Proceedings of
Meeting
By
Asok Nadhani
10.6.3 Voting at
Meeting
i. A motion in a
general meeting is decided by the votes cast by the members of the company. The
equity shareholders has right to vote on every motion of the company.
Preference Shareholders can vote only on those motions which affect rights
attached to their capital (Sec. 87).
ii. The voting may
be done in the following methods:
-
voting by Show of Hands
-
voting by Poll
10.6.3.1
Voting by Show of Hands
i.
At any general meeting, motions put to vote, at the
first instance, shall be decided on a show of hands, unless a poll is demanded
(Sec. 177).
a. When voting by
show of hands, each member has one vote, irrespective of his shareholding.
b. A proxy cannot
vote on a show of hands, unless the Articles specifically authorized a proxy to
vote on show of hands.
ii.
Result of voting by a show of hands
a.
The result of voting is declared on the basis of
number of hands raised, without regard to number of votes possessed by the
members showing the hands. Proxies cannot be used. So, voting by a show of
hands is a quick method and may not effectively reflect the interests of the
members of a company.
b.
A declaration by the chairman as evidenced by an
entry in the minutes book shall be conclusive evidence of the fact that a
resolution has, on a show of hands, been carried (Sec.178)
10.6.3.2 Voting
by Poll (Sec. 179)
i.
As voting by show of hands may not reflect the real
opinion of members. So, the chairman may take polls at his own accord or when demanded
by members.
a. Poll taken by
Chairman at his own accord: Poll may be taken before or on declaration of
results of voting on show of hands, by chairman on his own accord.
b. Poll demanded by
Members : The following persons may demand a poll and the chairman will order
for a poll:
a.
In case of a public company having share
capital: when the demand is made by member(s) holding at least 1/10th
of the total voting power; or Rs 50000 paid up capital
ii.
In case of a private company having share
capital : when the demand is made by:
-
One member,
if not more than 7 members are personally present,
-
2 members, if
7 or more members are present
iii.
In the case of any other company: if a
demand is made by:
-
any member or members present in person; or
-
by members present in person or proxy holding at
least 1/10th of the total voting power in respect of the resolution
iv. The demand for a
poll may be withdrawn at any time by the person or persons who made the demand
ii.
Time of taking poll: A poll demanded
on a question of adjournment or the appointment of a chairman shall be taken
forthwith. In any other case a poll shall be taken within 48 hours of the
demand for poll. (Sec. 180)
iii.
Polling
Procedure & Results: The chairman of the meeting
may regulate the manner in which a poll is to be taken. A poll is complete when
its result is ascertained, and not when just the votes were cast. Where a poll
is taken, the meeting is regarded as continuing until the result of the poll
are ascertained.(Sec. 185)
iv.
Use of votes differently by a member: Where a member
holds more than one share (and consequently he is entitled to cast more than
one vote), he has an option to cast some of the votes in favour of the
resolution, and some of the votes against the resolution. The right to use the
votes differently is also available to a proxy. (Sec. 183)
v.
Proportionate voting rights on poll: The voting right of every member of a
company on a poll is in proportion to his share of the paid-up equity capital
of the company.
vi.
Procedure for taking poll: When a poll is
taken, each member is given the details of shares held by him. He may cast
votes (either supporting the resolution or opposing the resolution) by marking
at appropriate place on the voting slip. The votes cast for and against the
resolution are counted. The chairman then declares the result of the poll.
vii. Appointment of scrutineers: Where a poll is
to be taken, the chairman shall appoint 2 scrutineers. One of the
scrutineers shall be a member (normally not an officer or employee of the
company if such member is willing to be appointed). (S. 184)
10.6.3.3 Voting
by Proxy (Sec. 176)
i.
Proxy is an agent appointed by member to attend a
general meeting and vote on poll on behalf of the member.
ii.
Normally, a member should
personally attend and vote in the meeting, but he may appoint any person as Proxy.
Proxy need not be a member. [Cousins Vs International Brick Co Ltd.]
a.
Unless the
Articles otherwise provide:
i.
proxy can vote only on a poll
ii.
member of a private company cannot appoint more
than one proxy to attend on the same occasion.
iii.
member of a company not having a share capital cannot
appoint a proxy.
b.
Proxy to be in writing: The instrument appointing a proxy shall be in writing and
signed by the appointer or his authorised attorney.
c.
Deposit of proxy
form: The instrument of proxy is to be deposited
with the company :
i. at least 48 hours before the meeting or, [K.P. Chackochan v. Federal
Bank]
ii. such shorter period specified by the articles.
d.
If the member himself votes, the proxy loses his
right to vote on behalf of the member.
10.6.3.4 Casting vote of
chairman
In the case of equality of
votes (referred as Tie), the chairman
of the meeting shall have a second or casting vote (whether on a show of hands
or on poll) (Regulation 54 of Table A). Casting vote can be used only for
passing an ordinary resolution and not a special resolution.
i. Any person
elected to occupy the chair would have a casting vote, unless the Articles
provide otherwise.
ii. The chairman can
use his casting vote in a different way in which he had exercised his first
vote. He may decide not to use his casting vote at all.
iii. Casting vote can
be used only before declaration of result of voting, and not afterwards.
10.7 Voting right of
Members
i.
Voting
rights of shareholders:
a.
Voting rights of equity shareholders. A member holding equity shares is entitled to vote
on every resolution placed before the general meeting.
b.
Voting rights of preference shareholders. A member holding preference
shares is entitled to vote only on such resolutions which directly affect their
rights, e.g., winding up of the company. However, he can vote on every
resolution in case he has earned voting rights (i.e., where dividend
remains unpaid to him for such period as specified under section 87).
ii.
Restriction on voting rights
a. Express
provision in the Articles is required to restrict the voting rights of members,
(both for public as well as private companies) on specified grounds only.
b. Grounds restricting the voting rights
i. Public company: A public company can
restrict the voting rights only on the following grounds: (S. 181)
§ Non payment of
calls on shares by a member,
§ Non payment of
other sums due against a member,
§ Where the
company has exercised any right of lien on shares held by a member.
ii. Private company: A private company can
restrict the voting rights on any grounds contained in its Articles.
iii. A Public Company (or a Private Co. subsidiary to Public Co.) shall not
restrict voting rights if a member other than a ground set in S. 181 (S. 182).
iii.
Provisions
of Table A : Following are
the provision of Table A regarding voting rights of Members:
a.
Unpaid calls on shares. No member shall be entitled
to vote at any GM unless all calls presently payable by him have been paid
(Regulation 59 of Table A).
b.
Exercise of lien on shares. A company shall have a lien
on every share (not being a fully paid share) for all moneys called and
remaining unpaid on the shares (Regulation 9 of Table A).
c.
Qualification of a voter. An objection can be raised
to the qualification of any voter only at the meeting or adjourned meeting, and
not thereafter. Decision of the chairman shall be final and conclusive
(Regulation 60 of Table A).
d.
Voting rights of joint holders. In case of joint holders,
the vote of the senior (whose name appears first) shall be accepted (whether in
person or by proxy) to the exclusion of votes of all other joint holders. (Regulation
57 of Table A).
Example. A and B are joint holders.
A is the senior joint holder. A appoints X as his proxy. In a general meeting,
both X and B are present. When voting was done, both X and B voted. The vote of
X shall be effective, if Articles of the company has adopted a regulation
similar to Regulation 57 of Table A.
iv.
Effect of pledge of shares : The voting
rights of a member are not affected by the fact that his shares have been
attached or pledged or a receiver has been appointed.
10.7.1 Representation in Company Meetings
When a Company or
Government holds shares in the Company, the following persons may attend the
meeting on their behalf :
a. When a Company holds the
Shares: The Board of directors may
authorise any person to act as a representative of the company at any general
meeting or class meeting. (S. 187)
b.
When the Government Holds the Share: If the
President or Governor is a member in a company, he may authorise any person to
act as his representative at any general meeting or class meeting. (S. 187A)
10.8 Resolutions of
Meetings
i.
Meaning
a.
Resolution means a decision taken in a meeting. The
points of discussions in a meeting are called motion. The motions are
deliberated and are put to vote or poll. The motions ultimately accepted become
‘Resolution’.
b.
Difference between Motion & Resolution
|
Aspect
|
Motion
|
Resolution
|
|
Meaning
|
It is a
definite proposal put before a Meeting for its consideration and adoption.
The business of a Meeting is transacted through motions or definite
proposals.
|
It is a Motion
duly voted upon and passed by requisite majority, with or without amendment.
It is the formal expression of the decision of a meeting.
|
|
Notice
|
a.
Notice of a Motion is necessary before it is
brought before the Meeting except - (i) formal motions, (ii) motions for
adjournment, and (iii) motions for appointment of Chairman, etc.
b.
If AOA provide, Notice for moving a proposal
should be given and included in the Agenda.
|
The matters to
be passed by way of a resolution are usually given in the Notice calling the
Meeting.
|
|
Proposal and Seconding
|
Motion must be proposed by
one person and second by another person. But, a motion proposed by Chairman
needs no seconding.
|
It is usually
proposed by one and seconded by another.
|
ii.
Kinds of
Resolution: In company meeting, 3 kinds of resolution may be deliberated :
a.
ordinary Resolution
b.
special Resolution
c.
resolution requiring special Notice
iii. Proposal of Resolution by Members (Sec. 188)
a. Generally, the Board of directors decides which resolution is to be moved
in a general meeting. However, in a company general meeting, following members
can propose a resolution :
One or more members holding 1/20th of total voting powers or
100 members holding paid up capital of Rs. 1,00,000, whichever is less.
b. Members may propose a resolution at the ensuing general meeting or can
submit any statement in respect to any business to be dealt with at general
meeting and such statement shall be circulated by the company to the every
member, thus enabling the members to express their view on a resolution.
c. The following conditions must be satisfied in relation to proposal of
resolution by members.
-
the requisition must be
signed by the requisitionists and deposited within 6 weeks before the General
Meeting in case where requisition proposes resolution. In any other case, the
requisition shall be deposited within 2 weeks before the meeting.
-
expenses relating to the
circulation of the resolution is to be borne by the members proposing the
resolution
iv. Stages in passing of a general meeting
resolution
a.
A notice of the proposed resolution to be passed in
a General Meeting is given to all the members.
b. The general
meeting is held in accordance with the provisions of the Act and the articles. After
the motion has been adequately discussed, the Chairman order for close of
discussion and the motion is put to vote.
c. If requisite
number of votes are cast in favour of the motion, the motion is passed, and it
becomes a resolution (Section 189).
d. Where a
resolution is passed at an adjourned meeting, the resolution shall be treated
as having been passed on the date on which it was in fact passed.(Section 191)
e. After resolution
is passed, minutes are prepared, i.e., the resolution is included in the
minutes book, and then minutes are signed by the Chairman (Section 193).
10.8.1 Ordinary
Resolution [Sec. 189 (1))
i.
Resolution passed at a general meeting by simple
majority of votes (i.e, votes cast in favour of the resolution exceed votes
cast against it) are known as Ordinary
Resolution. The casting vote of the chairman, if any, shall be counted in
the votes cast. The required notice of the meeting should be duly given.
ii.
Any item of business can be transacted by passing
an ordinary resolution unless the Companies Act or the Memorandum or the
Articles specifically require a special resolution.
iii.
The following are some instances
of business through Ordinary resolution:
- Rectification
of name (resembling name of an existing company) [Sec. 22 (1) (a)].
- Issue of
shares at a discount [Sec. 79 (2)].
- Alteration
of share capital [Sec. 94 (2)].
- Re-issue of
redeemed debentures (Sec. 121).
- Adoption of
statutory report (Sec. 165).
- Consideration
of Annual accounts, Auditors & Directors Report.(Sec. 210).
- Appointment
of auditors and fixation of their remuneration [Sec. 224 (1)].
- Appointment
of first directors who are liable to retire by rotation [Sec. 255 (1)].
- Increase or
reduction in the number of directors within limit (Sec. 258).
- Appointment
of managing/whole-time director (Sec. 269).
- Removal of
a director and appointment of a director in his place [Sec. 284 (1)].
- Approval of
appointment of sole selling agents (Sec. 294).
- Voluntary
winding up in certain events [Sec. 484 (1)
- Appointment
of liquidators in members' voluntary winding up [Sec. 490 (1)].
- Nomination
of a liquidator in a creditors' voluntary winding up [Sec. 502 (1)].
10.8.2
Special Resolution [Sec. 189 (2)]
i.
Resolution passed at a general meeting where votes
cast in favour of the resolution (by show of Hands or by Poll) must be at least
3 times the vote cast against the resolution (in person or in proxy) is known
as Special Resolution.
ii.
A special resolution must satisfy the following
conditions:
- the intention to
propose the resolution as a special resolution has been duly specified in the
notice calling the general meeting.
- an explanatory statement of all material facts
related to the special resolution is annexed to the notice of the meeting.
iii.
A copy of every special resolution together with
the copy of the explanatory statement is to be filed with the Registrar within
30 days of passing of the resolution.
iv.
The following are some
instances of business requiring Special resolution
- Alteration of Memorandum for changing the
place of registered office from one State [Sec. 17 (1) and (2)] and the
'objects clause' of the Memorandum.
- Change of name of a company (Sec. 21).
- Omission or
addition of the word 'Private' from, or to, the name of a company (Sec.
21).
- Change of
name of non-profit company by omitting 'Limited' or 'Private Limited' (Sec.
25 (3)).
- Alteration
of the Articles of a company (Sec. 31 (1)).
- Conversion
of uncalled capital into reserve capital (Sec. 99).
- Reduction
of share capital (Sec. 100 (I)].
- Variation
of shareholders' rights (Sec. 106).
- Shifting of
a company's registered office outside the local limits (Sec. 146 (2)).
- Keeping registers
and returns at a place other than the registered office (Sec. 163(1)).
- Payment of
interest out of capital (Sec. 208 (2) and (3)).
- Application
to Central Government for appointment of Inspector for investigation of
company's affairs (Sec. 237 (a)).
- Appointment
of sole selling or buying agent in some cases (Sec. 294-AA(3)).
- Fixing the
remuneration of directors in certain cases (Sec. 309 (I)).
- Permitting
a director to hold an office of profit (Sec. 314 (1)).
- Alteration
of Memorandum to render the liability of directors unlimited (Sec.
323(1)).
- Applying to
the Court to wind up a company (Sec. 433 (a)).
r.
Disposal of books and papers of a company after
voluntary winding up (Sec. 550 (1) (b)).
- Authorising
the liquidator of a company to accept shares for the transfer of its
assets (Sec. 494 (1)).
10.8.3
Resolution requiring Special Notice (Sec. 190)
a.
A resolution requiring a special notice is a kind
of an ordinary resolution of which
notice of the intention to move a resolution has to be given to the company by
the proposer.
b.
A special notice is required for a resolution in
the following cases
i. appointment of
an auditor other than the retiring ones and provision that a retiring auditor
shall not be re-appointed (Sec. 225).
ii. removal of a
director before the expiry of his period and appointment of one in his place (Sec.
284).
iii. The Articles of
a company may provide for additional matters in respect of which special notice
is required.
c.
Rules regarding special Notice
i.
The notice shall be given at least 14 days before the
meeting. It must specify the business proposed to be moved at the meeting.
ii.
The company shall send to every member a notice of
the proposed resolution in the same manner as it gives notice of the meeting.
10.8.4
Resolution through Postal Ballot [Sec. 192-A]
1.
A listed company may pass resolutions (as notified
by the Central Government) by postal ballot (postal ballot includes voting by
electronic mode) instead of passing resolutions in general meeting for the
purpose of : [S. 192A(1)]
Alteration in the Object clause of memorandum of
association
Change of Registered Office outside the local
limits of the city, town or village in which the registered office is situated.
Buy back of own shares by the company
Issue of shares with differential voting rights
Variation in the rights attached to a class of
shares u/s 106
Alteration of articles inserting provisions
defining a private company
Sale
Giving loans of guarantee or security in excess of
the limits prescribed under section 372A.
2. Procedure of
resolution by postal ballot
a.
The company shall send to every member:
i.
Notice
ii.
Draft resolution
iii.
Reason for passing the resolution by postal ballot
iv.
A postage pre-paid reply
envelope for communicating the assent or dissent of the members [S. 192A(3)]
v.
The documents shall be
sent by registered post acknowledgement due, or by any other
prescribed method [S.192A(3)]. The
members shall send their replies within a period of 30 days from the
date of posting of the ballot. [S. 192A(2)]
vi.
The company shall issue an advertisement stating
that the ballot papers have been dispatched to the members.
vii.
The advertisement shall be given in-
§ A leading
English newspaper; and
§ One vernacular
newspaper.
b.
Resolution assented to by requisite majority of the
shareholders by means of postal ballot shall be deemed to have been duly passed
at a general meeting. [S. 192A(4)]
c.
In case of default in compliance, the company and
every defaulting officer shall be punishable with fine upto Rs.50,000 [S.
192A(6)].
10.8.5 Registration of Resolution (Sec. 192)
i.
The company must file with the Registrar the following
documents and resolutions, within 30 days passing the resolution. [S. 192(1)]
§ Resolution of
the Board appointing or re-appointing, or varying the terms of appointment of
managing director.
§ Resolutions
approving the appointment of sole selling agents under section 294 or 294AA.
§ Special
resolutions.
§ Resolutions
agreed to by all the members but which, if not so agreed to, would not
have been effective.
§ Resolutions
agreed to by all the members of any class of shareholders but which, if
not so agreed to, would not have been effective.
§ Resolutions
which bind all the members of any class of shareholders though not
agreed to by all.
§ Resolutions according
consent to Board to exercise powers under section 293(1)(a), (d), (e).
§ Resolutions
requiring a company to be wound up voluntarily under section 484.
ii. A copy of every
resolution referred to in Section 192 shall be
a. Embodied in or
annexed to every copy of the Articles where Articles have been registered [S.
192(2)].
b. Forwarded to any
member at his request where Articles have not been registered [S. 192(3)].
10.9 Minutes of Meeting
i. Every company
shall record all proceedings at a meeting, including the decisions made thereat
in minutes books, within 30 days of conclusion of every such meeting (Sec.193).
These records are known as minutes.
ii. The form of
minutes depends upon the method of preparation of minutes adopted by the
company. There are two methods namely:
a. Minutes of narration: Minutes of narration are
minutes in a narrative form, which only states the business transacted with
necessary explanations or statements but without giving resolution verbatim.
b. Minutes of resolutions: Minutes of resolutions set
out formally the resolutions passed.
iii. Minutes of
meetings shall be evidence of the meetings held and of the proceedings recorded
therein (S.194). All appointments of directors or liquidators made therein
shall be valid. (s.195)
10.9.1 Minutes Book
i. It is the book
in which the record of the proceedings (i.e. minutes) are kept. Separate minute
books are to be maintained for shareholders' general meetings, Directors’
Meetings, Committee Meetings etc.
ii. The following
rules apply regarding Minute Book :
a.
Numbering of Pages: The pages shall
be consecutively numbered.
b.
Signing of minutes: Each page of
the minutes book shall be signed and the last page should be dated & signed
by:
i. In case of
Directors meetings : The chairman of the same meeting or of the next meeting.
ii. In case of
General meetings : The chairman of the same meeting, or a director duly
authorised by the Board, in the event of the death or inability of the
chairman.
c. Fair and correct summary: Minutes shall contain a fair and correct summary of the proceedings
of the meeting.
d. Exclusion of matter: The chairman may exclude
any matter from the minutes which he considers is immaterial, irrelevant, defamatory
of any person or detrimental to the interest of the company.
iii.
Inspection of minutes: (S. 196)
a. Any member of the company can inspect the minute book for at least 2
hours per day without any charge. He may also obtain a copy of the minute’s
book paying a prescribed fee within 7 days of such request.
b. Consequences
Refusal of Inspection : If the company fails to allow inspection
of minutes, or refuses to furnish a copy of minutes to a member, the Company
Law Board may compel immediate inspection or to send the copy forthwith.
10.10 One Person Meeting
a.
The word 'meeting' means coming together of more
than one person. So, normally, one shareholder present cannot constitute a
valid meeting. [Sharp V. Dawes]
b.
However, in following cases, a meeting of even one
person has been held to be valid:
i.
In a class meeting, where all the shares of that
class (e.g., preference shares) are held by one person, then the sole
shareholder may constitute a meeting of the class and can pass a class
resolution by signing it.
ii.
Where the Tribunal calls or directs the calling of
an annual general meeting u/s 167. It may direct that one member present in
person or by proxy shall constitute a valid meeting.
iii.
Where the Tribunal orders a meeting of a company
(other than the annual general meeting) u/s186, it may direct that even one
member of the company present in person or by proxy may constitute a valid
meeting.
iv.
Where the Board of directors delegates (subject to
the provisions of the Act & Articles), any of its powers to a one-man
committee, the only committee member shall constitute the quorum.
v.
In an adjourned meeting (adjourned for lack of
quorum), if a quorum is not present within half an hour, the members present
(even one person), constitute a valid quorum (Sec. 174)
10.11 Class
Meeting
i.
Class meetings are meetings of shareholders holding
a particular class of shares. Each class of shares may carry different rights
as to dividends, voting or otherwise.
ii.
Holding
of class meeting
-
Under Section 106, class meetings of the holders of
different classes of shares are to be held if the rights attaching to these
shares are to be varied.
-
Under Section 394, where a scheme of arrangement is
proposed, meetings of the several classes of shareholders and creditors are
required to be held.
-
At the time of winding up, the meetings of
creditors and members, are held for certain purposes.
iii. Sections 171 to
186 (except section 176) shall also apply to class meetings of members and
debenture holders except where the articles or any contract provide otherwise.
iv.
Provisions of Table A relating to general meetings
shall mutatis mutandis apply to a class meeting except that where the
terms of issue of any class of shares are to be varied, the necessary quorum
shall be two persons at least holding or representing by proxy one third of the
issued shares of that class. [Regulation 3(2) of Table A]
v.
Rights
attached to shares of
any class may be varied if (Sec. 106) :
a. Consent in
writing is obtained by members holding three fourths of issued shares of that
class; or a special resolution is passed at a separate meeting of
holders of that class.
b. Such variation can be made only if provision for variation is contained in the
memorandum or Articles of the company; or such variation is not prohibited by the terms of issue of shares
of that class.
vi. Rights of
dissentient shareholders to prefer an appeal to Court
a.
The appeal may be filed to the court within 21 days
of variation, by holders of at least 10% shares of such class having not
consented to such variation.
b. The Court shall
give opportunity of being heard to all the parties concerned before making any
order.
i.
The Court may cancel the variation if it is
satisfied that variation would unfairly prejudice such shareholders.
ii.
The order of the Court shall be final.
iii. The variation
shall not have any effect unless confirmed by the Court.
10.12
Meetings of Debenture Holders
A Meeting of Debenture holders is called if any variation is proposed to
be made in terms of security or to alter the rights of debentureholders.
i.
All the matters connected with the holding, conduct
and proceedings of the meetings of the debenture holders are normally contained
the Debenture Trust Deed.
ii.
The decisions arrived at such meetings with the
requisite majority, are valid and binding upon the minority.
10.13
Meeting of Creditors
i.
Meeting of creditors are held for certain arrangements
with the company (during life time or in of winding-up). These kind of meetings
are not company meetings in the real sense.
ii.
A company may enter into arrangements with the
creditors with the sanction of the Court (s.391-393). The court, on
application, may order the holding of a creditors' meeting. If the scheme of
arrangement is agreeable to, by three-fourths majority, in value, the court may
sanction the scheme. [Centron Industrial
Alliance Limited vs Pravin Kantilal Vakil]
iii.
When a company goes into liquidation, a meeting of
creditors and of contributors is held to ascertain the total amount due by the
company to its creditors and also to appoint a liquidator to wind-up the
affairs of the company.
Examples:
Time period of holding
first AGM
Ex.10.1
A
Company A Ltd. incorporated on April
1, 2002 may hold its first annual general meeting by October 1.
2004 and then no other meeting will be necessary either for 2003 or
2004. Similarly a company B Ltd. incorporated on January 1, 2003 may hold its
first annual general meeting within 18 months i.e., within July 1, 2004 . If the meeting
is held say in June 2004, the company need not hold any other meeting in the
years 2003 and 2004. [Ref. 10.4.1{b(i)}]
Grant
extended by Registrar
Ex.10.2
The
accounting year of a company ends on 31 st March. 2001. Its last AGM was held
on 31st August
2000 . The last date for holding the AGM will be 30th September 2001 .
The Registrar may on application grant time to hold AGM by 31st December 2001 . [Ref. 10.4.1{b(iic)}]
For more details,
refer to Business & Corporate Laws by Asok Nadhani, BPB Publications, www.bpbonline.com,
bpbpublications@gmail.com
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