RESOLUTION, MINUTES AND REPORT

Recently we have discussed “General Meetings”, “Preparing General Meetings” and “Proxies, Voting and Polling”. The provision contains here also applicable to all company meetings unless context restrict them to General Meeting.

RESOLUTION (SECTIONS 114):

The Companies Act, 2013 does not define resolution. Resolution is a formal statement of a decision or expression of opinion put before or adopted by an assembly. This may be ordinary resolution or special resolution.

Ordinary Resolution:

Where proper notice was duly given for resolution and it is passed where votes casted in its favour exceeds the vote casted against it by the members. The Chairperson may cast a casting vote.

Special Resolution:

Where proper notice was duly given, specifying the intention to propose the resolution as a special resolution and the vost cast in favour of the resolution are not less than three times the number of votes cast against the resolution.

RESOLUTION REQUIRING SPECIAL NOTICE (SECTION 115):

There are certain businesses under the Act and may be some additional businesses in the articles of the company, which requires special notice for resolution. The notice of the intention to move such resolution shall be given to the company by prescribed number of members holding not less than one percent voting power or holding shares of paid –up value of five lakh rupees. On receipt of such notice from these members, the company shall give notice in prescribed manner to its members.

DATE OF PASSING OF A RESOLUTION (SECTION 116):

We may understand, the date of passing of a resolution is a date on which it is passed not the date on which it was proposed for consideration or moved for consideration. There is no issue, when a resolution moved and passed on the proposed date.

Where a resolution is passed in an adjourned meeting, it shall be treated as having passed on the date on which it was in fact passed.

RESOLUTION AND AGREEMENT TO BE FILED (SECTION 117):

A copy of every resolution and agreement in respect of certain matters together with the explanatory statement annexed to the notice calling the meeting shall be filed with the Registrar with thirty days of passing or making.

The copy of every resolution which has the effect of altering the article and the copy of these agreements shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.

The dictionary meaning of embody is incorporate.

The resolution and agreement which are required to be filed are –

a)    special resolution;

b)   resolution agreed by all members which otherwise have to be passed as special resolution;

c)    any resolution of Board of Directors or agreement relating to appointment  or terms and conditions of a managing director;

d)    Resolution or agreements which have been agreed to by any class of members but which may otherwise need specific majority and all resolution or agreements which effectively bind all members of the class;

e)    Resolution according consent to the exercise by its Board of Directors of any power related to disposing of the undertaking and borrowing under section 180;

f)     Resolution to wound up voluntarily;

g)    Resolution relating to power of Board under Sub section (3) of Section 179;

h)    Any other resolution or agreement as may prescribed and placed in public domain.

The power under sub – section (3) of Section 179 are –

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board’s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed.

MINUTES OF PROCEEDINGS (SECTION 118):

Minutes are detail of events in chronological order. The resolution are formal statement of decision.

Every company shall prepare minutes of the proceedings of every meeting and every resolution passed by postal ballot and gets signed within thirty days of the conclusion of the event in the consecutively numbered minute books.

The minutes shall contain a fair and correct summary of the proceedings.

All appointments made in a meeting shall be included in the minutes of the meeting.

The minutes of the Board meeting or committee meeting shall also contain the name of all directors present. In case of each resolution passed in the meeting, the minutes shall contain the name of the directors dissenting from or not concurring with the resolution. The name of director assenting is not required to disclose.

The minutes may not include any matter which, in the opinion of the Chairperson of the meeting –

(a)  Is or could be defamatory of any person; or

(b) Is irrelevant or immaterial to the proceeding; or

(c)  Is detrimental to the interest of the company.

This means all relevant and material matters should be included.

The decision to include a matter depends upon absolute discretion of the chairperson.

The minutes of the meeting shall be evidence of the proceeding recorded therein.

Where the minutes have been kept accordingly then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.

No report of the proceeding of any general meeting of a company shall be circulated or advertised at the expenses of the company, unless it is included in the minutes of the company.

Every company shall observe the Secretarial Standards specified by the Institute of Company Secretaries of India and approved as such by the Central Government.

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

If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

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