PROCEDURE OF THE MEETINGS AND PROCEEDINGS OF THE COMPANY
ANNUAL GENERAL MEETING:
According to Section 96 of the Companies Act 2013 every company is required to call at least one meeting of its shareholders once in a year. The meeting held is known as the Annual General Meeting. The first Annual General Meeting of a company must be held within 9 months from the date of closing of the first financial year and then no meeting will be necessary for the year of incorporation. Therefore Annual General Meeting must be held every year and the gap between one meeting and the another should not be of more than 15 months. There is no provision in the act for deferment of the first Annual General Meeting.
In the case of TV Mathew v. Nadukara Agro Processing Co Ltd (2002) The Court held that a failure in holding the Annual General Meeting would invite consequences under the act.
WHAT WILL HAPPEN IF A COMPANY FAILS TO HOLD THE ANNUAL GENERAL MEETING?
Firstly, one of the members of the company can apply to the Tribunal and the latter will order the calling of the meeting and application can be made by any member under section 96 of this act. And then the Tribunal can give any ancillary or consequential directions which it thinks expedient in relation to the calling and conducting of the meeting and a meeting held in pursuance of this order will be deemed an Annual General Meeting of the company.
Secondly, The failure to call this meeting either generally or in pursuance of the order of the Tribunal is an offence punishable with fine the penalty is imposed upon the company as well as every officer who is in default.
PROCEDURE OF A VALID MEETING:
1)Meeting should be always called by a proper authority:
The First and the major essential required to constitute a valid meeting is that it should be called by a proper authority and only probable authority is the board of directors except when the meeting has in the event of the fault by the directors been called by the requisitionists or by the Tribunal.
For example if the meeting of the board at which it is resolved to call a General Meeting is not properly constituted then it will not render the General Meeting invalid.
In the case of Browne v. La Trinidad the court held that by reason of irregularity of the board meeting the general meeting was not incapacitated from acting and the court does not have power to give directions for the conduct of a meeting already called by the directors.
But in the case of NVR Nagappa Chettiar v. Madras Race Club in this case all the cases were discussed and a meeting was held invalid because the board which resolved to call it was not properly present.
2) ISSUING A PROPER NOTICE TO ALL THE MEMBERS:
Section 101 states that the second requirement to constitute a valid meeting is that a proper notice must be issued to all the members of the company.
In the case of Smyth v. Darlet the court held that deliberate omission to give notice to a single member main invalidate the meeting although and accidental omission to give notice to or non receipt of it by a member will not be fatal.
▪︎ Notice should be in writing and must be given 21 days before the date of the meeting 21 days are to be computed from the date of receipt of the notice by members and notice shall be deemed to have been received at the expiration of 48 hours from the time of posting
▪︎ In the case of Bradman v. Trinity Estate Ltd (1989) the court held that If notices are posted during a period of Postal Strike and decidedly would not have been served upon numbers the court said that the strike was in itself evidence of the fact that there would not be effective service and therefore the presumption of deemed service was ruled out
▪︎ Madras High Court has held that all the members can in case of an Annual meeting voluntarily consent to a shorter notice either before or after the meeting in case of any other meeting the consent of the holders of 95% of the paid up share capital on the consent of 95% of the total strength of the members would be necessary.
CONTENTS OF NOTICE
According to section 101 & 102 notice should specify the place and day and hour of the meeting and the meeting to be valid must be held at the place and time specified except on the failure of the directors of a company to call a meeting on a requisitionists themselves sent a notice to all the members for a meeting to be held at the registered office of the company. But the managing director locked the premises of the registered office. The court held that a meeting held at some other place and the resolutions passed were invalid.
▪︎Moreover the notice must contain a statement of business to be transacted at the meeting.
Section 102 categories businesses into two parts namely:
1) General business – At the annual meeting the business of considering accounts and directors report, the declaration of dividends, the appointment of directors and auditors and fixing their remuneration are regarded as general business
2) Special business: Any other business at an annual meeting and all business at extraordinary general meetings are regarded as special business .
Author: sarthak udaipuria,
ICFAI LAW SCHOOL HYDERABAD, 4TH YEAR