Company Meetings: 8 Main

Types of Company Meetings

This article throws light upon the eight main types of company
meetings. The types are: 1. Statutory Meeting 2. Annual General
Meeting 3. Extraordinary General Meeting 4. Meeting of the Board
of Directors 5. Class Meeting 6. Meeting of Creditors 7. Meeting of
Debenture Holders 8. Meeting of Creditors and Contributories.

Company Meeting Type # 1. Statutory Meeting:

Every public company limited by shares—and every company
limited by guarantee and having a share capital—must, 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, hold a general meeting of the members which is to be
called the Statutory Meeting.

In this meeting the members are to discuss a report by the

Directors, known as the Statutory Report, which contains
particulars relating to the formation of the company.

ADVERTISEMENTS:

Private companies are exempted from holding this meeting.

Statutory Report:
The nature of business conducted at the statutory meeting involves
consideration and adoption of the Statutory Report. The Statutory
Report is drafted by Directors and certified as correct by at least two
of them. A copy of the report must be sent to every member at least
21 days before the date of the meeting. A copy is also to be sent to
the Registrar for registration.

ADVERTISEMENTS:

Section 165(3) provides that the Statutory Report must

contain the following particulars:
(i) The total number of fully paid-up and partly paid-up shares
allotted;

(ii) The total amount of cash received by the company in respect of

the shares;

(iii) An abstract of the receipts, classifying them according to source

and mentioning the expenses incurred for commission, brokerage
etc.

(iv) The names, addresses and occupations of directors, auditors,

managers and secretaries and changes of the names, addresses etc.

(v) Particulars of contracts which are to be submitted to the meeting

for approval, with proposed modifications, if any;

(vi) If any underwriting contracts have not been carried out, the
reasons therefor;

(vii) The arrears due on calls from directors and others;

ADVERTISEMENTS:

(viii) Particulars of commissions and brokerages paid to directors

and managers.
Particulars as regards cash in the Statutory Report are to be
certified as correct by the auditors of the company.

The members of the company who are present in the Statutory

Meeting are at liberty to discuss any matter relating to the
formation of the company or arising out of the Statutory Report,
whether previous notice has been given or not. But no resolution
can be passed of which notice has not been given in accordance with
the provisions of the Act.

If default is made in complying with the provisions of Section 165,

every Director or any other officer of the company who is in default
shall be punishable with a fine which may extend to Rs. 500.

Company Meeting Type # 2. Annual General Meeting:

General Meeting of a company means a meeting of its members for
specified purposes.

There are two kinds of General Meetings:

(i) The Annual General Meeting and

(ii) Other General Meetings.

The statutory provisions regarding the Annual General

Meeting are:
(a) Section 166:
The first Annual General Meeting of a company may be held within
a period of not more than 18 months from the date of its incorpora-
tion. If such a meeting is held within the period, it is not necessary
for the company to hold any annual general meeting in the year of
its incorporation or in the following year.
Subject to the above-mentioned provision, a company must hold an
Annual General Meeting each year. Not more than 15 months shall
elapse between the date of one Annual General Meeting and the
next. The Registrar may, for any special reason, extend the time of
holding an Annual General Meeting (other than the first Annual
General Meeting) by a period not exceeding 3 months.

The notice, by which an Annual General Meeting is called, must

specify it as such. Every Annual General meeting shall be called
during business hours, on a day which is not a public holiday, at the
Registered Office of the company or at some other place within the
town or village where the Registered Office is situated. The Central
Govt. may exempt any class of companies from the provisions men-
tioned in this paragraph.

The time of holding of the Annual General Meeting may be fixed by

the articles of the company. A public company or a private company
which is a subsidiary of a public company, may, by a resolution
passed in one general meeting, fix the time for its subsequent
general meetings. Other private companies may do so by a
resolution agreed to by all the members thereof.

(b) Section 167:

If default is made in holding an Annual General Meeting in ac-
cordance with Sec. 166, the Regional Director of the Company Law
Board may, on the application of any member of the company, call
or direct the calling of a general meeting. He may also give di-
rections regarding the calling, holding and conducting the meeting.
Such a meeting shall be deemed to be an Annual General Meeting of
the company
(c) Section 168:
If the provisions of Sections 166 and 167 are not complied with, the
company and every officer of the company be fined.

(d) Section 171:

A general meeting may be called by giving not less than 21 days’
notice in writing. The Annual General Meeting may be called with a
shorter notice if it is agreed to by all the members entitled to vote in
the meeting. The Court has no power to direct the calling of the
Annual General Meeting.

Company Meeting Type # 3. Extraordinary General Meeting:

Any general meeting of the company which is not an Annual
General Meeting or a Statutory Meeting is called Extraordinary
General Meeting. An Extraordinary General Meeting is held for
dealing with some business of special or extraordinary nature and
which is outside the scope of the Annual General Meeting.

This meeting is also held to transact some urgent business that

cannot be deferred till the next Annual General Meeting. This
meeting may be called by the Directors or requisitioned by the
member’s according to Sec.169 of the Companies Act, 1956. The
Board of Directors can be compelled to hold

Extraordinary General Meeting upon request or

requisition made for it, under the following conditions:
(a) The requisition must be signed by members holding at least
1/10th of the paid- up capital of the company, in the case of
companies having a share-capital; and by members holding at least
1/10th of the total voting power in other cases.
(b) The requisition must set out the matters which will be
considered at the meeting.

(c) The requisition must be deposited at the Registered Office of the

company.

The Board must, within 21 days of the receipt of a valid requisition,

issue a notice for the holding of the meeting on a date fixed within
45 days of the receipt of the requisition. If the Board does not hold
the meeting as aforesaid, the requisitionists can call a meeting to be
held on a date fixed within 3 months of the date of requisition.

Resolutions, properly passed at a meeting called by the

requisitionists, are binding on the company.

Company Meeting Type # 4. Meeting of the Board of Directors:

The management of the company is vested on the Board of
Directors. Therefore, the Directors are to meet frequently to decide
both policy and routine matters.

The provisions regarding Board Meeting are:

1. Board Meeting must be held once in every three calendar months
and at least four times in every year. This provision may be
exempted by the Central Govt.

2. Notice of Board Meeting shall be given in writing to every

director for the time being in India and at his usual address in
India.

3. The Quorum:
Quorum means the minimum number of members required to hold
a meeting. According to the Act, quorum is constituted by 5
members personally present in the case of a public company and 2
members personally present in the case of other companies.

The articles may prescribe a larger number. If there is no quorum

within half an hour of the notified time for starting the meeting, it is
dissolved. No quorum is necessary in any adjourned meeting.

In every organisation there should be a provision in their

constitution or by-laws or Articles of Association fixing the number
which should constitute a quorum. If, however, no quorum is fixed
in the constitution or articles, the first meeting should decide what
should constitute the quorum of the meeting.

The quorum of members must be present not only at the beginning

but it also be maintained throughout the meeting. Otherwise the
business transacted at the meeting will be invalid. If a quorum is
not present at the starting time, the Chairman may allow some extra
time (e.g. half an hour) to enable the meeting to form the quorum.

If even the quorum is not present, the meeting shall stand

adjourned and will be held again at a place, time and date as may be
determined by the Chairman.

4. The Agenda:
Agenda means “things to be done” at the meeting. It is the list of
businesses to be transacted at the meeting. The Secretary prepares
the agenda in consultation with the Chairman. The notice of every
meeting must specify the business to be transacted in the meeting.

The Act states that the notice must annex an “Explanatory

Statement” at which some special business is to be transacted. The
statement must contain all the material facts relating to each item of
the business, indicating the nature and extent of the interest of
every director and manager of the company. The statement must
mention the time and place where all documents relating to special
business can be inspected.

The business transacted in a shareholders’ meeting can be

divided into two classes:
(i) Ordinary and

(ii) Special.

Ordinary means consideration of accounts and the Balance Sheet;

declaration of dividend; appointment of directors and appointment
and fixation of remuneration of auditors. Any other business is
special business.

5. Chairman:
Unless otherwise laid down in the articles, the members personally
present at the meeting shall elect a Chairman from amongst them-
selves by show of hands. But if a poll is demanded, it must be taken
forthwith with a Chairman elected for the purpose. Every director
has one vote but the Chairman has an extra vote known as casting
vote, i.e., either for or against the resolution.

6. Proxy:
Any member, entitled to attend and vote in a meeting, can appoint
another person to attend and vote on his behalf. The person
appointed is called the Proxy. The appointment of a Proxy must be
made by a written instruction signed by the appointer and
deposited with the company, not more than 48 hours before the
meeting.

A Proxy is not entitled to speak in the meeting and vote only in a

poll unless the articles provide otherwise. A Proxy need not be a
member of the company. A member of a private company cannot
appoint more than one Proxy to attend on the same occasion, unless
the articles otherwise provide.

A body corporate which is a member of a company can appoint a

representative or proxy, by resolution of the Board. The President of
India or the Governor of a State, if he is a member of a company,
may appoint any person to act as his representative in a meeting.

7. Method of Voting:
Resolutions are to be voted upon, in the first instance, by show of
hands. The Chairman’s declaration of the results of voting by show
of hands is conclusive.

A poll is to be taken:
(i) If the Chairman so directs;

(ii) In all cases, if it is demanded by members holding at least 1/10th

of the voting power or paid-up capital;

(iii) In the case of public companies if it is demanded by at least 5

members present and entitled to vote; and

(iv) In the case of private companies if it is demanded by any one

member if not more than 7 members are present and by 2 members
if more than 7 members are present.
A poll on a resolution for adjournment or for the appointment of a
Chairman is to be taken immediately. In other cases it is to be taken
when the Chairman decides, but it must be within 48 hours of the
demand for poll.

A poll is to be taken in the manner decided by the Chairman. The

usual method is to ask each member to record his decision on ballot
papers provided for the purpose. The Chairman shall appoint two
scrutinizers to scrutinize the ballot papers.

Notice:
Notice is an instrument of giving intimation to all persons who are
entitled to attend a meeting regarding the place, date, time and
purpose of the meeting.

Requisites of a valid notice are:

(i) Notice must be issued in accordance with the provisions of the
statute.

(ii) It should be in writing. Oral notice may also be sufficient.

(iii) Notice must state the nature of the meeting.

(iv) Notice must be given not only to members but also to all
persons entitled to attend a meeting, for e.g., in case of Annual
General Meeting, notice has to be served to the auditors of the
company.

(v) Proper length of notice must be given. A General Meeting

requires 21 days’ notice in writing. A meeting may be called by a
shorter notice if all members give their consent.
(vi) Notice must be adequate. It must clearly state the place, date
and hour of the meeting. A complete agenda is appended as a part
of the notice.

(vii) Notice must be signed and issued by the proper authority.

(viii) Notice is not the same as a circular. Notice is given to

members but circulars are given to customers and public.

Company Meeting Type # 5. Class Meeting:

These meetings are held by a particular class of shareholders for the
purpose of effecting variation in the Articles in respect of their
rights and privileges or for conversion of one class into another.

The provision for variation must be contained in the Memorandum

or Articles and this variation must not be prohibited by the terms of
issue of shares of that particular class. Such resolutions are to be
passed by three-fourth majority of the members of that class.

Company Meeting Type # 6. Meeting of Creditors:

These meetings are called when the company proposes to make a
scheme of arrangement with its creditors. The Court may order a
meeting of the creditors or a class of creditors on the application of
the company or of liquidator in case of a company being wound-up.

Such a meeting is held and conducted in such a manner as the Court

directs. If arrangement is passed by a majority of three-fourth in
value of creditors and the same is sanctioned by the Court, it is
binding on all the creditors.
Company Meeting Type # 7. Meeting of Debenture Holders:
These meeting are called according to the rules and regulations of
the Trust Deed or Debenture Bond. Such meetings are held from
time to time where the interests of debenture holders are involved
at the time of re-organisation, reconstruction, amalgamation or
winding-up of the company. The rules regarding the appointment of
Chairman, notice of the meeting, quorum etc. are contained in the
Trust Deed.

Company Meeting Type # 8. Meeting of Creditors and

Contributories:
These meetings are held when the company has gone into
liquidation to ascertain the total amount due by the company to its
creditors. The main purpose of these meetings is to obtain the
approval of the creditors and contributories to the scheme of
compromise or rearrangement to save the company from financial
difficulties. Sometimes, the Court may also order for such a meeting
to be held.

When a company desires to vary the rights of debenture-holders,

such meetings are to be held according to the rules laid down in the
Debenture Trust Deed. They are also held to enable the company to
issue new debentures or to vary the rate of interest payable to
debenture-holders. The term “contributory” covers every person
who is liable to contribute to the assets of the company when the
company is being wound-up.