Chapter VI
MEETINGS & PROCEEDINGS
A. BOARD MEETINGS [Topic 131‑133]
B. GENERAL MEETINGS [Topic 134‑144]
C. PROCEEDINGS [Topic 145‑158]
D. NOMINATION FACILITY [Topic
159]
(Topic 131 to Topic 133)
Topic 131
DO YOU WISH TO HOLD A MEETING OF YOUR
BOARD OF DIRECTORS?
1. Consult your
Articles of Association to see who can issue notice for convening a Board
Meeting and follow the procedure laid down by the Articles of Association in
this respect.
2. In the absence
of any provision in this regard in the Articles, any director of a company may
and the manager or secretary on the requisition of a director should at any
time summon a meeting of the Board. [Paragraph 1. 1 of SS 1].
3. If your
company is a public company limited by shares and there is no specific
provision in the Articles of Association of your company as to who can summon a
meeting of the Board of Directors, follow Regulation 73(2) of Table A of
Schedule I to the Companies Act, 1956.
4. Keep in mind
that a private company which is a subsidiary of a public company will be
treated as a public company under section 3(1)(iv)(c).
5. Ensure that
the Board Meetings are held at least once in every three months with a maximum
interval of 120 days between any two meetings such that at least four meetings
are held in each year. [Paragraph 2. 1 of SS 1]
6. Notice should
be given in writing to every director in India, and at his usual address in
India if a director is not in India. [Section 286]
7. Give notice by
hand or by post or by facsimile or by e‑mail or by any other electronic
mode where a director specifies a particular mode the notice should be given to
him by such mode. [Paragraph 1.2.1 of SS 1]
8. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of Rs. 1000/‑ [Section 286(2)]
9.
A. It is not obligatory to give agenda in the notice but
generally the agenda is accompanied by the notice
B. For the minimum information to be made available to the
Board of a listed company, see Annexure I of clause 49.IVA of the Standard
Listing Agreement.
9A. Give the
agenda setting out the business to be transacted at the Board Meeting and also
notes on agenda at least 7 days before the date of the meeting. [Paragraph
1.2.6 of SS 1].
10. In the case of
public companies and their subsidiaries, however, specific notice is required
for the following purposes:
(i) for making certain investments in shares of other companies
or giving loan or providing guarantee and security in connection with such loan
to other companies under section 372A(2).
(ii) for appointing a person as a managing director of more than
one company. [Section 316(2) Proviso];
(iii) for appointing a person as a manager of more than one company.
[Section 386(2) Proviso].
11.
(a) The Board Meeting must be held at least once in every three
months so that at least four such meetings are held in each year, unless
otherwise notified by the Central Government under Section 285.
(b) If you are a listed company, the Board meeting shall be held
at least four times a year, with a maximum gap (time gap) of four months
between any two meetings. [Clause 49. IV A. of Standard Listing Agreement]
12. Note that if
your company has been granted a 'Licence' under section 25 the aforesaid
provision of section 285 will apply only to the extent that the Board of
Directors, Executive Committee or Governing Committee of your company must hold
at least one meeting within every six months. [Section 25(6)]
13. Where a Board
Meeting is called but not held for want of quorum that simply will not be
considered a default. [Section 288(2)]
14. See that the
Memorandum and Articles of Association are kept ready before the meeting and
taken to the Board room.
15. See that the
Director's attendance register containing the names and signatures of the
directors present, register of contracts, companies and firms in which
directors are interested [Section 301] and register of directors [Section 303]
are there before the meeting of the Board.
16. Keep the
minutes of the previous Board Meeting ready for confirmation by the Board of
Directors and for signing by the Chairman of this meeting.
17. Hold the
meeting on the appointed date and see that a quorum of one‑third of the
total strength of directors (any fraction of one‑third to be rounded off
to one) or two directors, whichever is higher, is present.
18. Ensure that
the quorum is present throughout the Board Meeting and do not transact any
business when the quorum is not so present. [Paragraph 3.1.1 of SS. 1]
19. See that leave
of absence is granted to a director only when a request for such leave has been
communicated to the secretary of your company or to the Board of Directors or
to the Chairman. [Paragraph 4.2 of SS 1]
20. In case of a
public company or its subsidiary or holding company, if the number of directors
interested within the meaning of Section 300, exceeds or is equal to two‑thirds
of the total strength, the remaining directors, not being less than two, shall
form the quorum. [Section 287]
21. On getting the
full quorum as aforesaid, discuss the business in the meeting as per item of the
agenda.
22. If the number
of directors is reduced below the minimum fixed by the Articles of Association
of your company, do not transact any business unless the number is first made
up by the remaining, directors of your company or through a general meeting.
[Paragraph 3.1.2 of SS 1]
23. Keep in the
agenda an item called any other business to be taken up with the permission of
the Board where any urgent business which is not specifically mentioned earlier
can be taken up.
24. See that every
director of your company who is in any way concerned or interested in a
contract or arrangement of the company discloses the nature of his concern or
interest in the meeting.
25. See that
interested directors do not take part in the discussion or vote on any contract
or arrangement. [Section 300(1)]
26. Please also
keep in mind that every director who knowingly contravenes the aforesaid
requirement will be punishable with fine upto Rs. 50,000/- [Section 300(4)]
27. Further keep
in mind that if your company's paid‑up share capital is less than Rs. 50
lakhs but is also equal to or more than Rs. 10 lakhs then your company is
required to obtain a Compliance Certificate from a secretary in wholetime
practice to be filed with the Registrar of Companies stating therein inter
alia that the directors of your company have disclosed their interest in
other firms or companies to the Board of Directors pursuant to the provisions
of the Act and the rules made thereunder as per clause 18 of the Form of
Compliance Certificate appended to the Companies (Compliance Certificate)
Rules, 2001.5 [Section 383A (1)
proviso ]
28. See that vote of thanks is given to the Chair at
the conclusion of the Board Meeting.
Topic 132
DO YOU WISH TO HOLD FIRST BOARD MEETING?
1. First Board
Meeting is to be held as per Topic 131. Only see that the following
transactions take place in that meeting and the agenda accompanying the notice
contains reference of all these transactions:
(i) Election
of the chairman of that particular meeting;
(ii) Appointment
of chairman of the Board of Directors;
(iii) Production of certificate of incorporation of your company
before the Board;
(iv) Production of a copy of the Memorandum and Articles of
Association of your company;
(v) Production of a copy of the filing of consent by your
company's directors named in the Articles in Form No. 29 with the concerned
Registrar of Companies;
(vi) Appointment
of Secretary of the company;
(vii) Appointment of first auditors who are to hold office until the
conclusion of the first Annual General Meeting. [Section 224(5)];
(viii) Adoption
of common seal;
(ix) Production of a copy of the notice of the situation of the
registered office of your company in Form No. 18 [Section 146] if filed with
the Registrar with your company's Memorandum and Articles of Association; if
not, then take decision as regards situation of registered office in the first
Board Meeting and file the aforesaid notice within thirty days of the receipt
of the certificate of incorporation;
(x) Opening
of a bank account;
(xi) Allotment of shares agreed to be taken by the subscribers to
the Memorandum;
(xii) Approving the statement in lieu of prospectus if the company is
a public company;
(xiii) Approving the statement of preliminary expenses expended by the
promoters;
(xiv) Adoption
of preliminary contracts;
(xv) Give
direction to the Secretary to purchase books and registers;
(xvi) Authorising
the Board to take loans;
(xvii) Authorising
the Board to make investments;
(xviii) Authorising the Secretary to file particulars of directors,
manager or secretary in Form No. 32 in duplicate, and Form No. 29 with the
concerned Registrar of Companies within thirty days of the receipt of the
certificate of incorporation if this is not already done by the Secretary or
any Director of the Company, Form No. 29 is required to be filed only in case
of a public company;
(xix) Deciding
the date, time and place of the next Board Meeting;
(xx) Appointing the first directors by the subscriber if the names
of directors are not mentioned in the Articles of Association.
2. In addition to
the above itdms of business your company can have the following items in the
agenda of the first board meeting as per illustrative list of items of business
given in Annexure B of SS 1:-
(i) To
note the situation of the registered office of the company;
(ii) To read and record the notices'of disclosure of interest
given by the directors;
(iii) To
consider the appointment of additional directors;
(iv) To
fix the financial year.
3. The notice
issued to directors to convene the first Board Meeting must mention that it is
the first Board Meeting of the company.
4. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1000/-. [Section 286(2)]
5. If the
Articles of Association of a Company provide for holding of Board Meetings at
specified hour on a specified day or dates of particular months viz. 2nd of
April, July, October and January, notice of such meetings need not be given.
6. Please ensure
that the first Board Meeting is held within a month of the incorporation of the
company so that the first auditors of your company can be appointed. [Section
224(5)]
7. Please also
see if your company is a public company that draft of the statement in lieu of
prospectus as per Schedule III of the Act is filed with the concerned Registrar
of Companies.
8. Please keep in
mind that if your company is a private company which is a subsidiary of a
public company it will be treated as a public company. [Section 3(1)(iv)(c)]
Topic 133
DO YOU WISH TO PASS A BOARD RESOLUTION
BY CIRCULATION?
1. Circulate the
draft of the resolution in duplicate with all necessary papers, if any, to all
the directors then in India not being less in number than the quorum for a
Board Meeting and to all other directors at their usual addresses in India for
approval by signing one copy of the resolution and sending it back to the
company.
2. Send the draft
resolution together with necessary papers, individually to all the directors or
in the case of a committee to all the members of the Committee. [Paragraph 6.1
of SS1]
3. Send the draft
resolution and the necessary papers to be circulated by hand or by post or by
facsimile, or by e‑mail or by any other electronic mode. [Paragraph 6.2
of SS 1]
4. If all or
majority of the above directors as are entitled to vote on the resolution
approve the resolution, the resolution shall be deemed to have been duly passed
by the Board. [Section 289]
5. Record the
resolution having been passed by circulation in the minutes of the immediate
next Board Meeting.
6. See that the
resolution in the case of the following matters are not passed by the Board by
circulation:
(a) Filling up of casual vacancy in the office of a director
appointed in a General Meeting. [Section 262(1)];
(b) To
make calls on members. [Section 292(1)(a)];
(c) to authorise, the buy‑back referred to in the first
proviso to clause (b) of sub‑section (2) of section 77A. [Section
292(1)(aa)]
(d) To
issue debentures. [Section 292(1)(b)];
(e) To
borrow money otherwise than above. [Section 292(1)(c)];
(f) To
invest funds. [Section 292(1)(d)];
(g) To
make loans. [Section 292(1)(e)];
(h) To
delegate powers. [Section 292(1)(c), (d) & (e)];
(i) To
approve contracts in which directors are interested. [Section 297];
(j) To note the general disclosure of directors' interests or
the general notice or renewal thereof. [Section 299];
(k) To note disclosure of shareholdings of directors and manager.
[Section 307];
(l) In
the case of a public company and its subsidiary only:
(i) to appoint a person as manager or managing director in more
than one company. [Sections 316 and 386];
(ii) to
make inter‑corporate loans and investment. [Section 372A]
7. Please enclose
a copy of the Circular Resolution to the agenda of the ensuing immediately
next Board Meeting mentioning in the notes that the said resolution was
approved by so many number of directors and a certain number of directors
dissented from it, if any and also that it was passed by majority of directors.
8. Note that Circular Resolution should be deemed to
have been passed.
(Topic 134 to Topic 144)
Topic 134
DO YOU WISH TO HOLD A STATUTORY MEETING?
1. Prepare the
statutory report in Form No. 22 giving abstract of receipt and payments made
from the date of incorporation up to a date within the previous seven days from
the date of the report. [Section 165]
2. Convene a
Board Meeting after giving notice to all the directors of the company as per
Section 286 and approve the report.
3. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1000/‑. [Section 286(2)]
4. Get the
statutory report certified as correct by not less than two directors, one of
whom should be a managing director, if there is one.
5. Obtain the
auditor's certificate as to the correctness of the shares allotted, cash
received on that account and the receipt and payments. [Section 165(4)]
6. Unless the
members otherwise agree, send the statutory report to them atleast twenty‑one
days before the statutory "meeting along with the notice thereof.
7. See that the
notice specifically states that the meeting is to be the statutory meeting.
[Section 165(2)]
8. Include in the
notice any resolution, if any, which a member has notified to propose in the
meeting.
9. If the shares
of your company are listed on a recognised Stock Exchange then do the following
:
(i) Forward
to it three copies of the notice of the statutory meeting;
(ii) Forward to the Stock Exchange promptly six copies of the
statutory report and send one copy each to all the recognised Stock Exchanges
in India as soon as they are issued. [Clause 31(a) of the Standard Listing
Agreement]
10. File in Form
No. 22 a copy of the statutory report duly certified as afore said, with the
concerned Registrar of Companies immediately after the same has been sent to
the members. [Section 165(5)] after paying the requisite fee prescribed
under Schedule X to the Companies Act, 1956, either in cash or treasury
challan. [Rule 22]
11. A public
limited company having a share capital and every company limited by guarantee
and having a share capital has to call a statutory meeting within a period of
not less than one month and not more than six months from the date at which the
company is entitled to commence business. [Section 165 (1) read with paragraph
2.1 of SS 2]
12. A private
company is not required to hold a statutory meeting unless converted into a
public company within six months of its incorporation.
13. Keep in mind
that if your company is a private company which is a subsidiary of a public
company, it will be treated as a public company. [Section 3(1)(iv)(c) ]
14. Hold the
statutory meetingt on the appointed date and transact the following business
:-
(a) Produce a list showing the names, addresses and occupations
of the members and the number of shares held by each of them and keep the list
open and accessible to members during the meeting. [Section 165(6)]
(b) Discuss the resolution for which any of the members has given
notice. If no notice was given, the members are still at liberty to discuss any
matter relating to the formation of the company or arising out of the statutory
report, but without passing any resolution. [Section 165(7)]
(c) Approve
and adopt the statutory report.
15. If your
company is a Government Company, then you are exempted from the provisions of
Section 165.
16. Please keep in
mind that if default is made in complying with the provisions of section 165,
every director or other officer of the company who is in default will be
punishable with fine upto Rs. 5,000/-. [Section 165(9)]
Topic 135
DO YOU WISH TO HOLD AN ANNUAL GENERAL
MEETING?
1. Hold the first
Annual General Meeting within eighteen months after incorporation and if that
is done, there is no necessity of holding any other Annual General Meeting in
the year of incorporation or in the following year. [Proviso to Section 166(1)
read with paragraph 2.2. of SS 2]
2. Thereafter
hold the Annual General Meeting every year so that not more than fifteen months
elapse between the two Annual General Meetings.
3. In case of
delay for any special reason, make an applicationt for extension to the
concerned Registrar of Companies vide Topic 206 who can grant extension
only upto a period of three months. [Section 166(1) read with paragraph 2.2. of
SS 2]
4. Note that as
per the Citizen's Charter of the Department of Company Affairs, Schedule III,
Serial No. 5, this application for extension of time for holding Annual General
Meeting will be processed within 10 days. [No. 5/25/99‑CL‑V, Press
Note No. 9/99, dated 9‑8‑1999]
5. If your
company is a Government Company, then make the application for extension to the
Central Government.
6. Convene a
Board Meeting after giving notice to all the directors of the company as per
section 286 and approve the date, time, place, agenda, draft balance‑sheet
and profit and loss account, directors' report, notice of the Meeting.
7. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto,Rs. 1000/-. [Section 286(2)]
8. The time
should be during business hours, the date should not be a public holiday, and
the place should be either the registered office or some other place within the
same city, town or village in which the registered office of the company is
situated unless an exemption in this regard has been granted by the Central
Government. [Section 166(2)]
9. Note that if
your company has been granted a 'Licence' under section 25, your company
is exempted from the provisions of section 166(2) provided that the time date
and place of each annual general meeting are decided upon before hand by the
Board of Directors having regard to the directions, if any, given in this
regard by your company in general meeting. [Section 25(b)]
10. The time and
place may also be fixed in the Articles of Association of the company or in any
Annual General Meeting or by members in accordance with the second proviso to
Section 166(2), and its provisos.
11. If any
dividend be declared in the Annual General Meeting, then consider the payment
of dividend also in the Board Meeting.
12. If the shares
of your company are quoted on a Stock Exchange, inform the Stock Exchange about
the Board Meeting where recommendation of dividend is considered. [Clause 19 of
the Standard Listing Agreement]
13. Public holiday
is defined in section 2(38) of the Act as a public holiday within the meaning
of the Negotiable Instruments Act, 1881.
14. But no day
declared by the Central Government to be a public holiday shall be deemed to be
such a holidav. in relation to anv meetiniz unless the declaration was
notified before the issue ot the notice convening such meeting. [section 2(38),
Proviso]
15. If the shares
of your company are listed on a recognised Stock Exchange, then just after the
Board Meeting intimate to the Stock Exchange the decision taken by the Board
with regard to the dividend and also the particulars of profit, tax liability,
amounts appropriated from reserves etc. [Clause 20 of the Standard Listing
Agreetnent]
16. Please keep in
mind that SEBI has advised the Stock Exchanges to amend clause 20 of the
listing agreement to provide that such announcement be made immediately on the
date of the Board Meeting only after the close of the market hours. [Circular
No. SMD II/Policy/CIR 2000, dated 6‑4‑2000, issued by SEBI]
17. Specifically
mention in the notice that the same is for the Annual General Meeting. [Section
166(1)]
18. The notice of
the Annual General Meeting should be in writing and should at least be
given for twenty. one clear days [Section 171(1)] and where it is to be
sent by post it should be posted forty‑eight hours still earlier.
[Section 53(2)(b)(i)]
19. If your
company is a listed company, with more than 5000 members, then ensure that an
bridged version of the notice listing the items of business and the day, date,
time and place of the meeting is published in a newspaper with a circulation in
the whole or substantially the whole of India. [Paragraph 1.2.3 of SS 2]
20. Send notice
and accompanying documents at least 25 days in advance of the meeting and
ensure that such notice is accompanied by an attendance slip and a proxy form
with clear instructions for filling, stamping, signing and depositing the proxy
form. [Paragraphs 1.2.4 and 1.2.9 of SS 2]
21. Note that if
your company has been granted a 'Licence' under section 25, your company can
call a general meeting by giving a notice in writing of not less than 14 days.
[Section 25(6)]
22. The notice
should specify the complete address of the venue of the metting, date, hour and
agenda of the meeting. [Section 172(1) read with paragraph 1.2.2 of SS 2] and
Explanatory Statement should be annexed vide Topic 152 in respect of special
business other than the four ordinary business for an Annual General Meeting as
mentioned in Section 173.
23. A shorter
notice may also be given if so consented to by all the members in writing in
Form No. 22A. [Section 171(2)(i) read with paragraph 1. 2.5 of SS 2]
24. The notice is
to be given to all the members, to all the debenture holders, if any, to every
person entitled to a share of the company in consequence of death or insolvency
of a member, to every trustee of debenture holders and to the directors and
auditors of your company, in the manner specified in Section 171(2) and also to
other specific recipients. [Paragraph 1.2. 1 of SS 2]
25. The Articles
of Association of a private company, not being a subsidiary of a public company
may provide otherwise excepting that of the aforesaid provision of posting the
notice forty‑eight hours earlier would in any case apply. [Section
170(1)(ii)]
26. If the shares
of your company are listed on any Stock Exchange, send three copies of the
notices and six copies of the Directors Report, balance‑sheet and profit
and loss account to the Stock Exchange and a copy of each of them to all
recognised Stock Exchanges in India. [Clause 31(a) of the Standard Listing
Agreement]
27. Hold the
meeting and see that the quorum of five members (unless the Articles of
Association provide for a larger number), personally present in the case of a
public company and two members personally present in the case for private
company is present. [Section 174(1)]
28. Keep in mind
that a meeting convened upon due notice should not be postponed or cancelled.
[Paragraph 1.2.10 of SS 2]
29. The Articles
of Association of a private company, not being a subsidiary of a public
company, may provide otherwise. [Section 170(1)(ii)]
30. On the
aforesaid quorum being present, transact the business as specified in the
notice and ensure that the said quorum is present throughout the meeting.
[Paragraph 3 of SS 2]
31. See that no
business is transacted at the meeting if notice in accordance with Secretarial
Standard 2 has not been given and no item of business other than those
specified in the notice is taken up for consideration at the meeting.
[Paragraphs 1.2.7 and 1.2.8 of SS 2]
32. See that the
Chairman of the meeting calls the meeting in order and reads the Chairman's
speech.
33. See that the
Secretary of the company reads the Auditor's Report and ensure that the entire
Auditor's Report including the statement pursuant to the manufacturing and
other Companies Auditors Report order is also read at the meeting. [Paragraph
12 of SS 2].
34. Lay before the
Annual General Meeting, a balance‑sheet as at the end of the period
specified in Section 210(3) and a profit and loss account for that period.
35. If the shares
of your company are listed on a recognised Stock Exchange, then do the following‑.
(i) File with the Stock Exchange immediately after the Annual
General Meeting a schedule in quadruplicate in the form prescribed by the
Exchange showing the distribution of its securities listed on the Exchange as
at the date of the Annual General Meeting and the names and holdings of large
holders as required therein;
(ii) Send a copy of the proceedings of the Annual General Meeting
to the Stock Exchange. [Clauses 35 and 31(d) of the Standard Listing Agreement]
36. File three
certified true copies of the balance‑sheet and profit and loss account
with the concerned Registrar of Companies together with three copies of all
documents which are required to be annexed to them within thirty days from the
date on which they were so laid. [Section 220] after paying the
requisite fee9 in cash as prescribed under Schedule X of the Companies Act, 1956.
37. File with the
concerned Registrar of Companies within sixty days from the day on which the
Annual General Meeting is held an Annual Return containing the particulars
specified in Section 159(1) of the Companies Act, 1956, after paying the
requisite fee in cash as prescribed under Schedule X of the Companies Act, 1956.
38. If there is
any Special Resolution passed in the meeting, then file it Form No. 23 with the
concerned Registrar of Companies within thirty days of its passing [Section
192(1) and (4)(a)] after paying the requisite fees prescribed under
Schedule X to the Companies Act, 1956, either in cash or treasury
challan. [Rule 22]
39. Please keep in
mind that if default is made in complying with the aforesaid requirement, the
company and every officer of the company who is in default will be punishable
with fine upto Rs. 200/‑ for every day during which the default
continues. [Section 192(5)]
40. Please also
keep in mind that if default is made in holding the Annual General Meeting in
accordance with section 166, the company and every officer of the
company who is in default will be punishable with fine upto Rs. 50,000/‑
and in case of continuing default with a further fine upto Rs. 2,500/‑
for every day after the first during which such default continues. [Section
168]
41. Please further
keep in mind that if your company's paid‑up share capital is less than
Rs. 50 lakhs but is equal to or more than Rs. 10 lakhs, then you company is
required to obtain a compliance certificate from a secretary in whole‑time
practice to be filed with the Registrar of Companies mentioning therein inter
alia that the annual general meeting for the financial year ended on a specific
date was held on a specific date giving due notice to the members of the
company and the resolutions passed thereat were duly recorded in minutes book
maintained for the purposes as per paragraph 6 of the Form of compliance
certificate appended to the Companies (Compliance Certificate) Rules, 2001. [Section
383‑A (1) proviso]
Topic 136
DO YOU WISH TO CALL THE ANNUAL GENERAL
MEETING AT THE INSTANCE OF THE COMPANY LAW BOARD?
1. An Annual
General Meeting can be called by the Company Law Board when such a meeting
cannot be held by the company in accordance with the provisions of section 166
and an application is made to it by any member of that company. [Section
167(1)II]
2. Make an
application to the Company Law Board, Northern Region Bench, New Delhi, or
Eastern Region Bench, Kolkata or Western Region Bench, Mumbai or Southern
Region Bench, Chennai, depending on the jurisdiction of the particular Bench on
the situation of the registered office of the company, by way of a petition to
be prepared in Form No. 1 in Annexure II of the Company Law Board Regulations,
1991 and annexed thereto the following:
(i) Affidavit verifying the aforesaid petition which should be
prepared on a non‑judicial stamp paper of the requisite value prevalent
in the State and should be either notarised by the Notary Public or sworn
before the Oath Commissioner.
(ii) Demand
draft evidencing payment of fee of Rs. 500/‑.
(iii) Certified true copy of the Memorandum and Articles of
Association of the Company.
(iv) Certified true copy of the latest audited balance‑sheet
and profit and loss account with directors' and auditors' reports.
(v) Memorandum of Appearance in Form No. 5 of the Company Law
Board Regulations, 1991 with a certified true copy of the Board Resolution or
the executed Vakalatnama as the case may be.
(vi) Original
acknowledgement of the concerned Registrar of Companies.
3. The affidavit
should be drawn up in first person and shall give the full name, age,
occupation and complete residential address of the deponent and shall be signed
by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]
4. If the
deponent is not personally known to the person before whom the affidavit is
sworn, he should be identified by a person who is known to the person before
whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board
Regulations, 1991]
5. The said
affidavit should clearly and separately indicate statements which are true to
the knowledge of the deponent, information received by the deponent, belief of
the deponent and information based on legal advice. [Regulation 14(7) of the
Company Law Board Regulations, 1991]
6. Where any
statement is stated to be true to the information received by the deponent, the
affidavit shall also include the name and complete residential address of the
person from whom the information has been received by the deponent and declare
the deponent believes that information to be true. [Regulation 14(8) of the
Company Law Board Regulations, 1991]
7. Please ensure
that the aforesaid petition is written, type written, cyclostyled or printed
neatly and legibly on one side of the substantial paper of foolscap size in
double space and separate sheets shall be stitched together and every page
consecutively numbered. Numbers and dates specified therein should be expressed
in figures as well as in words. [Regulation 11 of the Company Law Board
Regulations, 1991]
8. The petition
should be divided into separate paragraphs which should be numbered serially
and shall state thereon, the matter and the name of the company to which it
relates. [Regulation 12 of the Company Law Board Regulations, 1991]
9. Please also
ensure that the aforesaid petition is presented by the petitioner in original
and two extra copies thereof in person or through authorised representative to
the office of the Bench or to be sent by registered post with acknowledgement
due addressed to the Bench Officer of the Bench concerned as the case may be.
[Regulation 14(1) of the Company Law Board Regulations, 1991]
10. Affix Court
Fee stamps of the requisite value on the original petition before submission.
11. Deliver a copy
of the petition along with copy of each of the enclosures to the concerned
Registrar of Companies. [Regulation 14(3) of the Company Law Board Regulations,
1991]
12. Draw the
demand draft in favour of the "Pay and Accounts Officer, Department of
Company Affairs, New Delhi", or Calcutta or Mumbai or Chennai as the case
may be depending on the jurisdiction of the Bench, and payable at New Delhi or
Calcutta or Mumbai or Chennai as the case may be. [Annexure I of the Company
Law Board Regulations, 1991]
13. On receipt of
the Company Law Board's approval, call, hold and conduct the Annual General
Meeting according to the directions given by the Company Law Board.
14. If such
directions include that a member present in person or by proxy shall constitute
the meeting, then such will be the quorum of the meeting, regardless of section
174. [Section 167(1), Explanation]
15. If such
directions include that a member present in person or by proxy shall constitute
the meeting, then such will be the quorum of the meeting, regardless of section
174. [Section 167(1), Explanation]
16. Forward three
copies of the notice and a copy of the proceeding of the Annual General Meeting
to the recognised Stock Exchange with which the shares of your company are
listed. [Clause 31(c) and (d) of the Standard Listing Agreement]
17. Please keep in
mind if, default is made in complying with any directions of the Company Law
Board under sub‑section (1) of section 167, the Company and every
officer of the company who is in default will be punishable with fine upto Rs.
50,000/- and in case of continuing default with ahrther fine upto Rs. 2,500/-
for every day after the first during which such default continues. [Section
168]
Topic 137
DO YOU WISH TO ADJOURN ANNUAL GENERAL
MEETING WITHOUT FILING ANNUAL ACCOUNTS?
1. Please note
that there are the following two distinct circumstances which require the
Balance Sheet and the Profit & Loss Account to be filed with the Registrar
of Companies:
(a) if the Balance Sheet and the Profit & Loss Account have
been laid before the Annual General Meeting, the same has to be filed with the
concerned Registrar of Companies whether it is adopted by the meeting or not.
[Sub‑section (1) read with Sub‑section (2) of Section 220]. Even if
the meeting is adjourned without adopting the Balance Sheet and the Profit
& Loss Account, the same has to be filed with the concerned Registrar of
Companies;
(b) the Balance Sheet and the Profit & Loss Account are also
required to be filed if the Annual General Meeting of a company for any year
has not been held, within thirty days of the latest day on or before which that
meeting should have been held.
2. Therefore,
please note that there is no requirement in the Act for filing the Balance
Sheet and the Profit & Loss Account if the meeting is held but no Balance
Sheet or the Profit & Loss Account is laid before the meeting and the
meeting is adjourned for purpose of laying the Balance Sheet and the Profit
& Loss Account at the adjourned meeting.
3. In case, you
are not ready with the Balance Sheet and the Profit & Loss Account to be
laid before the Annual General Meeting, the best course for you is to hold the Annual
General Meeting with all items of business other than the laying of the Balance
Sheet and the Profit & Loss Account.
4. Thereafter,
the meeting should be adjourned for purpose of laying the Balance Sheet and
the Profit & Loss Account.
5. If at the
adjourned meeting also, the Balance Sheet and the Profit & Loss Account are
not ready for being laid, the meeting can be further adjourned for purpose of
laying of these documents.
6. Please,
however, note that the adjournment should not finally be to such a date as
would give rise to a gap of fifteen months plus any extension given by the
Registrar of Companies between the Annual General Meeting last held and the
Annual General Meeting finally adjourned.
7. Please keep in
mind that if default is made in complying with the requirements of sub‑sections
(1) and (2) of section 220, the company and every officer of the company who is
in default will be punishable with fine upto Rs. 500/- for every day
during which the default continues. [Section 220(3) read with section 162]
8. Please also
note that a director of a public company which has failed to file its annual
accounts for three consecutive financial years shall not be eligible for
appointment as director of any other public company until the expiry of five
years from the date of default.
Topic 138
1. Check the following:
(a) Whether there is any exemption given by the Central
Government to any class of companies from holding annual general meeting on a
day which is a public holiday and also from holding it at a place which is not
within the city, town or village in which the registered office of the company
is situated.
(b) Whether
your company belongs to those exempted class of companies.
(c) The conditions subject to which such exemption is given.
[Section 166(2), Proviso]
2. Check also
whether the public holiday is declared by the Central Government before or
after the issue of the notice convening the annual general meeting.
3. If the
aforesaid declaration is notified after the issue of the notice of the annual
general meeting then the said meeting can be held without any specific
exemption given by the Central Government to class of companies to which your
company belongs. [Section 2(38), Proviso]
4. Hold the annual general meeting vide Topic 135.
5. Please keep in
mind that if default is made in holding the Annual General Meeting in
accordance with section 166, the company and every officer of the company who
is in default will be punishable with fine upto Rs. 50,000/‑ and in case
of continuing default with a further fine upto Rs. 2,500/‑ for every day
after the first during which such default continues. [Section 168]
Topic 139
DO YOU WISH TO HOLD AN EXTRAORDINARY
GENERAL MEETING OTHER THAN ON REQUISITION OF MEMBERS?
1. Convene a
Board Meeting after giving notice to all the directors of the company as per
section 286 and decide to call a General Meeting and also the date, time, place
and agenda for the same.
2. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1,000/‑. [Section 286(2)]
3. The Articles
of Association will govern the procedure in this regard, because section 169
does not make any provision for its holding at specific place, time, date etc.
like the holding of an Annual General Meeting.
4. Issue notice
in writing at least twenty‑one days before the date of'the General
Meeting in the manner as specified in items 18, 19, 20, 21, 22, 24 and 25
of Topic 135.
5. A shorter
notice may be given if the same has been consented to by the members (a)
holding, if the company has a share capital, not less than ninety‑five
per cent of such part of the paid‑up share capital of the company as
gives a right to vote at the meeting, or (b) having, if the company has no
share capital, not less than ninety‑five per cent of the total voting
power exercisable at that meeting.
6. However, such
notice should be accompanied with suitable Explanatory Statement of each
resolution proposed.
7. Hold the
meeting and on the quorum as stated in item 27 of Topic 135 being
present, transact the business as specified in the notice. [Section 174(1)]
8. If the shares
of your company are listed on a recognised Stock Exchange, forward to the
Exchange:
(i) A
copy of the proceedings of the General Meeting; and
(ii) Three copies of the notice of the Meeting promptly. [Clause
31(c) and (d) of the Standard Listing Agreement]
9. Check up if
there is any resolution, any prescribed forms to be filed with the concerned
Registrar of Companies or any application to be made to the Central Government
or to the Company Law Board.
10. Please note
that any General Meeting held between two Annual General Meetings will be
called as an Extraordinary General Meeting and items of business of an urgent
nature which need to be transacted before the next Annual General Meeting
should be considered of an Extraordinary General Meeting. [Paragraph 2.3 of
SS 2]
11. Please further
note that if your company's paid‑up share capital is less than Rs. 50
lakhs but is equal to or more than Rs. 10 lakhs, your company is required to
obtain a Compliance Certificate from a secretary in whole‑time practice
to be filed with the Registrar of Companies mentioning therein inter alia that
the extraordinary meeting of your company was held during the financial year
after giving due notice to the members of the company and the resolutions
passed thereat were duly recorded in the minutes book maintained for the
purpose as per paragraph 7 of the Form of Compliance Certificate appended to
the Companies (Compliance Certificate) Rules, 2001. [Section 383‑A(1)
proviso]
Topic 140
DO YOU WISH TO HOLD AN EXTRAORDINARY
GENERAL MEETING BY REQUISITION?
1. Get your
requisition signed by members, who hold not less than one‑tenth of such
of the paid‑up share capital of the company as at the date of the
requisition carrying the right of voting in regard to that matter.
2. In case of a
company without share capital, get your requisition signed by members who
represent one‑tenth of the total voting power of all the members having
at the said date a right to vote in regard to that matter. [Section 169(4)]
3. In case of
shares held jointly, it would be sufficient if only one or some of the joint
holders has or have signed the requisition or the notice calling the meeting.
[Section 169 (8)]
4. Set out the
matter on the requisition specifically mentioning the purpose for which the
meeting by requisition is to be called. [Section 169(2)]
5. If you wish
that two or more distinct matters or resolutions should be raised in the
Extraordinary General Meeting on requisition, be careful to see that each of
them is wanted by the number of members as mentioned in item 1. [Section
169(5)]
6. Please see
that the requisition or requisitions, as the case may be has or have been
deposited at the registered office of the company. [Section 169(2)]
7. If the
requisition consists of several documents in like form, get each of them signed
by one or more of the requisitionists. [Section 169(3)]
8. If in such a
meeting, a Special Resolutionj is to be considered, the meeting called by the
Board on requisition shall not be deemed to have been duly convened, if they do
not comply with the provisions of Sub‑section (2) of section 189 in
respect of a Special Resolution, vide Topic 150. [Explanation to Section 169(6)]
9. Issue notices
in writing for the meeting at least twenty‑one days before the meeting
and see that it contains exact wordings of the resolutions proposed to be
passed in the meeting with suitable Explanatory Statement. [Section 171(1)
read with section 173(2)]
10. If the Board
of Directors of your company does not proceed to call a meeting for the
consideration of the matter or matters raised in your requisition or
requisitions within twenty‑one‑days from the date on which you
deposited your valid requisition and fails to hold the requisitioned meeting
within forty‑five days from the date on which you deposited the
requisition, the requisition meeting may be called:
(a) by
the requisitionists themselves;
(b) in the case of a company having a share capital, by such of
the requisitionists as represent either a majority in value of the paid‑up
share capital held by all of them or not less than one‑tenth of such of
the paid‑up share capital of the company as is referred to in item 1, whichever
is less; or
(c) in the case of a company not having a share capital, by such
of the requisitionists as represent not less than one‑tenth of the total
voting power of all the members of the company referred to in item 1.
[Section 169 (6)].
11. The requisitioned
meeting called by requisitionists or others shall have to be called in the same
manner as the Board should have done, within three months from.the date on
which they had deposited the requisition. [Section 169(7)(b)]
12. You can also
adjourn the meeting held within three months to some other date after expiry of
that period. [Section 169(7) Explanation]
13. Any reasonable
expenses you incur in holding the requisitioned meeting on account of the
failure of the Board of Directors to hold the same, will have to be repaid to
you by the company. [Section 169(9)]
14. The company
shall retain the amount so spent from out of the sums due or to become due,
from the company by way of fees or other remuneration for their services to
such of the directors as were in default. [Section 169(9)]
15. Send promptly
to the Stock Exchange with which the shares of your company are listed three
copies of the notice and a copy of the proceedings of the Extraordinary General
Meeting. (Clause 31(c) and (d) of the Standard Listing Agreement]
16. If there is
any pending court order restraining the holding of any meeting then debar the
requisitionists to hold such meeting.
17. If there is
any Special Resolution passed in the meeting then file it in Form No. 23 with the
concerned Registrar of Companies 2 within 3 thirty days of its passing [Section
192(1) & 4(a)] after paying the requisite fee prescribed under Schedule
X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]
18. Please keep in
mind that if default is made in complying with the aforesaid requirements the
company and every officer of the company who is in default will be punishable
with fine upto Rs. 200/- for every day during which the default continues. [Section
192(5)]
19. If your
company is a Government Company then provisions of Section 169 are not
applicable.
Topic 141
1. If it is
impracticable to call a General Meeting other than the Annual General Meeting
for any reason, then the Company Law Board may either of its own motion or on
the application of any director or member of the company who is entitled to
vote, order a meeting to be called. [Section 186(1)]
2. Make an
application to the Company Law Board, Northern Region Bench, New Delhi, or
Eastern Region Bench, Kolkata, or Western Region Bench, Mumbai or Southern
Region Bench, Chennai depending on the jurisdiction of the particular Bench on
the situation of the registered office of the company by way of a petition in
Form No. 1, in Annexure II of the Company Law Board Regulations, 1991, and
annex thereto the following:
(i) Affidavit verifying the aforesaid petition which should be
prepared on a non‑judicial stamp paper of the requisite value prevalent
in the State and should be either notarised by the Notary Public or sworn
before the Oath Commissioner.
(ii) Demand
draft evidencing payment of fee of Rs. 500/‑.
(iii) Documentary
evidence in proof of status of the applicant.
(iv) Certified true copy of the Memorandum and Articles of
Association of the company.
(v) Certified true copy of the latest audited balance‑sheet
and profit and loss account along with Directors',or Auditors' Reports.
(vi) Memorandum of Appearance in Form No. 5 of the Company Law
Board Regulations, 1991 with a certified true copy of the Board Resolution or
the executed Vakalatnama, as the case may be.
(vii) Original
acknowledgement of the concerned Registrar of Companies.
3. The affidavit
should be drawn up in first person and shall give the full name, age,
occupation and complete residential address of the deponent and shall be signed
by the deponent. [Regulation 14(5) of the Company Law Board Regulations, 1991]
4. If the
deponent is not personally known to the person before whom the affidavit is
sworn, he should be identified by a person who is known to the person before
whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board
Regulations, 1991]
5. The affidavit
should clearly and separately indicate statements which are true to the
knowledge of the deponent, information received by the deponent, belief of the
deponent and information based on legal advice. [Regulation 14(7) of the
Company Law Board Regulations, 1991]
6. Where any
statement is stated to be true to the information received by the deponent, the
affidavit shall also include the name and complete residential address of the
person from whom the information has been received by the deponent and declare
that the deponent believes that information to be true [Regulation 14(8) of
the Company Law Board Regulations, 1991]
7. Please ensure
that the petition is written, type‑written, cyclostyled or printed on
substantial paper of foolscap size in double space and separate sheets should
be stitched together and every page should be consecutively numbered. Numbers
and dates specified therein should be expressed in figures as well as words. [Regulation
11 of the Company Law Board Regulations, 1991 ]
8. Divide the
petition into separate paragraphs and give serial numbers on them and state
matter and name of the company to which the petition relates. [Regulation 12
of the Company Law Board Regulations, 1991]
9. Please also
ensure that the aforesaid petition is presented by the petitioner in original
and two extra copies thereof in person or through authorised representative to
the Office of the Bench or to be sent by registered post with acknowledgement
due addressed to the Bench Officer of the concerned Bench, as the case may be [Regulation
14(1) of the Company Law Board Regulations, 1991]
10. Affix Court
Fee stamps of the requisite value5 on the original petition before submission.
11. Serve a copy
of the petition along with a copy of each of documents annexed to it
simultaneously on the concerned Registrar of Companies, before fil ing it with
the Company Law Board. [Regulation 14(3) of the Company Law Board Regulations,
1991]
12. Draw the
demand draft in favour of the "Pay and Accounts Officer, Department of
Company Affairs, New Delhi", or Kolkata or Mumbai or Chennai as the case
may be depending on the jurisdiction of the Bench, and payable at New Delhi or
Kolkatta or Mumbai or Chennai as the case may be. [Annexure I of the Company
Law Board Regulations, 1991]
13. On receipt of
the Company Law Board's approval, call, hold and conduct the Annual General
Meeting according to the directions given by the Company Law Board.
14. If such
directions include that a member present in person or by proxy shall constitute
the meeting, then such will be the quorum of the meeting, regardless of Section
174. [Section 167(1), Explanation]
15. Forward three
copies of the notice and a copy of the proceeding of the Annual General Meeting
to the recognised Stock Exchange with which the shares of your company are
listed. [Clause 31(c) and (d) of the Standard Listing Agreement]
16. Note that if
your company's paid‑up share capital is less than Rs. 50 lakhs but is
equal to or more than Rs. 10 lakhs, your company is required to obtain a
Compliance Certificate from a secretary in whole‑time practice to be
filed with the Registrar of Companies mentioning therein inter alia that
the company has obtained all necessary approval of the Central Government as
may be prescribed under the various provisions of the act as per paragraph 17
of the Form of Compliance Certificate appended to the Companies (Compliance
Certificate) Rules, 2001. [Section 383‑A(1) proviso].
Topic 142
1. If provisions
relating to meetings of debentureholders or any class of them are contained in
the terms of the issue of the debentures which may be either stated on the
debentures themselves or in the trust deed if there is any trust deed securing
the debentures, then follow the same.
2. If provisions
relating to such meetings are contained in the Articles of Association of your
company, then follow the same.
3. In the absence
of any provisions relating to such meetings in the terms of the issue of
debenture trust deed if any or in the Articles of Association, follow Rule 7
and the modified and adopted provisions of Sections 171 to 186 given in
Annexures 'C' and 'D' to the Companies (Central Government's) General Rules and
Forms, 1956.
4. Convene a
Board Meeting after giving notice to all the directors of the company as per
section 286 and fix the date, time, place and agenda of the debentureholders'
or any class of debentureholders' meeting.
5. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1000/‑. [Section 286(2)]
6. Issue notices
in writing at least twenty‑one days before the date of the
debentureholders or any class of debentureholders meeting to the
debentureholders or any class of debentureholders and auditors of your company
in the manner required for holding a General Meeting, along with a suitable
Explanatory Statement.
7. If you want to
give shorter notice than above take the consent of debentureholders or any
class of them holding not less than ninety‑five per cent in value of the
debentures or debentures of that class, issued by your company. [Section
171(2)(ii)]
8. In case of
death or insolvency of the debentureholder, send the notice to the
representatives or assignees by name or by title or by sending the notice in
any manner, where the death or insolvency is not on record, as if the death or
insolvency had not occurred.
9. Specify in the
notice the place, day and hour of the meeting and statement of the business to
be transacted at the meeting.
10. You may also
give notice by advertisement in a newspaper circulating in the neighbourhood of
the registered office of your company in the manner provided in Section 53(3).
11. In the case of
notice by newspaper advertisement, do not annex the statement of material facts
to the notice but just mention that they will be forwarded to the
debentureholders.
12. See that the
requisite quorum of five debentureholders, or debentureholders of that class
are personally present in the meeting within half an hour of the meeting.
13. If no such
quorum is present as aforesaid, then adjourn it to the same day in the next
week at the same time and place or at such other time as your Board of
Directors may decide.
14. If in the
adjourned meeting no quorum is present within half an hour, then
debentureholders or debentureholders of that class present shall be a quorum.
15. Mention in the
notice calling the meeting that a debentureholder entitled to attend and vote
is entitled to appoint a proxy to attend and vote instead of himself and that a
proxy need not be debentureholder or debentureholder of that class.
16. Do not apply
the provisions of Section 181 relating
to restriction on exercise of voting rights by debentureholders or
debentureholders of any class.
17. Elect one of
the debentureholders or debentureholders of that class present in the meeting
to be Chairman of that meeting either by show of hands or on poll. Chairman
elected as a result of the poll shall be the Chairman for the rest of the
meeting.
Topic 143
DO YOU WISH TO CIRCULATE A MEMBERS'
RESOLUTION TO BE MOVED AT AN ANNUAL GENERAL MEETING?
1.
(a) Such number of members as represent not less than one‑twentieth
of the total voting power of all the members having at the date of the
requisition a right to vote on the resolution or business to which the
resolution relates; or
(b) not less than one hundred members having the right aforesaid
and holding shares in the company on which there has been paid‑up an
aggregate sum of not less than one lakh of rupees in all, can make a
requisition in writing on the company:
(i) to give to members of the company entitled to receive notice
of the next Annual General Meeting, notice of any resolution which may properly
be moved and is intended to be moved at that meeting;
(ii) to circulate to members entitled to have notice of any
General Meeting sent to them, any statement of not more than one thousand words
with respect to the matter referred to in any proposed resolution, or any
business to be dealt with at that meeting. [Section 188(1) and (2)].
2. Deposit a copy
of the aforesaid requisition duly signed by the aforesaid number of members or
two or more copies which between them contain the signatures of all the
requisitionists, at the registered office of the company. [Section
188(4)(a)]
3. Ensure that the copy of the requisition is
deposited:
(a) In the case of a resolution requiring notice of a resolution
not less than six weeks before the meeting; or
(b) in the case of any other resolution not less than two weeks
before the meeting. [Section 188(4)(a)(i) and (ii)]
4. Note that the
company shall not be bound to give notice of any resolution or circulate any
statement unless the conditions mentioned in the preceding para are fulfilled.
5. If, after a
copy of requisition requiring notice of a resolution has been deposited at the
registered office of the company, an Annual General Meeting is called for a
date six weeks or less after the copy has been deposited, the copy although not
deposited within the time shall be deemed to have been properly deposited for
the purposes thereof. [Section 188(4) proviso]
6. See that the
requisitionists deposit with the requisition a reasonable sum of money sufficient to meet the company's expenses. [Section
188(4)(b)]
7. The company,
on receipt of the requisition, has to give and circulate notice of any such
resolution or statement to members of the company entitled to have notice of
the meeting sent to them, by serving a copy of the resolution or statement on
each member in any manner permitted for service of notice of the meeting.
8. The company
has also to give notice to other members by giving notice of the general effect
of the resolution in the said manner.
9. The above
action will be taken in such time as is required for the notice of the meeting
or at the earliest possible date if that is not practicable. [Section 188(3)]
10. A banking
company shall not be bound to circulate any statement if in the opinion of its
Board of Directors, the circulation will injure any interest of the company. [Section
188(6)]
11. The company
also shall not be bound to circulate any statement, if; on the application
either of the company or of any other person who claims to be aggrieved, the‑Company
Law Board is satisfied that the rights so conferred are being abused to secure
needless publicity for defamatory matter. [Section 188(5)]
12. In the aforesaid
situation the Company Law Board may order at the company's costs on an
application under this section to be paid in whole or in part by the
requisitionists, notwithstanding that they are not parties to the application. [Section
188(5)]. For procedure see Topic 144.
13. Include the
resolution of which notice is given in the business to be transacted at the
Annual General Meeting.
14. Forward
promptly to the recognised Stock Exchange with which the shares of your company
are listed, three copies of the notice served on the member under item 7 above.
[Clause 31(c) and (d) of the Standard Listing Agreement]
15. Please keep in
mind that if default is made in complying with the provisions of section 188,
the company and every officer of the company who is in default will be
punishable with fine upto Rs. 50,000/-.[Section 188(8)]
Topic 144
1. A company need
not circulate any statement required to be circulated under section 188(1) if
on the application either of the company itself or of any other person who
claims to be aggrieved the Company Law Board is satisfied that the right conferred
by section 188 are being abused to secure needless publicity for defamatory
matters. [Section 188(5)]
2. Please keep in
mind that if the company circulates any statement even after the aggrieved
persons application to Company Law Board, the company and every officer of the
company who is in default will be punishable withfine upto Rs. 50,000/‑.
[Section 188(8)]
3. If the company
is to make the application to the Company Law Board then before making the said
application it should take the following steps:
(a) Convene a Board Meeting after giving notice to all the
directors of the company as per Section 286 for taking the approval of the
Board of Directors of the company to make the application;
(b) Obtain authorisation in favour of one of the directors of the
company or the company secretary of the company if there is one, to sign and
file the said application to the Company Law Board and to make appearance
before it or appoint an Advocate to make appearance.
4. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1,000/‑. [Section 286(2)]
5. Make an
application to the concerned Bench of the Company Law Board, whether, Northern
Region Bench, at New Delhi or Eastern Region Bench, at Kolkata or Western
Region Bench, at Mumbai, or Southern Region Bench, at Chennai, as the case may
be, depending on the jurisdiction of the Bench on the registered office of the
company, by way of a petition to be prepared in Form No. 1 in Annexure II to
the Company Law Board Regulations, 1991 and annex thereto the following:
(i) Affidavit verifying the aforesaid petition which should be
prepared on a non‑judicial stamp paper of the requisite value prevalent
in the State and should be either notarised by the Notary Public or sworn
before the Oath Commissioner.
(ii) Demand draft evidencing payment of the fee of Rs. 50/‑.
[Regulation 34 of the Company Law Board Regulations, 1991 read with serial
No. 18 of Schedule to the Company Law Board (Fees on Applications and
Petitions) Rules, 1991]
(iii) Memorandum of Appearance in Form No. 5 of the Company Law
Board Regulations, 1991 or the executed Vakalatnama, as the case may be.
6. The affidavit
should be drawn up in first person and shall bear the full name, age,
occupation and complete residential address of the deponent and shall be signed
by the deponent. [Regulation 14(5) of the Company Law Board Regulations,
1991]
7. If the
deponent is not personally known to the person before whom the affidavit is
sworn, he should be identified by the person who is known to the person before
whom the affidavit is sworn. [Regulation 14(6) of the Company Law Board
Regulations, 1991]
8. The affidavit
should clearly and separately indicate statements which are true to the
knowledge of the deponent, information received by the deponent, belief of the
deponent and information based on legal advice. [Regulation 14(7) of the
Company Law Board Regulations, 1991]
9. Where any
statement is stated to be true to the information received by the deponent, the
affidavit shall also include the name and complete residential address of the
person from whom the information has been received by the deponent and declare
that the deponent believes that information to be true [Regulation 14(8) of
the Company Law Board Regulations, 1991]
10. Please ensure
that the petition is written, type‑written, cyclostyled or printed on
substantial paper of foolscap size in double space and separate sheets should
be stitched together and every page should be consecutively numbered. Numbers
and dates specified therein should be expressed in figures as well as words. [Regulation
11 of the Company Law Board Regulations, 1991]
11. Divide the
petition into separate paragraphs and give serial numbers on them and state
matter and name of the company to which the petition relates. [Regulation 12
of the Company Law Board Regulations, 1991]
12. Please also
ensure that the aforesaid petition is presented by the petitioner in original
and two extra copies thereof in person or through authorised representative to
the Office of the Bench or to be sent by registered post with acknowledgment
due addressed to the Bench Officer of the concerned Bench. [Regulation 14(1)
of the Company Law Board Regulations, 1991]
13. Affix Court
fee stamps of the requisite value 3 on the original petition before
submission.
14. Draw the
demand draft in favour of "Pay and Accounts Officer, Department of Company
Affairs, New Delhi" or "Kolkata" or "Mumbai" or
"Chennai", as the case may be, and payable at New Delhi or Calcutta
or Mumbai or Chennai.
15. On obtaining
the order of the Company Law Board submit a copy of the order to the concerned
company if the company is not the applicant.
(Topic 145 to Topic 158)
Topic 145
DO YOU WISH TO APPOINT A PROXY TO ATTEND
AND VOTE FOR YOURSELF IN A GENERAL MEETING?
1. Note that the
provisions regarding appointment of proxies, do not apply to a company without
share capital unless its Articles of Association provide otherwise. [Section
176(1)(a)]
2. Further note
that in case of private company not being a subsidiary of public company, the
Articles of Association may provide a procedure other than that given below. [Section
170(1)(ii)]
3. Also note that
if in the notice of the General Meeting a company fails to make a statement
with reasonable prominence that a member entitled to attend and vote is
entitled to appoint proxy, every officer of the company who is in default will
be punishable with fine upto Rs. 5,000/‑. [Section 176(2)]
4. Select the
person who need not be a member to be your proxy to attend and vote for you at
a General Meeting of a company, of which you are a member. [Section 176(1)]
5. Fill up the
proxy form as prescribed under your Articles of Association or as set out in
Schedule IX to the Companies Act, 1956 as an instrument appointing a proxy
should be either on the form specified in the Articles of Association or in any
of the forms set out in the Act. [Section 176(6) read with paragraph 7.2.1
of SS 2]
6. Put a revenue
stamp of Re. 0.30 Paise or stamp of different value as in force in your State
on the specific proxy form, whereas a general proxy form should be stamped as a
power of attorney.
7. Keep in mind
that an instrument of proxy is valid only if it is properly stamped as
unstamped, or inadequately stamped proxies or proxies upon which the stamps
have not been cancelled are invalid. [Paragraph 7.3 of SS 2]
8. Put your signature on the form cancelling the
stamp.
9. Your attorney duly
authorised in this respect may also sign on your behalf
10. In case
you are a body corporate, proxy form should be signed under the company's
common seal in accordance with the Articles of Association.
11. The same can also
be signed by an attorney duly authorised in that regard or by an individual
duly appointed by the body corporate under Section 187 as its representative. [Section
187(2)]
12. Keep in mind
that an instrument of proxy duly signed and stamped is valid only for the
meeting to which it relates and if the Articles of Association of your company
provide for any special requirements in respect of proxies, any proxy which
does not comply with such requirements should not be accepted. [Paragraph
7.2.2 and 7.2.3 of SS 2]
13. In case of a
public company and its subsidiary the instrument of proxy should reach the
office of the company before forty‑eight hours of the time fixed for the
meeting. [Section 176(3) read with Section 170(1)]
14. A proxy cannot speak at the meeting but is entitled
to vote at a poll being taken. [Section
176(1)]
15. The proxy,
again, cannot vote except on a poll unless the company's Articles of
Association otherwise provide. [Section 176(1), Proviso (c)]
16. You can
appoint more than one proxy, if you hold more than one share, but in case of a
General Meeting of a private company, you can only appoint one proxy unless its
Articles of Association otherwise provide. [Section 176(1), Proviso (b)]
17. Any member
entitled to attend this meeting may inspect the proxies lodged with the
company.
18. In the
aforesaid case, see that he gives not less than three days prior notice to the
company to do so and allow him to inspect the proxies during the period of 24
hours before the meeting and ending with the conclusion of the meeting. [Section
176(7) read with paragraphs 7.8.1 and 7.8.2 of SS 2]
19. If the shares
of your company are listed on a recognised Stock Exchange, see that the proxy
forms are worded in such a manner so that the shareholder or the
debentureholder may vote either for or against each resolution. [Standard
Listing Agreement]
20. Give a fresh
requisition, conforming to the above requirements for inspection of provisos in
case the original meeting is adjourned. [Paragraph M3 of SS 2]
21. See that there
is no invitation issued at the company's expense to any member entitled to have
a notice of the meeting and to vote thereat by proxy for any person or for any
number of persons specified in that invitation. [Section 176(4)]
22. Please keep in
mind that every officer of the company who knowingly issues the
invitations as aforesaid or wilfully authorises or permits their issue will be
punishable with fine upto Rs. 10,000/-. [Section 176(4)]
23. If a duly stamped proxy nomination is received by your
company through fax within the stipulated time, then allow the proxy holder to
attend the meeting. [IRC v. The Debtor, (1996) 1 BCLC 538 (Ch D)]
Topic 146
1. Convene a
Board Meeting after giving notice to all the directors of the company as per
section 286 and pass a resolution authorising the person whom it thinks fit to
act as its representative at a General or Class Meeting of any other company
concerned. [Section 187(1)]
2. Ensure that
the resolution specifies the company and the meeting or meetings at which the
representative is to act.
3. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1,000/‑. [Section 286(2)]
4. File with the
company concerned the said resolution duly certified by the Chairman of the
Board Meeting in which the same was passed before such time as prescribed in
the Articles of Association of that company.
5. The person so
authorised will be entitled to exercise the same rights and powers as the body
corporate, had the body corporate been an individual member including the right
to vote by proxy. [Section 187(2)]
6. Note that a
donee of a general power of attorney cannot act as a representative of a body
corporate.
Topic 147
DO YOU WISH TO RECORD VOTING ON POLL?
1. See that voting on poll is ordered before or on the
declaration of the result of the voting
by show of hands.
2. See that the
demand for voting on poll is made by either of the following number of members
:
(a) in the case of a public company having a share capital, by
any member or members present in person or by proxy and holding shares in the
company
(i) which confer a power to vote on the resolution not being
less than one tenth of the total voting power in respect of the resolution, or
(ii) on which an aggregate sum of not less than fifty thousand
rupees has been paid‑up, [Section 179(1)(a)];
(b) in the case of a private company having a share capital, by
one member having the right to vote on the resolution and present in person or
by proxy if not more than seven such members are personally present, and by two
such members present in person or by proxy, if more than seven such members
arie personally present, [Section 179(1)(b)];
(c) in the case of any other company, by any member or members
present in person or by proxy and having not less than one tenth of the total
voting power in respect of the resolution. [Section 179(1)(c)].
3. Take the poll
immediately if it is demanded on a question of adjournment of the meeting. [Section
180(1)]
4. Take the poll
within 48 hours from the time when the demand for poll was made on any other
question. [Section 180(2)]
5. Check up the
Articles of Association of your company and if it provides that no member shall
exercise any voting right in respect of any shares registered in his name on
which any calls or other sums are not paid or in respect of which your company
has exercised any right of lien, then see that such members do not vote on
poll. [Section 181]
6. See that there
is no restriction in the exercise of voting rights by members on poll except in
the case mentioned above, if your company is a public company or its
subsidiary: [Section 182]
7. If any member
present in person or by proxy has more than one vote, then provide option to
him to use his votes in different ways. [Section 183]
8. Appoint two
scrutineers to scrutinise the votes given on the poll and to report on them to
the Chairman. [Section 184(1)]
9. See that one
of the scrutineers so appointed is a member present at the meeting who is not
an officer or employee of the company. [Section 184(3)]
10. See that the
Chairman regulates the manner of the poll subject to the provisions of the
Act. [Section 185(1)]
11. Put each
resolution to the poll separately if poll is demanded for more than one
resolution.
12. Distribute polling papers to the members present
and to the proxies at the meeting.
13. See that on
the polling paper each member signs his name and states the number of shares
and each proxy states the name of the appointer and the number of shares held
by him as a proxy.
14. See also that
each such person signifies whether he is casting his vote in favour or against
the resolution.
15. Get the
polling papers so filled up collected through the scrutineers and their details
entered in a polling list.
16. See that the
scrutineers report to the Chairman after being satisfied as to the accuracy of
the voting on poll and then the Chairman will declare the result to the
meeting.
Topic 148
DO YOU WISH TO DEMAND A POLL IN A
GENERAL MEETING?
1. Unless a poll
is ordered to be taken by the Chairman himself, demand a poll either before or
on the declaration of the result of the voting on any resolution by a show of
hands with the following strength. [Section 179(1)]:
(a) in the case of a public company having a shares capital, by
any member or members present in person or by proxy and holding share in the
company
(i) which confer a power to vote on the resolution not being
less than one tenth of the total voting power in respect of the resolution, or
(ii) on which an aggregate sum of not less than fifty thousand
rupees has been paid‑up, [Section 179(1)(a)];
(b) in the case of a private company having a share capital, by
one member having the right to vote on the resolution and present in person or
by proxy if not more than seven such members are personally present, and by two
such members present in person or by proxy, if more than seven such members are
personally present, [Section 179(1)(b)];
(c) in the case of any other company, by any member or members
present in person or by proxy and having not less than one tenth of the total
voting power in respect of the resolution. [Section 179(1)(c)]
2. Determine by
reference to register of members the right to vote and the proportion of a
member's share of the paid‑up equity capital of the company.
3. On such demand, the poll
will be taken :-
(i) forthwith if the same is demanded on the election of the
Chairman [Section 175(2)] or on the question of adjournment [Section
180(1)];
(ii) at guch time not being later than forty‑eight hours
from the time when the demand was made as the Chairman may direct, if the same
is demanded on any other matter. [Section 180(2)]
4. Distribute
cyclostyled or printed polling papers to the members and also to the proxies
prest‑.nt at the meeting.
5. See that each
member signs his name, states the number of shares held by him on the polling
paper and signifies whether he is casting his vote in favour of, or against the
resolution.
6. If the person
is voting as proxy, see that he states also the name of the appointer and the
number of shares held by the proxy.
7. Collect the polling papers and enter the details in
a polling list.
8. Report the
result to the Chairman, after being satisfied as to the accuracy of the voting
and he will then declare the result.
9. Note that the
demand of poll may also be withdrawn at any time by the persons who demanded
the poll. [Section 179(2)]
10. Further note
that the demand for a poll cannot be withdrawn once the Chain‑nan
declares that a poll will be taken and adjourns the meeting for that purpose.
11. See that any
member who has not paid any calls or other sum presently payable by him and the
company has exercised lien on it, is not exercising voting right in respect of
any shares registered in his name in case of voting by poll if your company's
Articles provide so. [Section 181]
12. Note the provisions of sections 184 and 185.
13. Note that in
the case of a private company not being a subsidiary of a public company, the
Articles of Association may provide for a procedure other than that given
above.
Topic 149
1. Check whether
your company is a listed public company and also whether the resolution
proposed to be passed relates to the business that Rule 4 of the aforesaid
Rules prescribes to be conducted only by postal ballot. [Section 192A(1)]
2. Keep in mind
that notwithstanding anything contained in the provisions of the Companies Act,
1956 your company may get any resolution relating to any business not notified
by the Central Government passed by means of postal ballot instead of
transacting the business in a General Meeting.
3. Call a Board
Meeting after giving notice to all the directors of your company as per section
286 and take the decision of passing a resolution or resolutions by means of a
postal ballot.
4. Please
keep in mind that every officer of the company whose duty is to give notice of
the Board Meeting as aforesaid and who fails to do so will be punishable with
fine of Rs. 1,000/- [Section 286(2)]
5. Send a notice
to all the shareholders along with a draft resolution explaining the reasons
therefor and requesting them to send their assent or dissent in writing on a
postal ballot within a period of 30 days from the date of posting of the
letter. [Section 192A(2)]
6. Send the
notice by registered post acknowledgement due, or under certificate of posting
with an advertisement published in a leading English newspaper and in one
vernacular newspaper circulating in the State in which the registered office of
the company is situated about having dispatched the ballot papers. [Section 192A(3)
read with Rule 2A]
7. Ensure that
the notice includes a postage pre‑paid envelop for facilitating the
communication of the assent or dissent of the shareholder to the resolution
within the said period. [Section 192A(3)]
8. Make a note
below the notice of general meeting for understanding of members that the
transaction at serial number requires consent of shareholders through postal
ballot. [Rule 5(a)]
9. Ensure that
the Board of Directors of your company appoints a scrutinizer, who is not in
employment of your company, may be a retired judge or any person of repute who
in the opinion of the Board of Directors of your company can conduct the postal
ballot voting process in a fair and transparent manner. [Rule 5(b)]
10. See that the
aforesaid scrutinizer submits his report as soon as possible after the last
date of receipt of postal ballots. [Rule 5(c)]
11. Also ensure
that the scrutinizer so appointed by the Board of Directors is willing to be
appointed as a scrutinizer and he is available at the registered office of your
company for the purpose of ascertaining of requisite majority. [Rule 5(d)]
12. Further ensure
that the scrutinizer maintains a register to record the consent or otherwise
received, including electronic media, mentioning the particulars of name,
address, folio number, number of shares, nominal value of shares, whether the
shares have voting, differential voting or non‑voting rights and the
scrutinizer should also maintain record for postal ballot which are received in
defaced or mutilated form. [Rule 5(e)]
13. See that the
postal ballot and all other papers relating to postal ballot will be under the
safe custody of the scrutinizer till the Chairman considers, approves and signs
the minutes of the meeting. [Rule 5(e)]
14. Also see that
thereafter the scrutinizer returns the ballot papers and other related
papers/register to your company so as to preserve such ballot papers and other
related papers/registers safely till the resolution is given effect to. [Rule
5(e)]
15. Ensure that
consent or otherwise received after 30 days from the date of issue of notice is
treated as if reply from the member has not been received. [Rule 5(f)]
16. Keep in mind
that if a resolution is assented to by a requisite majority of the shareholders
by means of postal ballot, it will be deemed to have been duly passed at a
General Meeting convened in that behalf. [Section 192A(4)]
17. Also keep in
mind that if a shareholder sends under sub‑section (2) of section 192A
his assent or dissent in writing on a postal ballot and thereafter any person
fraudulently defaces or destroys the ballot paper or declaration of identity of
the shareholder, such person will be punishable with imprisonment for a term
which may extend to 6 months or with fine or with both. [Section 192A(5)]
18. Further keep
in mind that if a default is made in complying with subsections (1) to (4) of
section 192A, the company and every officer of the company who is in default
will be punishable with fine which may extend to Rs. 50,000/‑ in respect
of each default. [Section 192A(6)]
19. Note that for
the purposes of section 192A, "postal ballot" includes voting by
shareholders by postal or electronic mode instead of voting personally by
presenting for transacting business in a general meeting of the company.
[Section 192A(6) Explanation read with
rule 2(b)]
Topic 150
DO YOU WISH TO PASS A SPECIAL
RESOLUTION?
1. Note that
Special Resolutions are required to be passed either under the Companies Act,
1956, or under the Articles of Association of the concerned company.
2. In any case
include in the agenda of the notice calling the General Meeting, the intention
to propose a resolution as Special Resolution or otherwise intimate the same to
the members complying with all the requirements of a notice for a General
Meeting. [Section 189(2)(a)]
3. Send the
notice of the General Meeting in writing at least within twentyone days before
the date of the meeting, as required under Section 171 of the Act, to all the
members with Explanatory Statement. [Section 189(2)(b)]
4. Send three
copies of the notice to the recognised Stock Exchange with which the shares of
your company are listed. [Clause 31 (c) of the Standard Listing Agreement]
5. Hold the
General Meeting and see that the votes cast in favour of the resolution whether
on a show of hands or on poll by members, who being entitled to do so vote in
person, or where proxies are allowed, by proxy, are not less than three times
the number of the votes, if any, cast against the resolution by members so
entitled and voting. [Section 189(2)(c) read with Section 171(1) and Seciton
173(2)]
6. Forward
promptly to the recognised Stock Exchange with which the shares of your company
are listed, a copy of the proceedings of the General Meeting. [Clause 31(d) of
the Standard Listing Agreement]
7. File with the
concerned Registrar of Companies printed or type‑written copy of the
Special Resolution with Explanatory Statement duly certified under the
signature of an officer of the company in Form No. 23 within thirty days of its
passing [Section 192] after paying the requisite fee prescribed under Schedule
X to the Companies Act, 1956, either in cash, or treasury challan. [Rule 22]
8. Please keep in
mind that if default is made in complying with the aforesaid requirement, the
company and every officer of the company who is in default will be punishable
with fine upto Rs. 200/- for every day during which the de'fault continues.
[Section 192(5)]
Topic 151
DO YOU WISH TO PASS A RESOLUTION WITH
SPECIAL NOTICE?
1. Note that
special notice is required where the provisions of the Companies Act, 1956, or
the Articles of Association of the concerned company require it. Please see
that the requirements of section 188 are complied with. Pedley v. Inland
Waterways Association Ltd., (1977) 1 All ER 209 (ChD).
2. Give notice to
the company of the intention to move a resolution not less than fourteen days
before the General Meeting at which it is to be moved, exclusive of the day on
which the notice is served or deemed to be served and the day of the meeting.
[Section 190(1)]
3. The company
shall, immediately after the notice of the intention to move any such
resolution has been received by it, give its members notice of the resolution
in the same manner as it gives notice of the meeting. [Section 190(2)]
4. If in any case
that is not practicable, the company should notify the same to them either by
advertisement in a newspaper having an appropriate circulation or in any other
mode allowed by the Articles of Association not less than seven days before the
meeting. [Section 190(2)]
5. If any
representation is received from any concerned person regarding removal of
director or auditor, circulate it also to the members.
6. Issue the
notice in writing with suitable Explanatory Statement at least twenty‑one
days before the date of the General Meeting if the Resolution requiring the
Special Notice falls under Special Business. [Section 173(1)(b) & (2) read
with Section 171(1)]
7. Hold the
General Meeting and pass the Ordinary Resolution by simple majority or Special
Resolution by three‑fourths majority. [Section 189]
8. Take the
following steps if the shares of your company are listed on a recognised Stock
Exchange:
(i) Send three copies of the notice either sent to members
individually or published in the newspaper to the said Stock Exchange;
(ii) Forward promptly to the said Stock Exchange a copy of the
proceedings of the General Meeting. [Clause 31(c), (d) and (e) of the Standard
Listing Agreement]
9. If the
resolution passed is a Special Resolution, file the same with the Explanatory
Statement in Form No. 23 with the concerned Registrar of Companies within
thirty days of its passing [Section 192(4)(a)], after paying the requisite fees
as prescribed under Schedule X to the Companies Act, 1956, either in cash,
postal order, or treasury challan. [Rule 22]
10. Please keep in
mind that if default is made in complying with the aforesaid requirement, the
company and every officer of the company who is in default will be punishable
with fine upto Rs. 200/- for every day during which the default continues.
[Section 192(5)]
Topic 152
DO YOU WISH TO ANNEX AN EXPLANATORY
STATEMENT FOR A RESOLUTION?
1. An Explanatory
Statement is required to be annexed to every notice calling a General Meeting
other than the Annual General Meeting, in respect of every resolution being a
special business to be transacted thereat and in the case of all the businesses
if they are to be transacted at an Annual General Meeting except the following
:
(i) the
consideration of the accounts, balance‑sheet and the reports of the Board
of Directors and Auditors;
(ii) the
declaration of a dividend;
(iii) the
appointment of directors in the place of those retiring; and
(iv) the appointment of, and fixing of the remuneration of,
auditors. [Section 173(1) & (2)]
2. Set out all
the material facts in the Explanatory Statement relating to the business
concerned including, among others, the nature of the concern or interest,
thereon, if any, of every director and the manager, if there is one. [Section
173(2)]
3. Where any
business relating to or affecting any other company is proposed, then the
extent of shareholding interest in that other company of any of the aforesaid
persons of the proposing company shall also be mentioned in the Explanatory
Statement unless such shareholding interest is less than twenty per cent of the
paid‑up capital of the other company. [Proviso to Section 173(2)]
4. Also state in
the Explanatory Statement the time and place where the document, if any,
proposed for approval in the General Meeting can be inspected. [Section 173(3)]
5. In case of a
Special Resolution a copy of such Explanatory Statement is to be filed along
with a copy of the Special Resolution in Form No. 23 with the concerned
Registrar of Companies within thirty days of the passing of the Special
Resolution [Section 192(4)(a)] after paying the requisite fee as prescribed
under Schedule X to the Companies Act, 1956, either in cash, or treasury
challan. [Rule 22]
6. Please keep in
mind that if default is made in complying with the aforesaid requirement, the
company and every officer of the company who is in default will be punishable
with fine upto to Rs. 200/‑ for every day.during which the default
continues. [Section 192(5)]
7. Note that for
any ordinary business required to be passed by a Special Resolution under the
Act, no Explanatory Statement is needed to be given. Explanatory Statement is
required only for special business irrespective of the fact whether such
special business is to be passed by Ordinary Resolution or Special Resolution.
8. In case the
Explanatory Statement is required to be prepared for annexing with the Special
Resolution proposed to be passed for purchase of a company's own shares or
other specified securities under section 77A, then ensure that it contains the
following in addition to the particulars needed to be given under section
173(2):
(a) a
full and complete disclosure of all the material facts;
(b) the
necessity for the buy‑back;
(c) the
class of security intended to be purchased under the buy‑back;
(d) the
amount to be invested under the buy‑back and
(e) the
time limit for completion of buy‑back. [Section 77A(3)]
9. If your
Company is either a Public Limited Company or an Unlisted Public Limited
Company, and your Company proposes to pass a Special Resolution for buy‑back
of its shares, ensure that the Explanatory Statement required to be prepared
for annexing with the said Special Resolution contains additional disclosures
as specified in Schedule I to the Private Limited Company and Unlisted Public
Limited Company (Buy‑back of Securities) Rules, 1999. [Rule 4 of the said
Rules]
10. If your
company is a listed company and your company proposes to pass a Special
Resolution for buy‑back of its shares, ensure that the Explanatory Statement
required to be prepared for annexing with the said Special Resolution contains
additional disclosures as specified in Schedule I to SEBI (Buy‑back of
Securities) Regulations, 1998. [Regulation 5(1) of the said Regulations]
11. If your
company is having no profit or is having inadequate profits and wants to pay
managerial remuneration to its managing director or manager or whole‑time
director exceeding Rs. 24 lakhs per annum but not exceeding Rs. 48 lakhs per
annum or exceeding Rs. 48 lakhs per annum or exceeding Rs. 2 lakhs but not
exceeding Rs. 4 lakhs or exceeding Rs. 4 lakhs per month as per paragraph 1(B)
and (C) of section II of Part II of Schedule XIII, ensure that the Explanatory
Statement required to be prepared for annexing with the Special Resolution
contains information given in Paragraph 1(B) and (C)(iv) I, II, III and IV of
section II of Part II of Schedule XIII.
Topic 153
DO YOU WISH TO ADJOURN A BOARD OR A
GENERAL MEETING?
1. In the case
where there is a quorum, take decision in the Board Meeting or the General
Meeting, as the case may be, to adjourn either in the beginning or at any stage
by majority of votes, unless otherwise provided in the Articles of Association
in this regard.
2. If there is
disorder in the meeting, adjourn it for half an hour and then the meeting can
proceed.
3. If the
Articles of Association of your company, provide that the Chairman may, with
the consent of the meeting, adjourn the meeting, he may or may not do so even
if the members want it.
4. In absence of
a quorum for a Board Meeting, unless the Articles of Association otherwise
provide, the meeting shall automatically stand adjourned till the ,same day in
the next week, at the same time and place, or if that day is a public holiday,
till the next succeeding day which is not a public holiday, at the same time
and place. [Section 288(1)]
5. In the case of
a General Meeting (unless the same was called on requisition of members in
which case it will stand dissolved), the same shall stand adjourned either to
the same day in the next week at the same time and place, or to such other day
and at such other time and place as the Board may subsequently determine.
[Section 174(3) & (4)]
6. In the case of
a private company not being a subsidiary of the public company, however, the
Articles of Association may provide otherwise. [Section 170(1)(ii)]
7. In the case of
an Extraordinary General Meeting on requisition, such meeting must be
dissolved.
8. If the meeting
is adjourned for thirty days or more or if the Articles of Association of your
company provide to this effect, then remember to give notice of the adjourned
meeting, as in the case of an original meeting. [Schedule 1, Table A,
Regulation 53(3) of the Companies Act, 1956]
9. Forward three
copies of such notice to the Stock Exchange with which the shares of your
company are listed. [Clause 31(c) of the Standard Listing Agreement]
Topic 154
DO YOU WISH TO PREPARE MINUTES OF
PROCEEDINGS OF A BOARD OR A GENERAL MEETING?
1. Enter the
minutes of the meeting giving a fair and correct summary of the proceedings
thereof in separate books for General and Board Meetings within thirty days of
the conclusion of the meeting concerned. [Section 193(1) and (2) read with
paragraph 8.2 of SS 1]
2. Circulate
within 7 days from the date of your company's Board Meeting or Committee
Meeting or of an adjourned Board draft minutes thereof to all the members of
the Board or the Committee, as the case may be, for their comments. [Paragraph
8.1 of SS 1]
3. The minutes
will not be attached by way of pasting or otherwise. [Section 193(1B) read with
paragraph 8.5 of SS 1]. The only possible way would be to write the same by
hand.
4. Each page of
the minute book will be consecutively numbered and will be initialled or signed
by and the last page of the minutes of each meeting in the minute book will be
dated and signed:
(a) in the case of minutes of proceedings of a Board Meeting; by
the Chairman of the said meeting or the Chairman of the next succeeding
meeting;
(b) in the case of minutes of proceedings of a General Meeting,
by the Chairman of the same meeting within the aforesaid period of thirty days
or in the event of the death or inability of that Chairman within that period
by a director duly authorised by the Board for the purpose. [Section 193(1A)
read with paragraph 8.4 of SS 1]
5. State in the minutes the date, time, place of the
meeting and the kind of the meeting.
6. Ensure that
the date of entering the minutes is specified in the minutes book by a director
or the secretary. [Paragraph 8.3 of SS 1]
7. In the case of
a General Meeting, state the names of members who attended the meeting and
others attending in other capacity.
8. State the
precise nature of actual business transacted in the meeting and also the formal
propositions made and decisions ultimately taken on them.
9. The minutes
will also include the record of the appointment of officers made at the
meeting. [Section 193(3)]
10. Give extracts
of minutes of Board Meetings only after they are duly signed but certified
copies of any resolution passed at a meeting may be issued even pending signing
of the minutes by the Chairman if the draft of that resolution has been placed
at the meeting and was duly approved. [Paragraph 8.7 of SS 1]
11. Ensure that
the minutes of an earlier meeting are voted at the next meeting. [Paragraph
8.8 of SS 1]
12. Further ensure
that any alteration other than grammatical or minor corrections, in the minutes
as entered should be made only by way of express approval taken in the subsequent
meetings in which such minutes are sought to be altered. [Paragraph 8.9 of SS
1]
13. In case of
minutes of meetings of any Committee of your company's Board of Directors see
that they are circulated to the Board of Directors along with the agenda for
the meeting of the Board next following such meeting of the Committee and
should be noted at the Board Meeting. [Paragraph 8. 10 of SS 1]
14. In the case of a Board Meeting, the following,
inter alia, will also be included:
(a) the
names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the
names of the directors, if any, dissenting from, or not concurring in the
resolution. [Section 193(4)]
15. In addition to
the names of directors present at the meeting ensure that the names of persons
in attendance and the names of invitee, if any is also recorded in the minutes.
[Paragraph 9.1 of SS 1]
16. Apart from the
resolution or the decision, see that the Board minutes also mention, the brief
back ground of the proposal and the rationale for passing the resolution or
taking the decision. [Paragraph 9.2 of SS 1]
17. Also record in
the Board minutes the names of directors who dissented or abstained from the
decision and similarly the fact that an interested director did not participate
in the discussion or vote should be recorded in the minutes. [Paragraph 9.3 of
SS 1]
18. Keep in mind
that wherever any approval of the Board or the committee of the Board is taken
on the basis of certain papers laid before the Board or the Committee thereof,
proper identification by initialling of such papers by the Chainnan or any
director should be made and a reference thereto should be made in the minutes.
[Paragraph 9.4 of SS 1]
19. Certain
matters may not be included in the minute book if in the opinion and discretion
of the Chairman of the meeting, it:
(a) is,
or could reasonably be regarded as defamatory to any person;
(b) is
irrelevant or immaterial to the proceedings; or
(c) is
detrimental to the interest of the company. [Section 193(5)]
20. Please keep in
mind that if default is made in complying with the aforesaid requirements
respect of any meeting, the company and every officer of the company who is in
default will be punishable with fine upto Rs. 500/‑. [Section 193(6)]
21. If your
company wants to use loose‑leaf binder for keeping minutes of the Board
Meeting, then it can do so.
22. Bind the loose
leaves at intervals coinciding with the financial year of your company.
[Paragraph 8.6 of SS 1].
23. See that the
pages of loose‑leaf minute book are serially numbered and duly typed and
initialled by the Secretary of the company.
24. In the case of
General Meetings, forward a copy of the minutes to the recognised Stock
Exchange with which the shares of your company are listed as soon as possible.
[Clause 31(d) of the Standard Listing Agreement]
25. If your
company wants to enter minutes in a bound minutes book by a chemical process
which does not amount to attachment to any book by pasting, it can do so provided
on the mechanical impression of the minutes the original signature of the
Chairman is given on each page.
26. Keep in mind
that if your company's paid‑up share capital is less than Rs. 50 lakhs
but is equal to or more than Rs. 10 lakhs your company is required to obtain a
Compliance Certificate from a Secretary in whole‑time practice to be
filed with the Registrar of Companies, mentioning therein inter alia that the
proceedings of your company's Board Meetings were properly recorded and signed
including the circular resolution passed in the minutes book maintained for the
purpose as per paragraph 4 of the Form of Compliance Certificate appended to
the Companies (Compliance Certificate) Rules, 2001.[Section 383‑A(1)
proviso]
§ Topic 155
1. Check up the Articles of Association of your company and
verify whether it provides for any specific amount of sitting fees or it just
mentions that sitting fees will be paid as per the Companies Act, 1956 read
with Rule 10B.
2. If the Articles of Association of your company is silent on
this point or specifies the amount of sitting fees per director per Board Meeting
or Committee Meeting and that amount is less than the amount which you can
pay under the proviso to sub‑section (1) of section 310 of the
Companies Act, 1956, read with rule 1013, then alter the Articles of
Association accoedingly vide Topic 26.
3. If the Articles of Association of your company provides for
an amount which is either equal to or more than the amount which you can pay
under the proviso to sub‑section (1) of section 310 of the Companies Act,
1956, then see that the amount of remuneration by way of sitting fee for each
meeting of the Board of Directors or a Committee thereof does not exceed the
sum of five thousand rupees.' [Rule JOB]
4. Keep in mind that the abovementioned sitting fee is the
maximum amount a company can pay to a director per meeting of the Board or
Committee thereof and payment of sitting fees more than this maximum limit will
amount to increase in remuneration, [Section 310(l), Proviso] and
therefore will require approval of the Central Government for a public company
and also for a private company which is a subsidiary of a public company.
Topic 156
DO YOU WISH TO DRAFT A BOARD'S REPORT?
1. Please keep in
mind that a report by the Board of Directors of the company must be attached to
every balance sheet laid before the annual general meeting of the company.
[Section 217(1)]
2. While drafting
a Board's Report ensure that it covers statements particularly with respect to
the following matters:
(i) state
of the Company's Affairs;
(ii) the amounts, if any which the Board proposes to carry to any
reserves in the company's balance sheet;
(iii) the
amount, if any, the Board recommends to be paid by way of dividend;
(iv) material
changes and commitments;
(v) the conservation of energy, technology absorption, foreign exchange
earnings and outgo, in the manner as prescribed by the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988.
3. Ensure that
statements in the Board's report with respect to the state of the company's
affairs deal with the changes, if any, which have occurred during the financial
year in the nature of the company's business or in any of its subsidiaries and
also generally in the classes of businesses in which the company has an
interest. [Section 217(2)]
4. Also ensure
that the Board's Report includes a statement showing the name of every employee
of the company who‑was in receipt of aggregate remuneration for that
financial year of not less than Rs. 2,00,000/‑ per month or not less than
Rs. 24,00,000/‑ per annum. [Rule 1A of Companies (Particulars of
Employees) Rules, 1975, read with clauses (i) and (ii) of Sub‑section
(2A) of Section 217]
5. Please also
ensure that the aforesaid statement of particulars of employees contains the
following particulars with respect to each and every employee who is in receipt
of not less than aforesaid amount as mentioned in Topic 282.
6. Please also
ensure that the aforesaid statement of particulars of employees to be included
in the Board's Report mentions whether or not any such employee is in receipt
of remuneration in excess of that drawn by the managing director or whole‑time
director or manager and whether such employee holds by himself or along with
his spouse and dependent children not less than two per cent of the equity shares
of the company. [Section 217(2A)(iii)]
7. Further ensure
that the Board's Report includes a Directors' Responsibility Statement
indicating therein the following:
(i) that in the preparation of the annual accounts, the
applicable accounting standards had been followed along with proper explanation
relating to material departures;
(ii) that the directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the profit or loss of the
company for that period;
(iii) that the directors had taken proper and sufficient care for
the maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;
(iv) that the directors had prepared the annual accounts on a going
concern basis. [Section 217 (2AA)]
8. Please ensure
that the Board's report specifies the reasons for the failure, if any, to
complete that Buy‑back within the times specified in sub‑section
(4) ofsection 77A. [Section 217(2B)]
9. Please ensure
that the remuneration includes, remuneration mentioned in the Explanation to
Section 198 of the Act, which includes the following:
(i) any expenditure incurred by the company in providing any
rent‑free accommodation or any other benefit or amenity in respect of
accommodation free of charge, to any of the persons specified in Sub‑section
(1);
(ii) any expenditure incurred by the company in providing any
other benefit or amenity free of charge or at a concessional rate to any of the
persons aforesaid;
(iii) any expenditure incurred by the company in respect of any
obligation or service which but for such expenditure by the company, would,
have been incurred by any of the persons aforesaid; and
(iv) any expenditure incurred by the company to effect any
insurance on the life of, or to provide any pension, annuity or gratuity for,
any of the persons aforesaid or his spouse or child.
10. Please ensure
that the Board's Report includes fullest information and explanations on every
reservation, qualification or adverse remark, if any, contained in the
auditor's report by way of an addendum. [Section 217(3)]
11. In case the
auditors' report contains any reservation or qualification or adverse remark on
any information given in the Board's Report which information is required to be
given in the accounts and that report is actually annexed to the accounts, then
the Board's Report should give by way of an addendum fullest information and
explanation on that. [Section 217(3) read with Proviso to Section 222]
12. See that all
the necessary particulars have come in the Board's Report and in its addendum,
if any, and they are vetted by the Chairman of the Board or the Managing
Director of the company, and they are signed either by the Chairman of the
Board, if he is so authorised in that behalf or by such number of directors, as
are required to sign balance‑sheet and the profit and loss account of the
company by virtue of Sub‑sections (1) and (2) of Section 215.
13. Ensure that
the Board's Report discloses the fact of delisting, if any of your company, together
with statement of reasons and if the delisting is voluntary then also the
justification thereof. Disclosure as to suspension of trading in securities, if
any of your company should also be made in the Board's Report. [SEBI Circular
SMDRP/14/98 dated 29‑4‑1998.
14. Please keep in
mind that non‑compliance with the provisions of section 217 is punishable
with imprisonment for a term of six months or fine of Rs. 20 000/- or with
both. [Section 271(5)]
15. If your
company is not required to employ a whole‑time secretary under section
383A(1) but is required to file a compliance certificate with the Registrar of
Companies under section 383A(1) proviso' then ensure a copy of such certificate
as prescribed by the Companies (Compliance Certificate) Rules, 2001. is
attached to the Board's Report. [Section 383A(1) proviso]
16. If you are a
listed company, ensure that requisite additional report or information is
included in the Board's Report in terms of clause 49.V, VII and VIII of the
Standard Listing Agreement.
Topic 157
DO YOU WISH TO REIMBURSE TRAVELLING
EXPENSES TO DIRECTORS?
1. Consult the
Articles of Association of your company to see whether they authorise your
company to reimburse travelling expenses to the directors of your company. If
it does not so authorise, complete proceedings to alter them accordingly, vide
Topic 26.
2. Unless already
a Board Resolution has been passed to make such reimbursement, convene a Board
Meeting after issuing notices to the directors of the company as per section 286
and pass a resolution allowing the Board to reimburse travelling expenses to
directors.
3. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of Rs. 1,000/‑. [Section 286(2)]
4. Ensure that
only the actual expenses incurred by them in attending Board Meeting or
Committees thereof or General Meetings of the company or in connection with the
business of the company are reimbursed and not other expenses.,
5. Make the payment only after passing of the Board
Resolution and not before that.
Topic 158
DO YOU WISH TO ELECT A CHAIRMAN?
1. Consult the
Articles of Association of your company to see whether they authorise the Board
of Directors to elect a chairman of its meeting and determine the period for
which he is to hold office. If they do not so authorise, complete proceedings
to alter them accordingly, vide Topic 26.
2. Keep in mind
that every company should have a Chairman who would be the Chairman for
meetings of the Board. [Paragraph 5.1 of SS 1]
3. Also keep in
mind that the Board of Directors of your company while constituting any
Committee, should also appoint the Chairman of that Committee unless such
appointment is to be made in pursuance if any other applicable guidelines,
rules or regulations. [Paragraph 5.2 of SS 1]
4. Once the
provision is there in the Articles of Association, convene a Board Meeting
after issuing noitcesl to the directors of the company as per Section 286 and
pass a resolution electing one of the directors as the Chairman of its
meetingst. [Regulation 76(1) of Table A of Schedule I]
5. In the same
Board Meeting pass another resolution determining the period for which the
Chairman so elected is to hold office.
6. In the same
Board Meeting pass another resolution authorising the Chairman to have a second
or casting vote in case of equality of votes and also to be the Chairman of the
general meetings of the company. [Regulation 74(2)]
7. Please keep in
mind that every officer of the company whose duty is to give notice of the
Board Meeting as aforesaid and who fails to do so will be punishable with fine
of upto Rs. 1,000/‑.[Section 286(2)]
8. Inform the
director who has been elected as the Chairman of the Board and also the
Chairman of all general meetings of the company.
9. Keep in mind
that if the said elected Chairman is not present within five minutes after the
dine appointed for holding the meeting, the directors present may choose one of
their number to be the Chairman of the meeting. [Regulation 76(2) of Table A to
Schedule I]
10. Note the provisions about Chairman given in
sections 175 and 178 of the Act.
Topic 159
1. Check whether
you are a holder of shares or debentures or fixed deposits of a company.
2. Further check
whether you are jointly holding shares or debentures or fixed deposits of a
company.
3. Obtain the
nomination form being Form No. 2BJ from the company of which you are a
shareholder or debenture holder or fixed deposit holder.
4. Keep in mind
that the nomination can be made at any time in the prescribed manner. [Section
109A(1) read with Section 58A(11)]
5. Nominate a
person to whom your shares in or debentures or fixed deposits of the company
will vest in the event of your death. [Section 109A(1) read with Section
58A(11)]
6. Further keep
in mind that nomination can be made by joint holders of shares or debentures or
fixed deposits in the prescribed manner Form No. 2B in favour of a person to
whom all rights in shares or debentures or fixed deposit as the case may be of
the company, will vest in the event of death of all the joint holders. [Section
109A(2) read with Section 58A(11)]
7. In case you
want to nominate a minor, it will be lawful for you being a holder of shares or
debentures or fixed deposits to make the nornifiation to appoint in the
prescribed manner any person to become entitled to shares in or debentures or
fixed deposits of the company in the event of your death, during the nominees
minority. [Section 109A(4) read with Section 58A(11)]
8. Please note
that in respect of such shares in, or debentures or fixed deposits of, the
company, where a nomination made in the prescribed manner purports to confer on
any person the right to vest the shares in or debentures or fixed deposits of
the company, the nominee shall, on the death of the shareholder or holder of
debentures or fixed deposits of the company or, as the case may be, on the
death of the joint holders become entitled to all the rights in the shares or
debentures or fixed deposits of the company or, as the case may be, all the
joint holders, in relation to such shares in, or debentures or fixed deposits
of the conipany to the exclusion of all other persons, unless the nomination is
varied or cancelled in the prescribed manner. [Section 109A(3) read with
Section 58A(11)].
9. While
nominating a person, keep in mind that a person being a nominee, after the
death of the shareholder or debentureholder will be entitled to the same
dividends and other advantages to which he would be entitled if he were a
registered holder of the share or debenture except that he would not be able to
exercise his right as such in the meetings of the company before being
registered a member or debentureholder of the company. [Section 109A(4)]