NOTICE OF MEETING (SECTION 101):

A General meeting of a company may be called by giving not less than clear twenty – one days’ notice either in writing (i.e. in paper form) or through electronic mode.

If consent is given in writing or by electronic mode by not less than ninety – five percent of members entitled to vote at such meeting, a general meeting may be called after giving a notice of a shorter period, which is called shorter notice (not short in contents but time period).

Every notice of a meeting shall specify the place, date, day and the hour of the general meeting. Every notice shall contain a statement of the business to be transacted at the meeting. This means, a notice shall include agenda of the meeting.

The notice of every meeting of the company shall be given to –

(a)  Every member of the company, legal representative of any deceased member or the assignee of an insolvent member;

(b) The auditors of the company; and

(c)  Every director of the company.

Any accidental omission to give notice to or any non – receipt of such notice by any of these person shall not invalidate the proceedings of the meeting.

STATEMENT TO BE ANNEXED TO NOTICE (SECTION 102):

A statement setting out material facts concerning each item of special business to be transaction at a general meeting shall be annexed to the notice calling such meeting. The term annexed show this statement is not part of agenda but annexure to the notice. Following information shall be material information for each special business item:

Notice it, not seriously but Company Notice is serious business (Photo credit: Squirmelia)

(a)  The nature of concern or interest, financial or otherwise, if any, in respect of each item—

1. Every director and the manager, if any;
2. Every other key managerial personnel; and
3. Relatives of every director, manager and key managerial personnel

(b) Any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.

Where any item of special business to be transacted at a meeting of the company relates to or affects any other company, the extent of shareholdings interest in that other company of every promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned company shall, if the extent of such shareholdings is not less than two per cent of the paid-up share capital of that company, also be set out in the statement.

In simple words, where any item of special business is related to or affecting any other company where any director or key managerial personnel has share holding interest of not less than two percent of paid up capital, this shareholdings interest shall also be disclosed in the statement.

Where any item of business refers to any document, the time and place where the document can be inspected shall be specified.

Special Business:

In case of annual general meeting, all business shall be deemed special business except –

(i)           The consideration of financial statements and the reports of the Board of Directors and auditors;

(ii)          The declaration of any dividend;

(iii)         The appointment of directors in place of those retiring; and

(iv)         The appointment of and the fixing of the remuneration of the auditors.

In case of any other meeting, all business shall be deemed to be special business.

Penalties related to general meetings:

Where as a result of the non-disclosure or insufficient disclosure in any statement being made by a promoter, director, manager, if any, or other key managerial personnel, any benefit which accrues to such promoter, director, manager or other key managerial personnel or their relatives, either directly or indirectly, the promoter, director, manager or other key managerial personnel, as the case may be, shall hold such benefit in trust for the company, and shall, without prejudice to any other action being taken against him under this Act or under any other law for the time being in force, be liable to compensate the company to the extent of the benefit received by him.

If any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel who is in default shall be punishable with fine which may extend to fifty thousand rupees or five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is more.

QUORUM FOR MEETINGS (SECTION 103):

The quorum in case of a public company is –

An Annual General Meeting, October 8, 2004 (Photo credit: Wikipedia)

(a)  Five members personally present if number of members are not more than one thousand;

(b) Fifteen members personally present if number of members are more than one thousand but not more than five thousand; and

(c)  Thirty members personally present if the number of members are more than five thousand.

The quorum in case of private limited company is two members personally present.

Where it is a meeting called by requisitionists and quorum is not present within half an hour of the time appointed, the meeting shall stand cancelled.

If the quorum is not present within half an hour of the time appointed for the meeting, the meeting shall stand adjourned to the same say in the next week at the same time and place or to such other date, time and place as the Board may determine.

In case of an adjourned meeting or of a change of day, time or place of meeting, the company shall give not less than three days notice to the members either individually or by publishing an 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. Hence, it will add compliance cost in addition of cost of place and other arrangement for the meeting.

Thankfully, If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.

CHAIRPERSON OF MEETINGS (SECTION 104):

The articles of a company may name a person or a position as chairperson of a meeting. Otherwise, the members personally present at the meeting shall elect one of themselves to be the chairperson on a show of hands.

If a poll is demanded on the election of the Chairman, it shall be taken forthwith and the Chairman elected on a show of hands shall continue to be the Chairman of the meeting until some other person is elected as Chairman as a result of the poll, and such other person shall be the Chairman for the rest of the meeting.

This is important to note, requirement of number of independent director on company board is depends upon status of chairperson as executive or non – executive. Where company want to reduce number of independent directors, article may name a person or better a position as a non – executive chairperson.

CIRCULATION OF MEMBERS’ RESOLUTION (SECTION 111):

A company shall on requisition in writing of requisitionists under section 100, give notice to members of any resolution which may properly be moved and is intended to be moved at a meeting. The company shall also circulate any statement related to the proposed resolution or business to be dealt with at the meeting.

The company shall bound to give notice of resolution or circulate any statement only when –

(a)  A copy of resolution signed by the requisitionists is deposited at the registered office of the company not less than six weeks before the meeting;

(b) A copy of statement signed by the requisitionists is deposit at the register office of the company not less than two weeks before the meeting.

The requisitionists shall also deposit or tendered with the requisition, a sum reasonably sufficient to meet the company’s expenses in giving effect thereto.

If, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called on a date within six weeks after the copy has been deposited, the copy, although not deposited within the time required by this sub-section, shall be deemed to have been properly deposited for the purposes thereof.

When not to circulate:

The company is not required to circulate any statement if, the Central Government by order declares that the right conferred under this section are being abused to secure needless publicity for defamatory matter. The Central Government may do so on application made either by the company or of any other person who claims to be aggrieved.

This order of Central government may also direct that the cost incurred by the company for moving this application shall be paid to the company by the requisitionists. The fact that requisitionists were not party to the application, has no relevance for this order requiring to pay the cost.

If any default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees.