• Meeting should be called by proper authority

The first essential requisite of a valid meeting is that it should be called by a proper authority. Obviously the only proper authority is the Board of directors, except when the meeting has, in the event of default by the directors, been called by the requisitionists or by the Tribunal.

In the case of Harben v Phillip:Certain directors held a meeting of the Board but they prevented some lawfully constituted directors from attending the meeting. A quorum was, however, present. It was held that as the meeting of the Board was unlawful, the notice convening the general meeting also became invalid.

• Notice [S. 101]

The second requirement of a valid meeting is that a proper notice of the meeting should be given to the members. Notice should be given to every member of the company. Deliberate omission to give notice to a single member may invalidate the meeting, 46 although an accidental omission to give notice to, or non-receipt of it by, a member will not be fatal. [S. 101(4)].

Notice should be in writing and must be given 21 days before the date of the meeting. “21 days” are to be computed from the date of receipt of the notice by members and the notice shall be deemed to have been received at the expiration of 48 hours from the time of posting.

 NVR Nagappa Chettiar v Madras Race Club is an illustration in point: Notices were posted on October 16, for a meeting to be held on November 7. The notice was held to be short by one day as in computing the interval of 21 days the date of posting and date of meeting should be excluded.

Where notices were posted during a period of postal strike and decidedly would not have been served upon members, the court said that the strike was in itself an evidence of the fact that there would not be effective service and, therefore, the presumption of deemed service was ruled out as held in the case of Bradman vs Trinity Estate Ltd 1989.

• Contents of Notice : (Ss. Wow-102)

Notice should specify the place and day and hour of the meeting and the meeting to be valid must be held at the place and time specified, except, perhaps, in a situation that arose in Rao Bahadur MRS Rathnavelusami v MRS Manickavelu Chettiar 1951

On the failure of the directors of a company to call a meeting on a requisition, the requisitionists themselves sent a notice to all the members for a meeting to be held at the registered office of the company. But the managing director locked the premises of the registered office. It was held that a meeting held at some other place and the resolutions passed thereat were valid.

Again, the notice must contain a statement of the business to be transacted at the meeting. Section 102 puts businesses into two categories, namely:

1. General business. – At the annual meeting the business of considering accounts and directors’ report, the declaration of dividends, the appointment of directors and auditors and fixing their remuneration are regarded as general business.66
2. Special business. –Any other business at an annual meeting and all business at extraordinary general meetings are regarded as special business.67

Further issue of capital, being a special business, required to be mentioned in the notice. Not to have done so rendered the meeting, its notice and the further issue to be invalid.

• Explanatory Statement :

If any special business is to be transacted at an annual meeting, a statement to that effect must be annexed to the notice calling the meeting. The statement must set out all the material facts concerning each item of the special business and should also disclose the interest of any director or other key managerial personnel in the matter. “Notice must give a sufficiently full and frank disclosure to the shareholders of the facts upon which they are asked to vote.” The purpose of the explanatory statement is that the members should be informed of the nature of the business to be transacted at the meeting.? Section 102 specially provides about the contents of the statement.

A statement setting out the following material facts concerning each item of special business to be transacted at the meeting has to be annexed to the notice calling the meeting:

• The nature of concern or interest ; financial or otherwise
• Every director and manager if any
• Every other key managerial personnel
• Relatives of the above-mentioned persons
• Any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decisions on them.

The notice must be frank , clear and satisfactory as held in the case of Naravanlal Bansilal v Maneckji Petit Mfg Co Ltd:1931

A company had managing agents. It wanted to adopt a new set of articles changing the terms of their appointment. The notice convening a meeting of the shareholders for the purpose set out the proposed special resolutions, but did not give particulars of the important changes to be effected. Accordingly, the resolutions passed on the basis of this notice were held invalid.

• Benefits of non-disclosure [S. 102(4)].-Where as a result of 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 persons or their relatives, either directly or indirectly, he has to hold such benefit in trust for the company and be liable to compensate the company to the extent of the benefit received by him.

Penal consequences of default [S. 102(5)].-For any default in complying with the provisions of the section, every promoter, director or manager or other key personnel who is in default is punishable with fine extending to Rs 50,000 or five times the amount of benefit accruing to the person concerned whichever is more.

• Quorum [S. 103]

Another requirement of a valid meeting is the presence of a quorum.

Quorum means the minimum number of members that must be present at the meeting. It is generally for the articles to provide what number of members will constitute a quorum.

But Section 103 provides that unless the articles  provide for a large number five members personally present the he case of a public company and two in the case of a private company shall be the quorum for a meeting. If within half an hour from the time of a meeting a quorum is not present the meeting will stand dissolved if it was called upon requisition.

But in other cases, the meeting is automatically adjourned to re-assemble on the same day in the next week.”

And if at the reassembled meeting also a quorum is not present within half an hour, as many members as are actually present shall constitute the quorum. The crucial problem in such a case is that if only one member turns up, will the meeting be valid, or, in other words, whether a meeting attended by only one member can be called a meeting at all. This was the question in Sharp v Dawes: 1876:

There were several shareholders in a company. A meeting was called for the purpose of making a call. Only one shareholder attended the meeting. He, however, held the proxies of other shareholders. He took the chair and passed a resolution for making a call and then proposed and passed a vote of thanks. In giving judgment in the Court of Appeal, said: “The word ‘meeting’ prima facie means a coming meaning of the Act.” together of more than one person.

• Where the meeting commenced about 1½ hours late because there was no quorum within half hour of the scheduled time, it was held that Section 174 now S. 103] refers only to the presence of the quorum within half an hour and does not talk of the time at which the meeting should be called to order, a delay in the commencement of the meeting did not invalidate it.
• Where the meeting is called by requisitionists under Section 100, it becomes cancelled if the quorum is not present. In the case of an adjourned meeting or of a change of day, time or place of meeting, the company has to give not less than three days notice to the members either individually or by publishing an advertisement in newspapers one is English and one in vernacular language which is in circulation at the place where the registered office of the company is situate. [S. 103(2)]

• Chairman (Section 104):   For the proper conduct of business at a meeting a Chairman is necessary.

His appointment is usually regulated by the articles of association. But if there is nothing in the articles “the members personally present at the meet. ing shall elect one of themselves to be the Chairman”

• Power of adjournment and postponement. -The position and powers of a Chairman were explained by the Madras High Court in Narayana Chettiar v Kaleeswara Mills:°

If the Chairman unjustly and without the consent of shareholders stops the meeting, it is perfectly within the powers of the meeting to elect another Chairman and conduct the remaining unfinished business.

• Mixed nature of duty.-Further, it has been held in Ram Narain v Ram Kishen” that: A Chairman who presides over a meeting of a company is neither wholly a ministerial officer nor wholly a judicial officer; his duties are of a mixed nature, and he is not liable to be mulcted in damages, if, acting bona fide according to the best of his judgment and without malice, he erroneously excludes a shareholder from voting and declares him to be ineligible as a director of the company. A shareholder who has been wrongfully refused the right of voting or of election as a director, cannot maintain an action of damages against the Chairman of the company.
• Where a shareholder pledged his shares with a bank with voting rights and the bank lodged the documents with the company for the purpose of exercising voting rights, it was held that the Chairman had no power to examine validity of the documents.
• Casting vote. – In the case of a tie of votes, the Chairman can exercise a casting vote. This right can be exercised by the person who is occupying the chair. It is not necessary that he should be a regularly elected Chairman.
• Informal appointment.- The shareholders invited a person (claimant) to be the Chairman of the company but no resolution was passed appointing him as such. The shareholder could not say that there was no appointment.
• Appointment by the court .-The court also has the power to appoint an independent Chairman to preside over a meeting of a company. Such a Chairman is particularly necessary where there are factions among the shareholders and a peaceful meeting under the chairmanship of a person appointed by either faction is improbable.

• Proxies :  

A person who is appointed by a member to attend and vote at a meeting in the absence of the member at the meeting is termed as proxy. Thus proxy is an agent of the member appointing him.

The term ‘proxy’ is also used to refer to the instrument by which a person is appointed as proxy. Section 105 of the Companies Act, 2013 provides that a member, who is entitled to attend to vote, can appoint another person as a proxy to attend and vote at the meeting on his behalf. This section also provides the manner of appointing proxy. The provisions are as follows.

• Appointment of proxy: Any member of a company who is entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf. If a Proxy is appointed for more than fifty Members, he shall choose any fifty Members and confirm the same to the company before the commencement of specified period for inspection.
• Disabilities of proxy: A proxy shall not have the right to speak at the meeting. A proxy cannot vote on a show of hands. A proxy is not counted for the purpose of quorum.
• Rights of proxy: A proxy has the right to attend the meeting. A proxy has the right to vote only on a poll. A proxy, if eligible under section 109, has the right to demand a poll.
• Restriction on proxy: A member of a company registered under section 8 (Not for Profit Company) shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company.
• Time limit for deposit of proxy forms: The instrument appointing the proxy must be deposited with the company, 48 hours before the meeting. Any provision contained in the articles, requiring a longer period than 48 hours shall have effect as if a period of 48 hours had been specified.
• Records of proxies: Para 6.9.1 of SS-2 requires that all Proxies received by the company shall be recorded chronologically in a register kept for that purpose. Para 6.9.2 of SS-2 provides that in case any Proxy entered in the register is rejected, the reasons therefore shall be entered in the remarks column.
•  The prescribed form: For appointing a proxy is Form No. MGT 11. It needs to be in writing and signed by the appointer or his attorney duly authorised in writing. If the appointer is a body corporate, the instrument should be under its seal or be signed by an officer or an attorney duly authorised by the body corporate. An instrument appointing a proxy, if in MGT-11, shall not be questioned on the ground that it fails to comply with any special requirement specified for such instrument by the article of a company.

Proxy clause with reasonable prominence [Section 105(2)]: Every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, should carry with reasonable prominence, a statement that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member.

Position of OPC in India under the Companies Act, 2013: The Companies Act, 2013 classifies companies on the basis of their number of members into One Person Company, private company and public company. As stated above, a private company requires a minimum of2 members. In other words, a One Person Company is a kind of private company having only one member.

• Voting : The business of a meeting is done in the form of resolutions passed at the meeting. Shareholders have the right to discuss every proposed resolution and to move amendments. If an amendment is reasonably germane to a proposed resolution and is not in substance a negative of it, it must be admitted and put to the meeting.

 Accordingly, in TH Vakil v Bombay Presidency Radio Club: 1945  Where at a meeting of a company the Chairman wrongfully ruled an amendment out of order, it was held that the subsequent proceedings relating to that particular motion were invalidated.

After a resolution has been discussed it is put to vote. Voting right means the right of a member of a company to vote in any meeting of the company or by means of postal ballot. [S. 2(93)] Every holder of equity shares has the right to vote.

• Postal Ballot: Section 110 and Rule 22 of Companies Management and Administration Rules : Meaning of postal ballot: As per section 2(65) “postal ballot” means voting by post or through any electronic mode. It includes voting by shareholders by postal or electronic mode instead of voting personally for transacting businesses in a general meeting of the company.

By show of hands [S. 107].– In the first instance, voting on a resolution takes place by show of hands. On a show of hands, one member has one vote. A declaration by the Chairman on a show of hands that a resolution has or has not been carried is conclusive, except when a poll is demanded or when as held by the Calcutta High Court in Dhakeswari Cotton Mills Ltd vs. Nil Kamal Chakravorty:1937.

A declaration by the Chairman would be conclusive only if he does not find by his declaration the figures for or against the resolution. But where the Chairman finds the figures and erroneously in point of law holds that a resolution has been duly passed, the resolution cannot be said to have been passed according to law.

• Poll (Section. 109)  – If there is a dissatisfaction about the result of voting by show of hands a poll can be demanded.18 Taking a poll means recording the number of votes cast for or against a resolution. The “voting right of a member on a poll shall be in proportion to his share of the paid-up equity capital of the company.”

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