Company Meetings

 Meetings of shareholders

 Meetings of directors

Meaning and Definition of Company Meeting

• The word “meeting” is not defined anywhere in the Companies Act. Ordinarily, a company meeting
may be defined as gathering, assembling or coming together of two or more persons (by previous notice
or by mutual arrangement) for discussion and transaction of some lawful business.

• A company meeting may be defined as a concurrence or coming together of at least a quorum of

members in order to transact either ordinary or special business of the company

Sharp vs. Dawes (1971)

• In the case of Sharp vs. Dawes (1971), the meeting is defined as “An assembly of people for a lawful
purpose” or “the coming together of at least two persons for any lawful purpose.”

P.K. Ghosh
• According to P.K. Ghosh “Any gathering, assembly or coming together of two or more persons for the
transaction of some lawful business of common concern is called meeting.”

K. Kishore
• According to K. Kishore, “A concurrence or coming together of at least a quorum of members by
previous notice or mutual agreement for transaction business for a common interest is meeting.”

Characteristics of a Company Meeting

•1. Two or more persons (who are the members of the Company) must be present at the meeting.

•2. The assembly of persons must be for discussion and transaction of some lawful business.

•3. A previous notice would be given for convening a meeting.

• 4. The meeting must be held at a particular place, date and time.

• 5. The meeting must be held as per provisions/rules of Companies Act.

One-Man Meeting
• To Convene a meeting, two or more persons must be present. A meeting cannot be constituted by one
person. However, there are certain circumstances where one person can constitute a valid meeting.

1. Meeting Convened by Central Government:

Where the Central Government calls an annual general meeting, it may direct that one member of the
company present in person or by proxy shall constitute the meeting.

2. Class Meeting of Shareholders:

• Where one person held all the shares of a particular class, that member alone was held to constitute a
valid meeting of that class of shareholders.

Absence of Quorum in an Adjourned Meeting:

• By quorum we mean the minimum number of the members who must be present at a meeting as
required by the rules. In the absence of quorum the proceedings of the company cannot be started.

• If the quorum does not complete within half an hour of the prescribed time, meeting will be adjourned
to the same time, place and date in the next week. If at the adjourned meeting also the quorum does
not complete, the members present shall be quorum and attending members (even if one member is
present) may be allowed to come to a decision and pass resolutions. It means one member present in
person shall constitute a valid meeting.

4. Meeting Convened by Company Law Board:

Where the Company Law Board calls a meeting (other than an annual general meeting), it may direct
that one member present in person or proxy shall be deemed to constitute a valid meeting.

5. Meeting of One-Man Committee of Board of Directors:

The board of directors may delegate their works to a Committee which may have only one member.
When the meeting of such Committee will be held, only one member will be present and he alone will
constitute a valid meeting.

Meetings of shareholders
• I. Statutory meeting;

• II. Annual general meeting (AGM)

• III. Extra ordinary general meeting

• The shareholders are the real owners of the company, but due to certain limitations they
cannot take part in the management of the company. They leave this to their representatives
called the directors. For controlling the board of directors and their activities ‘shareholders’
‘meetings’ are held from time to time. Meeting of shareholders can be classified as under.

1-Statutory Meeting:
• Every public company having share capital must convene a general meeting of shareholders
within a period of not less than one month and not more than six months after the date on
which it is authorized to commence its business. This is the first meeting of the shareholders of
the company and it is held once in the whole life of the company.

The following companies need not to hold statutory meeting

(i) Private company.

(ii) Company limited by Guarantee having no share capital.

(iii) Unlimited liability company.

(iv) A public company which was registered as a private company earlier.

(v) A company which has been deemed as a public company

Notice of the Meeting

• The directors are required to send a notice of the meeting to all the members of the company
at least 21 days before the date of the meeting stating that it is the ‘statutory meeting’ of the
company. If the notice convening this meeting does not name it as the “Statutory Meeting” it
will not Amount to compliance with the provisions of this section.

Objects of Statutory Meeting.

• The statutory meeting is held to inform the shareholders about matters relating to
incorporation, allotment of share, the details of the contracts concluded by the company, etc.
According to Stephenson, “Statutory Meeting is convened in order to aord the shareholders an
opportunity for seeing what degree of success has attained the floatation of the company and in
order that any special matters requiring their approval may be laid before them.”

Statutory Report
• The directors are required to prepare and send a report called the ‘Statutory Report’ to every
member of the company at least 21 days before the date of the meeting. If the report is sent
later it shall be deemed to have been duly forwarded if it is so agreed to by a unanimous vote of
the members entitled to attend and vote at the meeting .A copy of this report should be sent to
the Registrar. • The statutory report must set out the following information.

• Shares allotted, Cash received, Directors, auditors and other managerial personnel, Contracts,
Underwriting contract, Arrears of calls, Commission and brokerage.

Certification of Report
• The statutory report must be certified as correct by not less than two directors; one of whom
shall be the managing director, if any The auditors of company then shall certify it as correct
regarding the shares allotted, cash received in respect of such shares and the receipts and
payment of the company.

• A certified copy of the statutory report shall be filed with the registrar for registration
immediately after the same has been sent to the members of the company.

Procedure at the Meeting

• At the commencement of the meeting the Board shall place a list showing the name,
addresses and occupation of the members of the company and the number of the shares held
by them. During the continuance of the meeting the list shall remain open for inspection by
members. • The members present at the meeting may discuss any matter relating to the
formation of the company or arising out of statutory report, whether previous notice has been
given or not. The meeting cannot pass a resolution on any item or on a subject unless notice has
been given according to the provisions of the ordinance .

Effect of Non-compliance
(i) If default is made in complying with the provisions of Law , every director or other officer of
the company who is in default will be liable to a fine.

(ii) If the statutory meeting is not held or the statutory report is not filed as per the provisions of
Companies ordinance , the company may be compulsorily wound up under the orders of
court.The court may, however, give direction for the statutory report to be filed or a meeting to
be held as the case may be and refuse to order the winding up of the company.

2-Annual General Meeting (AGM)

It is a meeting of shareholders which is held once in a year. The object of holding this meeting is to
review the progress and prospects of the company and elect its office-bearers for the coming year.
Holding of the Meeting
• The first annual general meeting of the company is held within 18 months of its incorporation. After
holding such meeting it is not necessary to hold any other annual general meeting in the year of its
incorporation and in the next year.

• Subsequent annual general meeting must be held by the company each year within six months of the
closing of the financial year. The interval between any two annual general meetings must not be more
than fifteen months. The registrar is empowered to extend the time up to a period to three months
except in the case of first annual general meeting.

Notice
• The Board of Directors has to call Annual General Meeting giving 21 days notice to all the members
entitled to attend the meeting. However, such a meeting may be called with shorter notice, if it is agreed
to by all the members to vote in the meeting.

• Certified copies of Profit and Loss Account and Balance Sheet, Directors’ Report and Auditor’s Report
should also be forwarded to the members at least 21 days before the holding of the meeting of the
company. Considering the importance of annual general meeting to shareholders it has been held that
the directors must call the meeting even though the accounts are not ready or the company is not
functioning.

(I) Routine Business:

(a) Adoption of Annual Accounts, Directors’ Report and Auditors’ Report.

(b) To declare the dividend.

(c) To elect the directors in place of those retiring by rotation.

(d)To appoint auditors and fix their remuneration.

(ii) Special Business:

(a) To increase Authorized Capital. (change in Memorandum)

(b) To alter the Articles of Association.

Effect of Non-Compliance
• (i) If default is made in holding the annual general meeting in accordance with the above provisions,
the Central Government may on the application of any member of the company, call or direct for the
calling of the meeting and give such directions for this purpose as it thinks proper. The directions may
include that one member of the company present in person or by proxy shall be deemed to constitute
the meeting.

• (ii) If default is made in holding a meeting of the company in accordance with the above provisions, the
company and its every officer who is in default shall be punishable with a fine which may extend to per
day basis as well in case of continuous delay.

3-Extraordinary General Meeting

• Extraordinary meeting is a general meeting which is held between two Annual General Meetings.
Extraordinary General Meeting is called to discuss any particular matter of urgent importance to the
company. This meeting is called for the consideration of any specific subject, decision of which cannot be
postponed to the next Annual General Meeting.

• This meeting may also be called to discuss the following

• (i) Alteration of any clause of Memorandum of Association; or

• (ii) Changes in the Articles of Association; or

• (iii) Scheme of the reduction of share capital etc.

• (iii) Scheme of the reduction of share capital etc.

Meeting Call
• The Extraordinary General Meeting may be called by the Directors or may be convened by the
Shareholders if the Board of Directors does not arrange for it despite their requisition to call it.

• Directors may call the Extraordinary General Meeting in accordance with the procedure laid down in
the Articles of Association of the company.

• Shareholders holding at least one-tenth of the paid-up share capital of the company can make a
requisition to the Board of Directors to convince such a meeting.

• If due to any reason it is impracticable to hold extraordinary general meeting the Company Law Board
may order to call such meeting either on its own initiative or on the application of any director or any
member of the company who are entitled to vote at the meeting.

• Companies Act empowers the Company Law Board to call only extraordinary general meeting and not
the annual general meeting of the company. If no such meeting is convened within 21 days of their
requisition, shareholders may themselves convene the meeting within 3 months from the date of their
requisition.
• A notice of 21 days has to be given to members indicating the nature and particulars of the resolutions
to be discussed. The special resolutions passed at Extraordinary General Meeting have to be filed with
the Registrar within 15 days.

Class Meetings
• When the meeting of a particular class of shareholders takes place such as preference shareholder
meeting, it is known as class meeting. Such a meeting can be attended only by that class of shareholders.
The articles define the procedure for calling such meeting. Such a meeting is called for the alteration in
the rights and privileges of the shareholders and for the purpose of conversion of one class of shares into
another.

Meeting of Directors
1-Meeting of board of directors
2-Meetings of the committees
3-Meetings of creditors
4-Meetings of debenture holders

1-Meeting of board of directors

At least one meeting in every three months:
The directors of the company, exercise most of their powers in joint meeting called the
meeting of board.

In case of every company, a meeting of the board of directors must be held:

1-At least once in every three months, and
2-At least four such meetings shall be held in every year.
In others words, no three months should pass without directors’ meeting being held, and no
year should expire without at least four directors’ meetings having been held in it.
The object of this section is to ensure that the board meetings are held at reasonably frequent
intervals so that the directors may be in touch with the management of the affairs of the
company.

Notice of the Meeting

Notice to every meeting of the board of directors must be given in writing to every directors
must be given in writing to every director. A director has no power to waive his right of notice.
Notice must be given to a director, even if he has stated that he will be unable to attend the
meeting.
There is no need to send notice, if the articles provide for meetings to be held at regular
intervals’ e.g ; monthly, the time and the place being fixed. Also, if all the directors should
meet casually, and are willing to hold a meeting, the meeting can be held notwithstanding
absence of notice.

Agenda
The term ‘term’ agenda means things to be done. In the present context it is a statement of
the business to be transacted at a meeting. It also sets out the order in which the business is
to be dealt with. Though the Companies Act does not make it obligatory on the secretary to
send and agenda or to incorporate the same in the notice of board meeting, yet by
convention it necessarily accompanies the notice calling the meeting.
When the agenda is closed with the notice each director gives due consideration to the
proposed business and comes with necessary preparations for discussion in the meeting.

Quorum
There must be a proper quorum for every meeting. The quorum for board meeting should be
at least two directors or 1/3 of total strength of the board of directors, whichever is more
subject to a minimum of two directors. While determining the total strength, the vacancies
are not counted.

Board Meetings are called for the following business;

1-To issue shares and debentures
2-To make calls on shares
3-To forfeit the share
4-To transfer, the shares
5-To fix the rate of dividend
6-To take loan in addition to debentures
7-To invest the wealth of the company
8-To think over the difficulties of the company
9-To determine the policies of the company

2-Meeting of the Committees of Directors

The board of directors may form certain committees and delegate some of its powers to
them. These committees should consist of only directors. The delegation of powers to such
committees is to be authorized by Articles of Associations and should be subject to the
provisions of the Companies Act.
In large company routine matters like Allotment, Transfer, Finance are handled by sub-
committees of the board of directors. The meetings of such committees are held in the same
way as those of board of meetings.

3-Meetings of Creditors
The meetings of creditors are called when the company proposes to make a scheme for
arrangement with its creditors.
The Companies Act not only give powers to the company to compromise with the creditors
but also lay down the procedure of doing so.

4-Meetings of Debenture Holders

Meetings of the debentures of holders are held according to the conditions contained in the
debenture trust deed.
The meetings are called from time to time where the interests of debenture holders are
involved at the time of reconstruction, reorganization, amalgamation or winding up of the
company.
The rules and regulations entered in trust deed relate to the notice of the meeting,
appointment of a chairman of the meeting, passing the resolutions, quorum of the meeting
and the writing and signing of minutes.