Meetings of a company – Essentials & kinds of Company meetings
The word ‘Meetings’ can be defined as an assembly or place where several persons coming together to discuss and act upon some matters in which they have a common interest. A Company is defined as an association of several persons and important decisions are made according to the majority of the persons on certain topics. For meetings, there must be at least two members. A Company is known to be an artificial person, it means with its separate legal entity, yet it cannot itself think over various issues and matters nor analyze them and cannot make a decision related to them. Company meeting is necessary for every company because it prevents chaos or mismanagement between the members of the company as a shareholder or director of the company. As a shareholder of the company, company meetings help them to decide various matters by calling their meetings from time to time. The matters are decided by passing the resolution. Similarly, the directors of the company can take decisions by constituting their meetings.
Essential Elements of Company Meetings:
- Two or more persons: To constitute a valid company meeting, there must be two persons or more than two persons.
- Lawful assembly: Gathering for the company meeting must be lawful it means gathering must be done for the lawful business.
- Previous Notice: Previous Notice means a condition precedent for valid meetings. A notice which is purely accidental and not summoned after due notice is not a valid meeting in eyes of the law
- To transact a Business: The purpose of a company meeting is to transact a business. If the company meeting has no definite object or is summoned without any pre-determined topic, it is not called a valid meeting.
Kinds of Company Meetings:
Company Meetings can be broadly classified into two main parts:
- Meetings of Shareholders or Members
- Other Meetings
Meetings of Shareholders or Members:
Meetings of Shareholder can be broadly classified into 4 parts:
- Statutory Meeting
- Annual General Meeting
- Extraordinary general meeting
- Class Meeting
It is the first meeting of the shareholders of a public company. This meeting is held within a period not less than one month and not more than 6 months from the date at which the company is entitled to commence business. This meeting is held only once in the lifetime of a company. This meeting is an opportunity for the shareholders to decide on the various matters relating to the formation of the company.
Annual General Meeting:
Annual General meeting refers to those meetings where a company whether public or private is compulsory to hold at least one meeting of its members (shareholders) each year. This meeting is done to provide complete information about every fact and progress made by the company to the shareholders during the year.
The Obligation regarding Annual General Meeting:
- Section 96 defines that the first annual general meeting must be held within 9 months from the date of closing of the first financial year of the company.
- No meeting should be held on National Holiday declared by the Central Government like Republic Day, Independence Day, etc.
- Every Annual General Meeting must be called for a time during business hours, that is between 9.00 a.m to 6 p.m.
- This meeting has to be pre-notified to company members which have not to be less than 21 days before the scheduled days. In some cases, the meeting can be called on short days.
Extraordinary General Meeting:
All general meetings, other than the statutory meeting and annual general meetings called Extraordinary General Meeting. Sometimes a situation occurs where some important and urgent business decision has to be taken which cannot be postponed till the next annual general meeting. These extraordinary meetings are held to solve the extraordinary matters of the company which falls outside the usual general meetings.
Convening the Extraordinary General Meeting
The following persons are authorized to convene an extraordinary general meeting:
- Board of Directors
- Requisitionists themselves
- National Company Law Tribunal
Class Meetings are those meetings of a particular class of shareholders like preference shareholders, debenture holders, and equity shareholders. If any problem is affecting one class of the shareholder, a meeting of that particular class of shareholders is held to adequately discuss the matter from their point of view to solve the problem. For example, if there is a reduction in the rate of a dividend of preference shares, the meeting of the preference shareholders will be called, at which only the preference shareholders are entitled to be present and vote.
Other Meetings can be defined in 3 ways:
- Meeting of Debenture holder
- Meetings of Creditors
- Meetings of Directors
Meeting of Debenture holder:
The Debenture holder of a particular class hold these meeting for the purposes like the discussion of the debenture holder’s interest, ascertainment of their wishes at the time of crises, when a company wants to modify their rights or vary the term of security or interest payable to them, etc and for knowing their wishes or viewpoints for some modifications.
Meeting of Creditors:
The Meeting of creditors can be divided into two parts:
- Meeting of Creditors and Contributories in Winding-up: These meetings are called during the winding-up of the company. The word ‘ Contributory’ can be defined under Section 2(26) which says it refers to a person liable to contribute towards the asset of the company in the event of its being wound-up.
- Meetings of Creditors during the lifetime of the company: They are not the main meetings of the company. They are held when the company proposes of making compromises, arrangements, and amalgamations.
Meeting of Directors:
Directors Meetings can be divided into two classes :
- Board Meetings
- Committee Meeting
It is known as Meetings of the Board of Directors. Board Meetings are highly significant as well as most frequent. All decisions related to policy matters and other important related to the company are made in Board Meetings. According to Section 173, every company shall hold the first meeting of the Board of Directors within 30 days from the date of commencement.
Committee Meetings can be referred to as when the board of directors may from certain committees of Directors and delegate them powers to take decisions on the matters referred to them. Such delegation of power can be done when it is given in Articles Authorities and Board Member has an authority to do so.
Author: Divya Tripathi,
Shri Ramswaroop Memorial University LLB 3 Year ( 2 Semester)