of any dividend (iii) Appointment of directors in place of those retiring (iv) Appointment and the fixing remuneration of auditors. in case of any other meeting all business shall be deemed to be special.
Que. No. 12] Distinguish between: Ordinary Business & Special Business CS (Inter) – Dec 2006 (4 Marks)
Ans.: Following are the main points of distinction between ordinary & special business: Points Ordinary Business Special Business Meaning Following four business are ordinary business: (1) the consideration of the accounts, bal- ance sheet and the reports of the board of directors and auditors (2) the declaration of dividend (3) the appointment of directors in the place of those retiring (4) The appointment and fixing of remunera- tion of the auditors.
All business to be transacted at an AGM shall be deemed special business except which are ordinary businesses.
Where transacted
Ordinary businesses are transacted at AGM. Special businesses can be transacted at AGM or EGM. Resolution Any matter to be dealt at AGM may be ‘ordi- nary business’ but it may require passing of ‘special resolution’.
Any matter to be dealt at AGM or EGM may be ‘Special business’ but it may require passing of ‘ordinary resolution’.
Extraordinary GEnEral MEEtinGs
Que. No. 13] Write a short note on: Extraordinary General Meetings State the provision and conditions for holding extraordinary general meeting on requisi- tion. CS (Inter) – Dec 2001 (16 Marks)