Tag Archives: General Meeting

Shareholders in General Meeting


To be legally correct I will say, all Members of a company may attend a General Meeting including the Annual General Meeting of a company. I will discuss, related aspects in brief.

Member

In legal terminology Section 2(55) of the Companies Act, 2013 defines the term member:

“member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become a member of the company, and on its registration, shall be entered as a member in its register of members;

(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.”

Members are those shareholders who got shares registered in their name.

A shareholder, who has recently purchased, inherited or received a gift of shares of a company may not become shareholders unless shares are registered in its name. Likewise, a member who has recently sold, died or given a gift of shares may continue as members til such shares are registered in the name of another person.

Please note in case of de-materialised shares, such registration happened immediately.

Notice of (Annual) General Meeting

According to Section 101(3)(a) of the Act, the notice of every meeting of the company shall be given to every member of the company, legal representative of any deceased member or the assignee of an insolvent member.

Quorum

Normally the quorum of a general meeting:

(a) in case of a public company,—

(i) five members personally present if the number of members as on the date of the meeting is not more than one thousand;

(ii) fifteen members personally present if the number of members as on the date of the meeting is more than one thousand but up to five thousand;

(iii) thirty members personally present if the number of members as on the date of the meeting exceeds five thousand;

(b) in the case of a private company, two members personally present shall be the quorum for a meeting of the company.

There is no discrimination among member, who may present. Every member person who received the notice of a general meeting may attend it.

Voting

In normal circumstances, only members who are equity shareholder may vote as per defined voting rights. According to Section 47(1)(a) of the Act, every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company. Presently, it is possible to have different classes of equity shareholders with differential voting rights.

Members, who are preference shareholders may vote in certain circumstances only. Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company. Where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.

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Emeritus Chairman vs Chairman


In India, most companies have designation of Chairman but there is no legally recognised office of chairman of company under the Companies Act, 2013. In Indian law, chairman or chairperson is not legal position but a momentary position in meetings.

Chairman under the company law is person appointed/elected as chairman of the Meeting of Board of Directors or meetings of members (general meetings). To avoid time to appoint/select/elect chairman in each such meeting, usually board of directors names a person as its chairman once. Chairman of the Board of Directors may act as chairman of the company (means chairman of its general meetings). However, this position usually treated as permanent designation for a person.

Section 104 of the Companies Act, 2013, talk about chairman of meetings. In some later sections term chairperson is also used in same meaning.

Indian Secretarial Standards bring some legal definition for the position of chairman.

For Indian Secretarial Standards SS – 1 dealing with meetings of Board of Directors, Chairman means the Chairman of the Board or its Committee, as the case may be, or the chairman appointed or elected for a meeting.

For Indian Secretarial Standards SS – 2 dealing with general meetings, Chairman means Chairman of the Board or the Chairman appointed or elected for a Meeting.

These definitions given in Indian Secretarial Standards give some legal backing for permanently appointed chairman of the board.

Chairman Emeritus is more ceremonial position. Chairman Emeritus is an honorary position usually given to people who have retired from the position. It is just a respect to person named so. Chairman Emeritus is like a head of family who lost all powers to younger generation but have high regards at least in society (if not in the family). More often than not, Chairman Emeritus conducts meetings just by presence and all legal responsibilities rest on named chairman.

Basic responsibility of chairman is to conduct a meeting and certify as correct the proceeding when noted down as minutes of meeting. Thus, legally chairman is higher and actual position.

In listed companies, Chairman is preferably a non – executive position and sometime independent directors need to be elected as chairman. Chairman of most committees of Board should legally be an independent director. In private companies and closely held companies managing director act as chairman. In family owned head of family acts as chairman.

This post was earlier written as Quora answer here.

 

Notification of Sections Relevant for NCLT


Yesterday late evening, I posted here about press release issued by Ministry of Corporate Affairs. Soon thereafter, two files uploaded on Official Gazette website with two notifications in each. In earlier post here today, we discussed establishment and jurisdiction of various NCLT benches.

In this post, we will have a bird’s eye view on Sections notified on 1st June 2016 related to NCLT.

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REPORT OF THE COMPANIES LAW COMMITTEE – 4


On 1st February 2016, Ministry of Corporate Affairs uploaded the report of Companies Law Committee on its website here. In 4th post on this report, we will discuss recommendations of the committee related to shares, debentures, general meeting, NFRA, Board Report, CSR etc.

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REPRESENTATIVE, PROXY AND WHO ELSE


This is not possible every time for a member to be present in a General Meeting. Members are very much concerned for well being of the company, its management, profit and growth. Corporate law does not permit members to participate members to interfere in day to day management. A member at most may seek certain information or participate in general meetings of the company. Participation in a meeting need a presence; a personal presence of a member. Even in a virtual presence, a member needs to spare time for the purpose.

Representative:

Further, it may also be possible that member is a corporate sole like President of India or Governor of an Indian State who may not be present himself but through representative. President of India and Governor of an Indian State may appoint a person as his representative for a meeting of the company [Section 112(1)]. Where a member is a body corporate, it may also appoint a person as representative [Section 113(1)]

A representative of President or Governor shall be deemed to be a member of such a company and shall be entitled to exercise the same rights and powers, including the right to vote by proxy and postal ballot, as the President or, as the case may be, the Governor could exercise as a member of the company. [Section 112(2)]

A representative of body corporate shall be entitled to exercise the same rights and powers, including the right to vote by proxy and by postal ballot, on behalf of the body corporate which he represents as that body could exercise if it were an individual member, creditor or holder of debentures of the company. [Section 113(2)]

Major difference among representative under Section 112(2) and 113(3) is that representative of President or Governor shall be deemed to be a member but representative of body corporate is a mere representative who may exercise powers as a member. This difference arises from drafting and may not have much practical impact.

 Major similarity among representative under Section 112(2) and 113(3) is that both representatives may vote by proxy and postal ballot.

So now, for the purpose of this post, we may treat all members as individual as corporate sole and body corporate also being represented by individuals exercise same powers in the general meeting.

Proxy:

Where a member may not present, member may appoint a proxy under Section 105 of the Companies Act, 2013 t attend and vote in the meeting. Similar provision was there in earlier Acts also.

A proxy may vote even if member present personally in the meeting until members expressly revoke proxy or vote himself which implicitly revoke the proxy. [Tata Iron & Steel Co. Ltd., In Re., AIR 1928 Bom. 80].

We have discussed legal provisions related to proxies earlier here and here. We here reproduced only few provisions required for this post.

The instrument appointing a proxy shall be in writing and be signed by the appointer or his attorney. Where appointer is a body corporate, it shall be sealed of body corporate and signed by an officer of attorney. [Section 105(6)] The appointment of proxy shall be in the Form MGT – 11. [Rule 19(3)]

Limitation of Proxy:

Proxy is an agent for the purpose of voting on poll in a general meeting and cannot speak or vote otherwise. [Section 105(1)] What is use of such agent, if the voice of the member could not reach and heard in General Meeting? This limit right of the members to certain manner.

This limited right to appoint is not available to all classes of members. A member of a company not having a share capital shall not be entitled to appoint proxy unless articles provide so. Central Government may also specify companies whose members shall not be entitle to appoint a proxy.  [Proviso to Section 105(1)]

How can a member ensure to coup with such limitation where he could not be represented through proxy? How can a member ensure his voice in general meeting?

Attorney:

The companies Act, 2013 does not give the answer to abovementioned questions. This does not render a member helpless. The Power of Attorney Act, 1882 come to rescue a member in this situation.

A Power of Attorney includes any instrument empowering a specified person to act for and in the name of the person executing it. [Section 1A of the Power of Attorney Act, 1882]

A ‘power-of-attorney’ means a formal instrument by which one person empowers another to represent him, or act in his stead, for certain purposes, usually in the form of a deed poll, and attested by two witnesses. The donor of the power is called the principal or constituent; the donee is called the attorney or agent. [Osborn’s Concise Law Dictionary, 7th Edn.,]

The donee of a power of attorney may execute pr do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. [Section 2 of the Power of Attorney Act, 1882]

However, an attorney may do such act only when the attorney and the donor have capacity to make contract.

Where a Power of Attorney contains the following words “… to appear and to represent me at any meeting of any joint stock company in which I am interested as a shareholder or debenture holder or preference shareholder, or as a member or otherwise and to vote there, and also to grant proxies to any other person …” These words are sufficient for attorney to exercise powers of member in a general meeting. [Tata Iron & Steel Co. Ltd., In Re., AIR 1928 Bom. 80].

A holder of General Power of Attorney shall be treated as member personally present not as a proxy. Accordingly, he will be counted for the purpose of quorum. A General Power of Attorney may include all power of members which it may exercise as members under the Companies Act 2013 and any other law for the time being in force.

However, a power of attorney executed outside India shall be treated in accordance with the law of that that country for the time being in force.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.

QUORUM IN ADJOURNED MEETING


According to Section 103(1), unless the articles of the company provide for a larger number,—

  1. in case of a public company,—
    1. five members personally present if the number of members as on the date of meeting is not more than one thousand;
    2. fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand;
    3. thirty members personally present if the number of members as on the date of the meeting exceeds five thousand;
  2. in the case of a private company, two members personally present,

shall be the quorum for a meeting of the company.

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Decoding Secretarial Standards – Preservation, Records, Report and Disclosures


In my earlier post here I have raised some issues related to issuance of secretarial standards. As these are curable technical issues. I continue my study of these Secretarial Standards.

In this post, I will discuss Secretarial Standards related to Preservation, Records, Report and Disclosures under SS – 1 and SS – 2.

Minutes of all Meetings shall be preserved permanently in physical or in electronic form with Timestamp. [Paragraph 8.1 of SS – 1 and Paragraph 18.1 of SS – 2]

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