Ch 7 – Management & Administration

Registers Annual Return Meetings Requisites of Convening a Meeting

Section 88 – 91 & 95 Section 92 & 94 Section 96 - 102 & 121 Section 103 – 120 & 122

Registers Annual Return

88 89 90 91 95 92 94
Register Declaration in Register of Power to Close Registers, Annual Place of
of respect of Significant Register of Members etc. to be Return Keeping &
Members beneficial Beneficial Owners or Debenture evidence Inspection of
interest in any in a Company Holders or other registers,
share Security Holder Returns Etc.
7.1 7.6 7.8 7.13 7.20 7.14 7.18

Meetings

96 97 98 99 121 100 101 102

Annual Power of Power of Punishment for Report on Extra - Notice of Explanatory
General Tribunal to Tribunal to default in Annual Ordinary a Meeting Statement to
Meeting call Annual call Meetings complying with General General be annexed to
(AGM) General of Members, the provisions Meeting Meetings Notice
Meeting ETC. of section 96
to 98
7.57 7.60 7.60 7.60 7.61 7.62 7.21 7.
7.223
5 95
5
 Ch 7 – Management & Administration

Requisites of Convening a Meeting

103 104 105 106 107 108

Quorum forChairman of Proxies Restriction on Voting by Voting through
Meetings Meeting Voting Rights Show of Hands Electronic Means

7.25 7.27 7.28 7.31 7.32 7.32

8

109 110 111 112 113

Demand Postal Circulation of Representation of the President & Representation of
for Poll Ballot Member’s Resolutions 1 Governors in Meeting of Companies Corporations Meeting of
to Which They are Member Companies & Creditors
7.37 7.39 7.43 7.43 7.46

114 115 116 117 118

Ordinary & Resolutions Resolutions Passed at Resolutions & Minutes
Special Requiring Special Adjourned Meeting Agreements to be filed
Resolution Notice
37 7.51
7.46 7.48 7.49 7.50

119 120 122

Inspection of Minute – Maintenance & Inspection Applicability of this
Books of General of Documents in Electric chapter to One Person
Meeting Form Company
7.54 7.55 7.65
 

7.1 REGISTERS

REGISTER OF MEMBERS, ETC. [SECTION 88] :

Section 88 (1)of the Companies Act, 2013 requires that every company shall keep
and maintain the following registers:
(i) Register of Members (holding of each class of equity and preference shares of each
member residing in or outside India shall be shown separately in the register)
(ii) Register of Debenture-holders (DH); and
(iii) Register of any other security holders (OSH).

Maintenance of Register of Members :

(i) Every company limited by shares shall, from the date of its registration, maintain a
register of its members in Form No. MGT-1.

(ii) In case of a company not having share capital, the register shall contain the following
particulars, in respect of each member :
„ Name of the member, address (registered office address in case the member is a
body corporate); email address; Permanent Account Number or Corporate Identity
Number (‘CIN’); Nationality; in case member is a minor – name of his guardian and the
date of birth of the member, name and address of the nominee;

7-1


 

„ Date of becoming the member;

„ Date of cessation;
„ Amount of guarantee, if any;

„ Any other interest, if any; and

Maintenance of Register of Debenture Holders (DH) or any Other Security Holders

Every company which issues or allots debentures or any other security shall maintain a
separate register for debenture holders or security holders, as the case may be, for
each type of debentures or other securities in Form MGT-2. [Rule 4]
Time period for making entries in Register

As per Rule 5 (1), entries have to be made in the Register within 7 days of the date of
approval by the Board or Committee thereof by approving the allotment or transfer of
shares, debentures or any other securities, as the case may be.
Place of maintaining Register

According to Rule 5 (2), the registers shall be maintained at the registered office of
the company unless a special resolution is passed in a general meeting authorising the
keeping of the register at any other place within the city, town or village in which the
registered office is situated or any other place in India in which more than 1/10th of
the total members entered in the register of members reside.
Updating of change in status of members

„ Rule 5 (4) states that if any change occurs in the status of a member or debenture-
holder or any other security holder :

whether due to death or insolvency or change of name or due to transfer to Investor

Education Protection Fund (IEPF) or due to any other reason, entries thereof explaining
the change shall be made in the respective registers.
Index of names :

Section 88 (2) provides that every register maintained under section 88 (1) shall include
an index of names included therein. However, according to Rule 6 of the Companies
(Management and Administration) Rules, 2014, the maintenance of index is not necessary
where the number of members is less than 50.

7-2
 

Register and Index of Beneficial Owners being maintained by a Depository

Section 88 (3) is an enabling provision, which sets out that the register and index of
beneficial owners maintained by a depository under section 11 of the Depositories Act,
1996, shall be deemed to be the corresponding register and index for the purposes of
this Act.
Foreign Register [Section 88(4) read with rule 7]

„ Maintenance of Foreign Register : A company which has share capital or which has
issued debentures articles, keep in any country outside India, a part of the register of
members or debenture holders or of any other security holders or of beneficial owners,
resident in that country. The register shall be called “Foreign Register”.

„ Other requirements relating to Foreign Register : In case a company decides to keep a

Foreign Register, it shall comply with the following requirements :

i) Filing of notice of the situation of the office : Within 30 days from the date of the
opening of any Foreign Register, the company shall file or any other security may, if
so authorised by its with the Registrar of Companies, notice of the situation of the
office where such register is kept. The notice shall be filed in Form No. MGT– 3
along with the requisite fee.
ii) Filing of notice in case of change or discontinuance : In the event of any change in
the situation of such office or of its discontinuance, the company shall, within 30
days from the date of such change or discontinuance, as the case may be, file notice
in Form No. MGT-3 with the Registrar of Companies, of such change or
discontinuance.

iii) Foreign Register part of company’s register: A foreign register shall be deemed to be
part of the company’s register (to be called ‘principal register’) of members or of
debenture - holders or of any other security holders or beneficial owners, as the case
may be.

iv) Format of Foreign Register : The foreign register shall be maintained in the same
format as the principal register.

v) Inspection, etc. of Foreign Register: A foreign register shall be open to inspection

and may be closed, and extracts may be taken therefrom and copies thereof may be
7-3


 

required, in the same manner, as is applicable to the principal register. However,

advertisement before closing the register shall be inserted in at least two
newspapers circulating in the place wherein the foreign register is kept.

vi) Transmission of a copy every entry : The company shall transmit to its registered
office in India, a copy of every entry in any foreign register within 15 days after
the entry is made.

vii) Keeping of Duplicate Foreign Register at Registered Office : The company shall
keep at the Registered Office a duplicate register of every foreign register duly
updated from time to time.

viii) Duplicate Foreign Register to be part of Principal Register : Every duplicate

foreign register shall be deemed to be the part of the principal register.

ix) Transfer of Entries on discontinuation : The company may discontinue the keeping
of any foreign register and thereupon all entries in that register shall be
transferred to some other foreign register kept by the company outside India or to
the principal register.
Penalty for failure to maintain register in accordance with the provisions of Section 88(1) & 88(2)

If a company does not maintain a register of members or debenture-holders or other

security holders or fails to maintain them in accordance with the provisions of sub-
section (1) or sub-section (2), the company shall be liable to a penalty of three lakh
rupees and every officer of the company who is in default shall be liable to a penalty of
fifty thousand rupees.
Authentication of entries [Rule 8] :

„ The entries in the registers maintained under section 88 and index included therein
shall be authenticated by the company secretary of the company or by any other person
authorised by the Board for the purpose, and the date of the board resolution
authorising the same shall be mentioned.
„ The entries in the foreign register shall be authenticated by the company secretary of
the company or person authorised by the Board by appending his signature to each
entry.

7-4


Illustration 1 : Luxy Hairstylefs Private Limited allotted 500 shares in the name of
Mr. Zoey’s daughter, Mila, who is 4 years old. Mr. Joe, the Director of the Company,
has approached you to advise him on the entries to be made in the register of
members, since Mila is incompetent to contract in her capacity as minor.
Answer : Since minors are not competent to enter into any contract, their names
cannot be entered in the register of members without the details of guardians.
Therefore, Mr. Joe is advised that while filling MGT – 1, the name of a minor shall be
entered only if the details of the guardian are available. Thus, Zoey’s name shall also
appear in the register of members of Luxy Hairstyles Private Limited since Mila is a
minor.
Illustration 2 : Tanya and Tarun who recently got married were jointly allotted 1000
shares by New Hospitality Services Private Limited. Tarun intimated the company
that only the name of his wife should appear in the records of the company in respect
of joint holding of shares allotted to them. The directors of the company are not
sure whether this is possible, given that the shares are held in the names of both
Tanya and Tarun.
Answer: Joint holders of shares may request the company to enter their names in
the register in a certain order, or execute transfers to have their holdings split, with
the result that part of the holding is entered showing the name of one holder and
part showing the name of other holder. However, the condition of Tarun that only the
name of his wife, Tanya, should appear in the register as a member cannot be acceded
to, although the names can be entered in the order such that the name of his wife
appears first. The reason for this is that the articles of most companies provide
that, in the case of exclusion of the other joint holders, and for this purpose,
seniority shall be determined by the order in which the names stand in the register
of members.


7-5


 

DECLARATION IN RESPECT OF BENEFICIAL INTEREST IN ANY SHARE [SECTION 89]

„ Declaration by registered holder of shares : A person whose name is entered in the

register of members of a company as the holder of shares in that company but who does
not hold the beneficial interest in such shares (hereinafter referred to as “the
registered owner”), shall file with the company, a declaration to that effect in Form No.
MGT-4, specifying the name and other particulars of the person who holds the
beneficial interest in such shares. The declaration MGT-4 shall be made within a period
of thirty days from the date on which his name is entered in the register of members
of such company. [Section 89 (1) and Rule 9 (1)]

„ Declaration by person holding beneficial interest in shares: Every person who holds or
acquires a beneficial interest in share of a company shall make a declaration to the
company in form MGT-5, within 30 days after acquiring such beneficial interest,
specifying the nature of his interest, particulars of the person in whose name the
shares stand registered in the books of the company and such other particulars as may
be prescribed. [Section 89 (2) and Rule 9 (2)]

„ Declaration in case of change in beneficial interest : Where any change occurs in the
beneficial interest in any shares in respect of which a declaration has been filed under
section 89 (1) by the registered owner and under section 89 (2) by the beneficial owner
then, within 30 days of such change, a declaration is to be made to the company.

„ Filing of return by the company with the Registrar : Where any declaration under
section 89 is made to a company, the company shall make a note of such declaration in
7-6
 

the register concerned and shall file, within thirty days from the date of receipt of
declaration by it, a return in Form No. MGT-6 with the Registrar in respect of such
declaration with fee. [Section 89 (6) and Rule 9 (3)]

„ Consequence of non-filing of declaration : Where a declaration required to be made

under section 89 is not made by the beneficial owner, then, any right with respect to
such shares shall not be enforceable by the beneficial owner or by any person claiming
through him. [Section 89 (8)]

„ Exemption :Rule 9 shall not apply to a trust which is created to set up a Mutual Fund or
Venture Capital Fund or such other fund as may be approved by SEBI. Accordingly, such
entities need not file the declarations as envisaged by this rule.
„ Meaning of beneficial interest :For the purposes of section 89 and section 90, beneficial
interest in a share includes, directly or indirectly, through any contract, arrangement or
otherwise, the right or entitlement of a person alone or together with any other person to:

i) exercise or cause to be exercised any or all of the rights attached to such share; or
ii) receive or participate in any dividend or other distribution in respect of such share.
[Section 89(10)]

„ Exemption to a Government Company- In case of Government Company - Section 89

shall not apply. [Notification No. GSR 463 (E), dated 5th June, 2015]

„ The above-mentioned exemption shall be applicable to a government company which has

not committed a default in filing its financial statements under section 137 or annual
return under section 92 with the Registrar
Penalty for default [Sections 89 (5) & 89 (7)] :

 L  Relating to Default made by persons required to make a declaration – ,Iany person

fails to make a declaration as required under sub-section (1) or subsection (2) or sub-
section (3), he shall be liable to a penalty of fifty thousand rupees and in case of
continuing failure, with a further penalty of two hundred rupees for each day after the
first during which such failure continues, subject to a maximum of five lakh rupees.
[Section 89(5)]

(ii) Relating to Default made by a company - If a company, required to file a return

under sub-section (6), fails to do so before the expiry of the time specified therein, the
7-7


 

company and every officer of the company who is in default shall be liable to a penalty
of one thousand rupees for each day during which such failure continues, subject to a
maximum of five lakh rupees in the case of a company and two lakh rupees in case of an
officer who is in default. [Section 89(7)]

REGISTER OF SIGNIFICANT BENEFICIAL OWNERS IN A COMPANY [SECTION 90] :

„ As per Section 90 of the Companies Act, 2013, every Significant Beneficial Owner
(SBO) is required to disclose the nature of his interest and other particulars within the
prescribed period of time to the Company, which in turn will inform the same to the
Registrar of Companies. In this connection, MCA has issued the Companies (Significant
Beneficial Owners) Rules, 2018, which deal with identification and reporting in
connection with SBO.

„ Definition of Significant Beneficial Owner : The term 'significant beneficial owner'

“SBO” has been defined in section 90 of the Act as every individual, who acting alone or
together, or through one or more persons or trust, including a trust and persons resident
outside India, holds beneficial interests, of not less than twenty-five per cent. or such
other percentage as may be prescribed, in shares of a company or the right to exercise, or
the actual exercising of significant influence or control as defined in clause (27) of section 2,
over the company (herein referred to as "significant beneficial owner").

7-8
 

„ However, the Companies (Significant Beneficial Owners) Amendment Rules, 2019

("Amendment Rules") has amended the definition of the term SBO. In terms of Rule
2(1) (h) of the SBO Rules, the term ‘Significant Beneficial Owner’ (SBO) is defined as an
individual who :

i) acting alone or together, or

ii) through one or more persons or trust, possess one or more of the following rights or
entitlements in the Reporting Company (i.e. the company in respect of which SBO
declaration is required to be filed) :
a) holds indirectly, or together with any direct holdings, not less than 10% of the
shares;
b) holds indirectly, or together with any direct holdings, not less than 10% of the
voting rights in the shares;
c) has the right to receive or participate in not less than 10% of the total
distributable dividend, or any other distribution, in a financial year through
indirect holdings alone, or together with any direct holdings;
d) has the right to exercise, or actually exercises, significant influence or control,
in any manner other than through direct holdings alone

The amended Rules further explain that if an individual does not hold any indirect right
or entitlement as mentioned in (i), (ii) or (iii) above, he will not be considered to be a
'significant beneficial owner' .

„ “Significant influence” means the power to participate, directly or indirectly, in the

financial and operating policy decisions of the reporting company but is not control or
joint control of those policies. [Rule 2 (1) (i)]

„ Majority stake : The Amendment Rules inserted a new term, “Majority Stake,” which
means :

i) holding more than one-half of the equity share capital in the body corporate; or

ii) holding more than one-half of the voting rights in the body corporate; or
iii) having the right to receive or participate in more than one-half of the distributable
dividend or any other distribution by the body corporate. [Rule 2 (1) (d)]

„ Direct and Indirect shareholding:The Amendment Rules provide that when an individual
7-9


 

holds any rights or entitlement directly in the reporting company, the said individual shall
not be considered as SBO. An individual will be considered to hold a right or entitlement
directly in the Reporting Company, if he satisfies any of the following criteria :
a. the shares in the Reporting Company representing such right or entitlement are held
in the name of such individual;

b. the individual holds or acquires a beneficial interest in the shares of the Reporting
Company under section 89 (2), and has made a declaration in this regard to the
Reporting Company.

„ Indirect shareholding is, when a shareholder is a (a) body corporate; (b) Hindu
Undivided Family; (c) Partnership entity; (d) Trust; (e) Pooled investment vehicle.

„ Onus on the reporting company to identify a SBO and cause him to make
declaration : The duty is on the reporting company to identify a SBO and cause such
SBO to make a declaration in the prescribed Form.
„ As per sub-section (5) of section 90 read with the Amendment Rules, every reporting
company shall give notice in the Form BEN-4 to any person (whether or not a member of
the company) whom the company knows or has reasonable cause to believe :
a) to be a significant beneficial owner of the company;
b) to be having knowledge of the identity of a significant beneficial owner or another
person likely to have such knowledge; or
c) to have been a significant beneficial owner of the company at any time during the
three years immediately preceding the date on which the notice is issued, and who is
not registered as a significant beneficial owner with the company as required under
this section.

„ Maintenance of Register of SBO and Inspection thereof : According to section 90

(2) and 90 (3) read with Rule 5, every company shall maintain a register of significant
beneficial owners in Form No. BEN-3 which shall be open for inspection during business
hours, at such reasonable time of not less than two hours, on every working day as the
board may decide, by any member of the company on payment of such fee as may be
specified by the company but not exceeding fifty rupees for each inspection.

7 - 10
 

Application to the Tribunal [Section 90 (7)] :

The company shall,

(a) Where that person fails to give the company, the information required by the notice
within the time specified therein. (According to Rule 7 notice shall be given in Form No.
BEN-4 for providing information within 30 days of date of notice); or

(b) Where the information given is not satisfactory, apply to the Tribunal within a period of
fifteen days of the expiry of the period specified in the notice, for an order directing
that the shares in question be subject to restrictions with regard to transfer of
interest, suspension of all rights attached to the shares and such other matters as may
be prescribed.
Note : According to Rule 7, the reporting company shall apply to the Tribunal in
accordance with section 90 (7), for order directing that the shares in question be
subject to restrictions including-

i) restrictions on the transfer of interest attached to the shares in question;

ii) suspension of the right to receive dividend or any other distribution in relation to
the shares in question;
iii) suspension of voting rights in relation to the shares in question;

iv) any other restriction on all or any of the rights attached with the shares in question.

„ Section 90 (8) states that on any application made under sub-section (7), the Tribunal
may, after giving an opportunity of being heard to the parties concerned, make such
order restricting the rights attached with the shares within a period of sixty days of
receipt of application or such other period as may be prescribed.

„ According to section 90 (9), the company or the person aggrieved by the order of the
Tribunal may make an application to the Tribunal for relaxation or lifting of the
restrictions placed under section 90 (8) within a period of one year from the date of
such order.

„ Provided that if no such application has been filed within a period of one year from the
date of the order such shares shall be transferred, without any restrictions, to the
authority constituted under sub-section (5) of section 125 (i.e. Investor Education and
Protection Fund Authority), in such manner as may be prescribed.

7 - 11


 

Declaration by SBO under Section 90 :

As regards declaration of significant beneficial ownership under section 90, Rule 3 of

SBO Rules, 2018 states as under :
(1) Every individual who is a significant beneficial owner (SBO) in a Reporting Company, as
on the date of commencement of the Amendment Rules, 2019 (i.e. 8-2-2019), is required
to file a declaration in Form No. BEN-1 with the Reporting Company within 90 days from
such commencement.

Note : According to Rule 4, the Reporting Company shall be required to file a return
in Form No. BEN-2 with the Registrar in respect of such declaration within 30 days
of its receipt from the SBO.

(2) Any individual, who subsequently becomes a significant beneficial owner (SBO) in the
Reporting Company or whose significant beneficial ownership undergoes any change, shall
be required to file a declaration in Form No. BEN-1 with the Reporting Company in within
30 days of such acquisition or change.
Non-Applicability of SBO Rules :

Rule 8 of The Companies (Significant Beneficial Owner) Amendment Rules, 2018 states
that the ‘SBO’ Rules shall not be made applicable to the extent the share of the
Reporting Company is held by :
(a) the Investor Education and Protection Fund Authority [constituted under section 125 (5)];
(b) its holding reporting company provided that the details of such holding reporting
company shall be reported in Form No. BEN-2;
(c) the Central Government, State Government or any local authority;
(d) (i) a reporting company or (ii) a body corporate or (iii) an entity, controlled wholly or
partly by the Central Government and/ or State Government(s);

(e) investment vehicles such as mutual funds, alternative investment funds (AIFs), Real
Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs)
registered with and regulated by the Securities and Exchange Board of India; and

(f) investment vehicles regulated by Reserve Bank of India, Insurance Regulatory and
Development Authority of India or Pension Fund Regulatory and Development Authority.

7 - 12
 

„ Exemption to a Government Company - The above-mentioned exemption shall be

applicable to a government company which has not committed a default in filing its
financial statements under section 137 or annual return under section 92 with the
Registrar-
POWER TO CLOSE REGISTER OF MEMBERS OR DEBENTURE-HOLDERS OR OTHER
SECURITY HOLDERS [SECTION 91]

„ Section 91 (1) contains following provisions :

(i) Closure Period : A company may close its register of members or register of
debenture-holders or register of other security holders for an aggregate period of
45 days in each year but not exceeding 30 days at any one time.
„ Rule 10 of the Companies (Management & Administration) Rules, 2014, specifies the
manner of closure of registers as under :

(a) A company closing the register of members or the register of debenture holders or
the register of other security holders shall give at least seven days previous notice
and in such manner, as may be specified by SEBI, if such company is a listed
company or intends to get its securities listed,
„ by advertisement at least once in a vernacular newspaper in the principal vernacular
language of the district and having a wide circulation in the place where the registered
office of the company is situated, and

„ at least once in English language in an English newspaper circulating in that district and
having wide circulation in the place where the registered office of the company is
situated, and publish the notice on the website as may be notified by the Central
Government and on the website, if any, of the Company. [Rule 10 (1)]

(b) Exemption to Private Companies : It is to be noted that a private company has been
exempted from issuing a public notice in newspapers, provided it issues minimum 7 days’
notice to its members prior to closure of the registers. [Rule 10 (2)]

Section 91 (2) contains penalty provisionsas stated below :

„ In case of contravention of provisions of section 91(1) (i.e. if the respective
registers are closed without giving notice, or after giving a shorter notice than that
so provided, or for a continuous or an aggregate period in excess of the specified

7 - 13


 

limits), section 91 (2) states following penalty :

the company and every officer of the company who is in default shall be liable to a
penalty of ` 5,000 per day subject to a maximum of ` 1,00,000 during which the
register is kept closed.
Note : The offence is a compoundable offence under section 441 of the Companies
Act, 2013.

7.3 ANNUAL RETURN [SECTION 92 AND 94]

„ As per Rule 11, every company shall file its annual return in Form No. MGT-7 except One
Person Company (OPC) and Small Company. One Person Company and Small Company shall
file the annual return from the financial year 2020-2021 onwards in Form No. MGT-7A

CONTENTS OF ANNUAL RETURN :

According to section 92(1), every company shall prepare a return (referred to as

the Annual Return) in the prescribed form containing the particulars as they stood on
the close of the financial year regarding :
(a) its registered office, principal business activities, particulars of its holding, subsidiary
and associate companies;
(b) its shares, debentures and other securities and shareholding pattern;

(c) [Omitted]

7 - 14
 

(d) its members and debenture-holders along with changes therein since the close of the
previous financial year;
(e) its promoters, directors, key managerial personnel along with changes therein since the
close of the previous financial year;
(f) meetings of members or a class thereof, Board and its various committees along with
attendance details;

(g) remuneration of directors and key managerial personnel;

(h) penalty or punishment imposed on the company, its directors or officers and details of
compounding of offences and appeals made against such penalty or punishment;
(i) matters relating to certification of compliances, disclosures as may be prescribed;
(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign
Institutional Investors; and

(k) such other matters as may be prescribed,

ABRIDGED FORM OF ANNUAL RETURN :

„ One Person Company and small company shall file the annual return from the financial
year 2020-2021 onwards in Form No. MGT-7A.
SIGNING OF ANNUAL RETURN

„ The annual return shall be signed by a director of the company and the company
secretary; and in case, there is no company secretary, by a company secretary in
practice.

„ However, in relation to One Person Company and small company, the annual return shall
be signed by the company secretary, or where there is no company secretary, by the
director of the company.
CERTIFICATION OF ANNUAL RETURN BY A COMPANY SECRETARY IN PRACTICE IN
CERTAIN CASES

i) a listed company or

ii) a company having paid-up share capital of `10 crore or more or a turnover of `50
crore or more, shall be certified by a Company Secretary in practice stating that
the annual return discloses the facts correctly and adequately and that the company
has complied with all the provisions of the Companies Act, 2013.
7 - 15


 

Such certificate shall be in Form No. MGT – 8.

PLACING OF ANNUAL RETURN ON WEBSITE

Every company shall place a copy of the annual return on its website, if any, and the web-
link of such annual return shall be disclosed in the Board's report. [refer Section 92 (3)]
TIME LIMIT FOR FILING OF ANNUAL RETURN

A copy of annual return shall be filed with the RoC within 60 days from the date on
which the Annual General Meeting (‘AGM’) is held. Where no annual general meeting is
held in any year, it shall be filed within 60 days from the date on which the annual
general meeting should have been held, along with the reasons for not holding the AGM.
[Section 92 (4) and Rule 12]
PENALTY FOR CONTRAVENTION

(i) Section 92(5) specifies as under : if any company fails to file its annual return under
sub-section (4), before the expiry of the period specified therein, such company and its
every officer who is in default shall be liable to a penalty of ten thousand rupeesand in
case of continuing failure, with further penalty of one hundred rupees for each day
during which such failure continues, subject to a maximum of two lakh rupees in case of
a company and fifty thousand rupees in case of an officer who is in default.

(ii) Section 92(6) specifies penalty in case of a Company Secretary in Practice as under: If a
company secretary in practice certifies the annual return otherwise than in accordance with
section 92 or the rules made thereunder, he shall be liable to a penalty of two lakh rupees.
Illustration 3 : Big Fox Entertainment Limited called its Annual General Meeting on
30th September, 2021, for laying down the financial statements relating to the
Financial Year ended 31st March 2021 for approval of its shareholders and conducting
of other requisite businesses. However, due to want of quorum, the meeting could not
take place and was cancelled. The company did not file the annual return for the year
ending 31st March 2021, with the jurisdictional Registrar of Companies till date. The
directors are of the view that since the Annual General Meeting did not take place,
the period of 60 days for filing of annual return is not applicable and thus, there is no
contravention of section 92.
Answer : The contention of directors is incorrect if they are of the view that there
is no contravention of the provisions of the Companies Act, 2013. Section 92 (4)
states that every company has to file an annual return with the RoC within 60 days
from the date on which Annual General Meeting is held or where no Annual

7 - 16


General Meeting is held in any year, it shall be filed within 60 days from the date on
which the Annual General Meeting should have been held, along with the reasons for
not holding the AGM. In the above case, the Annual General Meeting should have been
held by 30th September, 2021 but it did not take place for want of quorum. Even if it
was not held, Big Fox Entertainment Limited was required to file Annual Return within
the specified time along with the reasons for not holding the AGM. By not filing
Annual Return, the company has contravened the provisions of Section 92 of the
Companies Act, 2013 and therefore, it shall be liable for a penalty as specified in
Section 92 (5) of the Act.

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PLACE OF KEEPING AND INSPECTION OF REGISTERS, RETURNS, ETC. [SECTION 94]

Place of keeping Registers and Returns :

In respect of place of keeping Registers and Returns Section 94 (1) and First
Proviso state as under:

(i) At Registered office : The registers required to be kept and maintained by a company
under section 88 and copies of the annual return filed under section 92 shall be kept at
the registered office of the company.
(ii) At any other place in India : The registers or copies of return may also be kept at any
other place in India in which more than one-tenth of the total number of members
entered in the register of members reside, if approved by a special resolution passed at
a general meeting of the company.
Inspection of Registers, etc.

„ The registers and indices maintained pursuant to section 88 and copies of returns
prepared pursuant to section 92, shall be open for inspection during business hours, at
such reasonable time on every working day as the Board may decide, by any member,
debenture holder, other security holder or beneficial owner without payment of fee and
by any other person on payment of such fee as may be specified in the Articles of
Association of the company but not exceeding fifty rupees for each inspection.

Explanation : For the purposes of this sub-rule, reasonable time of not less than two
hours on every working day shall be considered by the company.

„ Extracts of register or index : According to Section 94 (3) read with Rule 14 (2), any
member, debenture-holder or security holder or beneficial owner or any other person
can take the extracts without payment of any fee or can also get copies thereof with
payment of fee not exceeding `10 for each page. Such copies or entries or return shall
be supplied within 7 days of deposit of fee.
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„ As per Rule 14, Notwithstanding anything contained in sub-rules (1) and (2), the
following particulars of the register or index or return in respect of the members of a
company shall not be made available for any inspection under sub-section (2) or for
taking extracts or copies under sub-section (3) of section 94, namely :

i) address or registered address (in case of a body corporate);

ii) e-mail ID
iii) Unique Identification Number
iv) PAN Number
PRESERVATION OF REGISTER OF MEMBERS ETC. AND ANNUAL RETURN

„ Preservation of register of members : The register of members along with the index
shall be preserved permanently and shall be kept in the custody of company secretary
of the company or any other person authorised by the Board for such purpose.
„ Preservation of register of debenture holders/other security holders : The register of
debenture-holder or any other security holder along with the index shall be preserved
for a period of 8 yearsfrom the date of redemption of debentures or securities, as the
case may be, and shall be kept in the custody of the company secretary of the company
or any other person authorized by the Board for such purpose.
„ Preservation of Copies of documents filed with ROC :Copies of all annual returns prepared
under section 92 and copies of all certificates and documents required to be annexed
thereto shall be preserved for a period of 8 yearsfrom the date of filing with the RoC.
„ Preservation of Foreign Register of Members : The foreign register of members shall
be preserved permanently, unless it is discontinued and all the entries are transferred
to any other foreign register or to the principal register.

„ Foreign register of debenture-holders or any other security holders shall be preserved

for a period of 8 yearsfrom the date of redemption of such debentures or securities.
The foreign register shall be kept in the custody of the company secretary or person
authorised by the Board.
Penalty for refusing the inspection or making any extract or copy required –

„ If any inspection or the making of any extract or copy required under this section is
refused, the company and every officer of the company who is in default shall be liable
7 - 19


 

for each such default, to a penalty of `1, 000 for every day subject to a maximum of
`1, 00,000 during which the refusal or default continues. [Section 94 (4)]

„ The Central Government* may also, by order, direct an immediate inspection of the
document, or direct that the extract required shall forthwith be allowed to be taken by
the person requiring it. [Section 94 (5)]
* Powers are delegated to Regional Directors.
REGISTERS, ETC. TO BE EVIDENCE [SECTION 95]

According to Section 95, the registers, indices and copies of annual return shall be
prima facie evidence of any matter directed or authorised to be inserted therein by or
under this Act.
7.4 PRE-REQUISITES OF A MEETING

Key term s 

(a) General Meeting :It is the meeting of the shareholders of a company to be held as per
the provisions of the Act. The general meeting can be an Annual General Meeting (AGM)
or an Extraordinary General Meeting (EGM). An annual general meeting (AGM) is a
mandatory yearly gathering of a company's shareholders. The objective of holding an
AGM is to provide an opportunity to members to discuss the functioning of the company
and take steps to protect their interests. They can discuss any matter relating to the
conduct of the affairs of the company. An Extraordinary General Meeting (EGM) can be
defined as a meeting of shareholders which is not an AGM. The objective of holding an
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EGM is to discuss any matter of urgent importance which cannot be postponed till the
next Annual General Meeting.
(b) Board Meeting :It is the meeting of the Board of Directors of a company.
(c) Class Meeting : It is the meeting of particular class of persons, like, creditors,
preference shareholders, debenture holders, etc.
NOTICE OF A MEETING [ SECTION 101]

„ Section 101 (1) of the Companies Act, 2013 states that in order to properly call a
general meeting, a notice of at least 21 clear days is required to be given either in
writing or through electronic mode in such manner as may be prescribed.

„ In case of section 8 company, in clause (1) of Sub-section (1) of Section 101 for the
words "21 days", the words "14 days" shall be substituted. This exception shall be
applicable to a section 8 company which has not committed a default in filing its
financial statements under section 137 or annual return under section 92 with the
Registrar.
Contents of the Notice [Section 101(2)]

Every notice of a meeting must state the place, date, day and the hour of the meeting
and shall contain a statement of business to be transacted at that meeting.
Persons entitled to receive the Notice of the General Meeting [Section 101(3)]

The notice of every meeting of the company shall be given to :

a) every member of the company, legal representative of any deceased member or the
assignee of insolvent member;
b) the auditor or auditors of the company;
c) every director of the company.
Meaning of 21 clear days :

The term ‘21 clear days’ means that the date on which notice is served and the date of
meeting are excluded while sending the notice of a meeting. A company cannot curtail
the requirement of 21 clear days through its Articles of Association.
Note :Where a notice of a meeting is sent by post, it shall be deemed to be served
at the expiration of 48 hours after the letter containing the same is posted.

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Sending of Notice of Meeting through Electronic Mode :

Sending of notices through electronic mode has been statutorily recognized.

Accordingly, it is permitted for a company to give notice through electronic mode.
Rule 18(3)

„ The e-mail shall be addressed to the person entitled to receive such e-mail as per the
records of the company as provided by the depository.

„ Non-receipt of Notice : According to Section 101(4) any accidental omission to give

notice to or the non-receipt of such notice by, any member or other person who is
entitled to such notice for any meeting shall not invalidate the proceedings of the
meeting. The onus is on the company to prove that the omission was not deliberate.

Illustration 4 : Mr. Abhinav, a member of Elixir Logistics Limited, filed a complaint

against the company for not serving him a notice for attending the Annual General
Meeting. The company, in turn, provided the proof that they had sent the notice, by
way of an email to Mr. Abhinav, inviting him to attend the annual general meeting of
the company. Mr. Abhinav alleges that he never received the email. State whether
the company is liable to be guilty for contravening the provisions of section 101 of the
Companies Act, 2013 read with the applicable Rules.

Answer: As per Rule 18 (3) (v) of the Companies (Management & Administration)
Rules, 2014, the company’s obligation shall be satisfied when it transmits the email
and the company shall not be held responsible for a failure in transmission beyond its
control. Also, Rule 18 (3) (vi) if a member entitled to receive the notice fails to
provide or update relevant e-mail address to the company, or to the depository
participant as the case may be, the company shall not be in default for not delivering
notice via e-mail. Accordingly, Elixir Logistics Limited shall not be held guilty if there
was a failure in transmission beyond its control or in case where Mr. Abhinav did not
update his e-mail address.

Shorter notice of less than 21 days [Proviso to Section 101 (1)]

„ As noted earlier, usually general meetings need to be called by giving at least a notice of
21 clear days.
„ However, a general meeting may be called after giving shorter notice than that
specified in sub-section (1) of Section 101, if consent, in writing or by electronic mode,
is accorded thereto :

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(i) in the case of an annual general meeting, by not less than ninety-five per cent. of the
members entitled to vote thereat; and
(ii) in the case of any other general meeting, by members of the company :
a) holding, if the company has a share capital, majority in number of members entitled
to vote and who represent not less than ninety-five per cent. of such part of the
paid-up share capital of the company as gives a right to vote at the meeting; or

b) having, if the company has no share capital, not less than ninety-five per cent. of the
total voting power exercisable at that meeting.

„ Where any member of a company is entitled to vote only on some resolution or

resolutions to be moved at a meeting and not on the others, those members shall be
taken into account for the purposes of sub section (1) of section 101 in respect of the
former resolution or resolutions and not in respect of the latter.

Illustration 5 : The paid-up share capital of Aakash Soaps Limited is Rs. fifty lakh
divided into five lakh shares of ` 10 each. The directors of the company are desirous
of calling an extra-ordinary general meeting (EGM) by giving a shorter notice which is
less than 21 days. Sixty percent of the members holding shares worth Rs. forty lakh
accorded their consent by electronic mode to the shorter notice. Whether EGM can
be validly called.
Answer : In the above case, consent to call the EGM by shorter notice has been
accorded by sixty percent members holding shares worth Rs. forty lakh which works
out to 80% (40,00,000/50,00,000 u 100) whereas the requirement is that majority in
number of members who represent not less than 95% of paid-up share capital which
gives them a right to vote at the meeting (i.e. shareholders holding shares worth
` 47,50,000) must consent to shorter notice. Therefore, the EGM cannot be validly
called and held.

Authority to call a General Meeting :

A general meeting (AGM or EGM) has to be called by the Board of Directors. An individual
director does not have the authority to call a General Meeting. Any notice of General
Meeting given without the sanction of the Board is invalid; however, the same can be
ratified by the Board. For calling a General Meeting, the Board passes a Board Resolution.
EXPLANATORY STATEMENT TO BE ANNEXED TO NOTICE [SECTION 102]

Section 102 of the Companies Act, 2013 mentions that where any special businessis to
be transacted at the company’s general meeting, then an ‘Explanatory Statement’
7 - 23


 

shall be annexed to the notice calling such general meeting. The ‘Explanatory Statement’
must specify,

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each
items of:
i) every director and the manager, if any;
ii) every other key managerial personnel; and
iii) relatives of the persons mentioned in sub-clauses (i) and (ii);

(b) any other information and facts that may enable members to understand the meaning,
scope and implications of the items of business and to take decision thereon.
„ Ordinary business and Special business : Companies Act, 2013 sets out two types of
businesses as under :

a) Ordinary business includes the following business which are transacted at the Annual
General Meeting of a company :
i) the consideration of financial statements and the reports of the Board of Directors
and auditors;
ii) the declaration of any dividend;
iii) the appointment of directors in place of those retiring;
iv) the appointment of, and the fixing of the remuneration of, the auditors.

„ In the case of AGM, all business to be transacted thereat except the ones stated above
are special business. At the EGM, every business transacted is a special business.
Explanatory statement is not required for transacting Ordinary Business.
„ Proviso to section 102 (2) sets out that if any item of special business relates to, or
affects, any other company, the extent of shareholding in that other company of every
promoter, director, manager and of every other KMP shall be disclosed, if the extent of
shareholding is 2% or more of the paid-up share capital of that other company.

„ Effect of non-disclosure/insufficient disclosure in Explanatory Statement [Section

102(4)] : If as a result of non-disclosure or insufficient disclosure in explanatory
statement, any benefit accrues to a promoter, director, manager, other key managerial
personnel or their relatives, such person shall hold such benefit in trust for the
company, and shall, without prejudice to any other action being taken against him under
7 - 24
 

this Act or under any other law for the time being in force, be liable to compensate the
company to the extent of the benefit received by him.

Penalty for contravention of the provisions of section 102 :

Without prejudice to the provisions of sub-section (4), if any default is made in

complying with the provisions of this section, every promoter, director, manager or
other key managerial personnel of the company who is in default shall be liable to a
penalty of fifty thousand rupees or five times the amount of benefit accruing to the
promoter, director, manager or other key managerial personnel or any of his relatives,
whichever is higher. [Section 102 (5)]
QUORUM FOR MEETINGS [SECTION 103] :

Quorum means the minimum number of members who must be personally present in
order to constitute a valid meeting. Section 103 of the Companies Act, 2013 states that
unless the articles of the company provide for a larger number, the quorum for the
meeting shall be as follows :
Public Company - Private Company -

If number of members is not more than Two members personally present shall
1000, quorum shall be 5 members be the Quorum.
personally present.

if the number of members is more than

1000 but upto 5000, then the quorum
shall be 15 members personally present

If the number of members exceed

5000, then quorum shall be 30 members
personally present.

„ It is to be noted that the term ‘members personally present’ as mentioned above refers
to the members entitled to vote in respect of the items of business on the agenda of
the meeting.
Adjournment of Meeting for want of Quorum [Section 103 (2) and (3)]

If the quorum is not present within half-an-hour from the time appointed for
holding a meeting of the company :

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(a) the meeting shall stand adjourned to the same day in the next week at the same time
and place, or to such other date and such other time and place as the Board may
determine; or

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled :
Provided that in case of an adjourned meeting or of a change of day, time or place of
meeting under clause (a), the company shall give not less than three days’ notice to the
members either individually or by publishing an advertisement in the newspapers (one in
English and one in vernacular language) which is in circulation at the place where the
registered office of the company is situated.

Quorum not present at the adjourned meeting also : Where quorum is not present in the
adjourned meeting also within half an hour, then the members present shall form the
quorum.
Note : The following points have been prescribed by Secretarial Standard – 2:
1. One person can be an authorised representative of more than one body
corporate. In such a case, he is treated as more than one Member present in
person for the purpose of Quorum. However, to constitute a meeting, at least
two individuals shall be present in person. Thus, in case of a public company
having not more than one thousand members with a Quorum requirement of five
members, an authorised representative of five bodies corporate cannot form a
Quorum by himself but can do so if at least one more member is personally
present.
2. Quorum shall be present not only at the time of commencement of the Meeting
but also while transacting business.
3. Members who have voted by Remote e-voting have the right to attend the
General Meeting and accordingly their presence shall be counted for the purpose
of Quorum.
4. A Member who is not entitled to vote on any particular item of business being a
related party, if present, shall be counted for the purpose of Quorum.
5. The stipulation regarding the presence of a Quorum does not apply with respect
to items of business transacted through postal ballot.

Illustration 6 : There are 54 members in Nice Games Private Limited. The company
called its annual general meeting on Friday, 1st July 2022 at 2:00 p.m. at its
registered office. There were 28 members present till 2:30 p.m. at the venue of the
AGM. The Chairman of the meeting proceeded to initiate the meeting and passed the
resolutions after observing due process. Comment whether the meeting took place as
per the provisions of Companies Act, 2013.

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Answer : As per the provisions of Section 103 of the Companies Act, 2013, the
quorum for a Private Limited Company shall be two members personally present,
within half-an-hour from the time appointed for holding a general meeting of the
company. Thus, the quorum for the Annual General Meeting of Nice Games Private
Limited was complied with and the company has not contravened any of the provisions
of the Companies Act, 2013.
Illustration 7 : Abbey Lights and Sounds Limited has 2300 members. The company
called its Annual General Meeting on Tuesday, 23rd August, 2022 at 10.30 a.m. at its
registered office situated in Connaught Place, New Delhi. On the day of the meeting,
18 members were personally present by 11.00 a.m. and the Chairman proceeded to
initiate the Annual General Meeting. There were 5 special businesses to be discussed
at the said meeting and by 2.30 p.m. Agenda 1 to 3 had been discussed and
appropriate resolutions were passed. However, due to some emergency, 4 of the
members had to leave around 3 p.m. The Chairman granted them the permission and
proceeded to discuss Agenda 4 and 5 and accordingly passed resolutions as per the
consent of the remaining members. Comment whether the meeting is a properly
convened meeting as per the provisions of section 103 of the Companies Act, 2013.
Answer : According to Secretarial Standard - 2 (SS-2), Quorum shall be present not
only at the time of commencement of the Meeting but also while transacting business.
In the above case, while the required quorum as per section 103 of the Companies
Act, 2013 was present at the time when the meeting started, the quorum was not
present at the time of deciding Agenda 4 and 5. Thus, where at the time of
transacting business, the number of members is less than the quorum fixed for the
meeting, the business cannot be transacted and shall be a nullity.

CHAIRMAN OF MEETING [SECTION 104] :

„ Election of Chairman by Members :Section 104 of the Companies Act, 2013 seeks to

provide that unless the Articles of Association of the Company otherwise provide, the
members, personally present, shall elect among themselves to be the Chairman on a show
of hands.

„ Demand for Poll : The section further provides that if a poll is demanded on the
election of the Chairman, the Chairman elected by show of hands shall continue to be
the Chairman of the meeting until some other person is elected as Chairman as a result
of poll, and such other elected person shall be the Chairman for rest of the meeting.

„ Powers of Chairman :Chairman of the meeting is the person who manages the meetings
and ensures that the required decorum of the meeting is maintained at all times, till the
meeting is concluded and post that, executes the minutes of the meeting. The Chairman

7 - 27


 

has prima facie authority to decide all questions which arise at a meeting and which
require decision at that time. In order to fulfil his duty properly, he must observe strict
impartiality.

„ Chairman to have ‘casting vote’ if so provided in the Articles :The Chairman has a
casting vote in Board Meetings and general meetings, if specifically empowered by the
articles of the company. The term ‘casting vote’ means that in the event of equality of
vote on a particular business being transacted at the meeting, the Chairman of the
meeting shall have a right to cast a second vote. If there is no provision in the articles
for a casting vote, an ordinary resolution on which there is equality of votes is deemed
to be dropped.

„ Exemption to a Private Company : In case of a private company - Section 104 shall

apply, unless otherwise specified in respective section or the articles of the company
provide otherwise. -

„ This exception shall be applicable to a private company which has not committed a
default in filing its financial statements under section 137 or annual return under
section 92 of the Act, with the Registrar. -

7.5 PROXIES [SECTION 105]

„ Appointment of a proxy is an important right of a member of the company. Section 105

(1) provides that any member of a company who is entitled to attend and vote at a
meeting of the company shall be entitled to appoint another person as a proxy to attend
and vote at the meeting on his behalf. However, a proxy shall not have the right to
speak at such meeting and shall not be entitled to vote except on a poll.
„ Applicability of the sub-section (1) – Unless the articles of a company otherwise
provide, this sub-section shall not apply to a company not having a share capital. The
Central Government may also prescribe a class or classes of companies whose members
shall not be entitled to appoint another person as a proxy. According to Rule 19, a
member of a company registered under section 8 (companies formed with charitable
objects, etc.) shall not be entitled to appoint any other person as his proxy unless such
other person is also a member of such company. A person can act as proxy on behalf of
members not exceeding fifty and holding in aggregate not more than 10 per cent of the
7 - 28
 

total share capital of the company carrying voting rights. However, a member who is
holding more than 10 per cent of the total share capital of the company carrying voting
rights may appoint a single person as a proxy and such person shall not act as proxy for
any other person or shareholder. [Rule 19 (2)]

„ As a compliance requirement, in every notice calling a meeting of a company which has a

share capital, or the articles of which provide for voting by proxy at the meeting, there
shall appear with reasonable prominence a statement that a member entitled to attend
and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies, to
attend and vote instead of himself, and that a proxy need not be a member. [Section 105 (2)]
„ The appointment of proxy shall be in Form No. MGT-11. [Rule 19(3)]

„ If the instrument appointing a proxy is in the prescribed Form, it shall not be questioned
on the ground that it fails to comply with any special requirements specified for such
instrument by the articles of a company. [Section 105 (7)]

„ The instrument appointing a proxy shall be in writing and signed by the appointer or his
attorney duly authorised in writing. If the appointer is a body corporate, the instrument
shall be under its seal or be signed by an officer or an attorney duly authorised by the
body corporate. [Section 105 (6)]

„ Section 105 (4) provides that a proxy received 48 hours before the meeting will be valid
even if the articles provide for a longer period.

„ Section 105 (8) provides that every member entitled to vote at a meeting of the
company, or on any resolution to be moved thereat, shall be entitled during the period
beginning twenty-four hours before the time fixed for the commencement of the
meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at
any time during the business hours of the company, provided not less than three days'
notice in writing of the intention so to inspect is given to the company.

In simple words, it can be said that :

„ every member entitled to vote at a meeting of the company, or on any resolution to be

moved thereat, shall be entitled to inspect the proxies lodged.

„ for the purpose of inspection, a minimum three days’ notice in writing is required to be
given to the company.
7 - 29


 

„ inspection by any member can be made during the period beginning twenty-four hours
„ before the time fixed for the commencement of the meeting and ending with the
conclusion of the meeting.
„ inspection can be done at any time but only during the business hours of the company.
Penalty for default :

„ If default is made in complying with section 105 (2), every officer of the company who
is in default shall be liable to penalty of five thousand rupees. [Section 105(3)]

„ If for the purpose of any meeting of a company, invitations to appoint as proxy a person
or one of a number of persons specified in the invitations are issued at the company's
expense to any member entitled to have a notice of the meeting sent to him and to vote

thereat by proxy, every officer of the company who issues the invitation as aforesaid or
authorises or permits their issue, shall be liable to a penalty of fifty thousand rupees.

Provided that an officer shall not be liableunder this sub-section by reason only of the
issue to a member at his request in writing of a form of appointment naming the proxy,
or of a list of persons willing to act as proxies, if the form or list is available on request
in writing to every member entitled to vote at the meeting by proxy. [Section 105(5)]
7.6 VOTING [SECTION 106-109]
„ The various modes through which a shareholder can cast his vote are as follows:

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RESTRICTION ON VOTING RIGHTS [SECTION – 106]

„ Section 106 (1) indicates the supremacy of Articles of Association and specifies that
the Articles of a company may provide that :

a) No member shall exercise any voting right in respect of any share registered in his
name on which any amount is due from him on calls or any other sums presently
payable by him to the company have not been paid, or

b) In regard to which the company has exercised any right of lien.

„ Section 106 (2) requires that a company shall not prohibit any member from exercising
his voting rights on any other ground except the grounds mentioned as above.
„ On a poll being taken at a meeting of a company, a member having more than one vote or his
proxy, need not use all his votes or cast in the same way all the votes he uses.
„ Also, such member cannot sign a requisition for an extra-ordinary general meeting.
„ In case of joint shareholders, they must concur in voting unless the articles provide to
the contrary. Regulation 52 of Table F states as under :
(i) In the case of joint holders, the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of the other
joint holders.
(ii) For this purpose, seniority shall be determined by the order in which the names
stand in the register of members.
Note : Where the articles of the company do not contain any provision restricting
the exercise of voting rights of members, then a member cannot be prevented from
voting, even though, calls or other sums payable by him have not been paid or the
company has exercised any right of lien over his shares. But, where the articles
contain any such provision, and the shares forfeited for non-payment of calls have
been re-allotted, the new allottee being liable for the balance, if any, remaining
unpaid on the shares would not be entitled to vote so long as any calls presently
payable on the shares remain unpaid.

Illustration 8 : Suppose Mr. Subramaniam and Mrs. Sneha are joint shareholders of
Sports Equipment Private Limited holding 500 equity shares. In respect of a
particular special business being transacted at the extra-ordinary general meeting
(EGM) of the company, Mr. Subramaniam is in favour of passing the resolution
whereas Mrs. Sneha does not favour the resolution. Decide how should the vote be
casted in case such a situation arises?

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Answer : The voting in case of joint shareholders is done in the order of seniority,
which is determined on the basis of the order in which their names appear in the
register of members. The joint-holders have a right to instruct the company as to
the order in which their names shall appear in the register of members. Accordingly,
in case of Mr. Subramaniam and Mrs. Sneha, it is to be seen as to whose name
appears first in the register of members; and then to decide whether the vote is
casted in favour of resolution or against it.
Illustration 9 : Consider a situation where directors are also the shareholders of
the company.
Answer : Directors, who are also the shareholders of the company, stand in a
fiduciary relationship with the company in their capacity as directors. However, a
director shall vote in the same manner as a common shareholder would have voted in
a general meeting. Therefore, while casting his vote, he is not supposed to be
influenced by the fact that he is one of the directors of the company.

VOTING BY SHOW OF HANDS [SECTION 107] :

„ According to section 107 (1) of the Companies Act, 2013, unless the voting is demanded
by way of poll or by electronic means, the voting shall be done by way of show of hands
in the first instance.

„ Section 107(2) states that the declaration by the Chairman of the meeting of the
passing of a resolution or otherwise by show of hands and an entry to that effect in the
minutes books shall be conclusive evidence that the resolution has been passed.

Illustration 10 : Can an insolvent shareholder vote at the general meeting by show

of hands?
Answer : Yes. Notwithstanding that he has no longer any beneficial interest in the
shares and the dividends are payable only to his trustee in bankruptcy, an insolvent
shareholder so long as he remains in the register of the company as a member, is
entitled to exercise his votes which are attributed to his status as a member.

VOTING THROUGH ELECTRONIC MEANS [SECTION 108] :

Companies required to provide its members the facility of exercising right to vote by
electronic means [Rule 20 (2)]:
Every company which :

„ has listed its equity shares on a recognised stock exchange; and

„ has not less than one thousand members;
„ shall provide to its members facility to exercise their right to vote on resolutions

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proposed to be considered at a general meeting by electronic means.

„ Exempted entity : However, a Nidhi, or an enterprise or institutional investor referred

to in Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements) Regulations, 2009 is not required to provide the
facility to vote by electronic means.

For the purp oses of this rule, the expression:

„ ‘cut-off date' means a date not earlier than seven days before the date of general
meeting for determining the eligibility to vote by electronic means or in the general
meeting.

„ Exercise of right to vote through voting by electronic means by a member : A

member may exercise his right to vote through voting by electronic means on resolutions
and the company shall pass such resolutions in accordance with the provisions of this rule.

„ Procedure :Rule 20 (4) states that a company which provides the facility to its members
to exercise voting by electronic means shall comply with the following procedure :
i) Notice of meeting : The notice of the meeting shall be sent to all the members,
directors and auditors of the company either :
a) by registered post or speed post; or
b) through electronic means, namely, registered e-mail ID of the recipient; or
c) by courier service;
ii) Placing of Notice on website : The notice shall also be placed on the website, if
any, of the company and of the agency forthwith after it is sent to the members;
iii) Particulars contained in Notice : The notice of the meeting shall clearly state -
a) that the company is providing facility for voting by electronic means and the
business may be transacted through such voting;

b) that the facility for voting, either through electronic voting system or ballot
or polling paper shall also be made available at the meeting and members
attending the meeting who have not already cast their vote by remote e-voting
shall be able to exercise their right at the meeting;
c) that the members who have cast their vote by remote e-voting prior to the
meeting may also attend the meeting but shall not be entitled to cast their

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vote again;

iv) The Notice shall :

a) indicate the process and manner for voting by electronic means;

b) indicate the time schedule including the time period during which the votes
may be cast by remote e-voting;
c) provide the details about the login ID;
d) specify the process and manner for generating or receiving the password and
for casting of vote in a secure manner.
v) Publication of notice : The company shall cause a public notice by way of an
advertisement to be published, immediately on completion of dispatch of notices for
the meeting under clause (i) of sub-rule (4) but at least twenty-one days before
the date of general meeting, at least once in a vernacular newspaperin the principal
vernacular language of the district in which the registered office of the company is
situated, and having a wide circulation in that district, and at least once in English
language in an English newspaper having countrywide circulation, and specifying in
the said advertisement, inter alia, the following matters, namely :-
a) statement that the business may be transacted through voting by electronic
means;
b) the date and time of commencement of remote e-voting;
c) the date and time of end of remote e-voting;
d) cut-off date;

e) The manner in which persons who have acquired shares and become members of
the company after the dispatch of notice may obtain the login ID and password;
f) the statement that :
i) remote e-voting shall not be allowed beyond the said date and time;
ii) the manner in which the company shall provide for voting by members
present at the meeting;

iii) a member may participate in the general meeting even after exercising
his right to vote through remote e-voting but shall not be allowed to vote
again in the meeting; and
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iv) a person whose name is recorded in the register of members or in the

register of beneficial owners maintained by the depositories as on the
cut-off date only shall be entitled to avail the facility of remote e-voting
as well as voting in the general meeting;
g) website address of the company, if any, and of the agency where notice of the
meeting is displayed; and
h) name, designation, address, email id and phone number of the person responsible
to address the grievances connected with facility for voting by electronic means:

Provided that the public notice shall be placed on the website of the company, if any,
and of the agency ;

vi) Time for opening of e-voting :The facility for remote e-voting shall remain open
for not less than three days and shall close at 5.00 p.m. on the date preceding the
date of the general meeting;

vii) Option for remote e-voting :During the period when facility for remote devoting
is provided, the members of the company, holding shares either in physical form or
in dematerialized form, as on the cut-off date, may opt for remote e-voting.
Provided that once the vote on a resolution is cast by the member, he shall not be
allowed to change it subsequently or cast the vote again :

Provided further that a member may participate in the general meeting even after
exercising his right to vote through remote e-voting but shall not be allowed to vote
again;

viii) When to block facility :At the end of the remote e-voting period, the facility shall
forthwith be blocked :

ix) Appointment of scrutinizer(s) : The Board of Directors shall appoint one or more
scrutinizer, who may be Chartered Accountant in practice, Cost Accountant in practice,
or Company Secretary in practice or an Advocate, or any other person who is not in
employment of the company and is a person of repute who, in the opinion of the
Board can scrutinize the voting and remote e-voting process in a fair and
transparent manner.

Provided that the scrutinizer so appointed may take assistance of a person who is not in
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employment of the company and who is well-versed with the electronic voting system;

x) Role of Chairman : The Chairman shall, at the general meeting, at the end of
discussion on the resolutions on which voting is to be held, allow voting, for all those
members who are present at the general meeting but have not cast their votes by
availing the remote evoting facility.

xi) Counting of votes :The scrutinizer shall, immediately after the conclusion of voting
at the general meeting, first count the votes cast at the meeting, thereafter unblock
the votes cast through remote e-voting in the presence of at least two witnesses not
in the employment of the company and make, not later than three days of conclusion
of the meeting, a consolidated scrutinizer’s report of the total votes cast in favour
or against, if any, to the Chairman or a person authorized by him in writing who shall
countersign the same :

xii) Scrutinisers to have access to details relating to members : For the purpose of
ensuring that members who have cast their votes through remote e-voting do not
vote again at the general meeting, the scrutiniser shall have access, after the closure
of period for remote e-voting and before the start of general meeting, to details
relating to members, such as their names, folios, number of shares held and such
other information that the scrutiniser may require, who have cast votes through
remote e-voting but not the manner in which they have cast their votes :

xiii) Maintenance of Register by scrutinisers : The scrutiniser shall maintain a register

either manually or electronically to record the assent or dissent received,
mentioning the particulars of name, address, folio number or client ID of the
members, number of shares held by them, nominal value of such shares and whether
the shares have differential voting rights;

xiv) Safe Custody of register : The register and all other papers relating to voting by
electronic means shall remain in the safe custody of the scrutiniser until the
Chairman considers, approves and signs the minutes and thereafter, the scrutiniser
shall hand over the register and other related papers to the company.

xv) Results along with the report of the scrutiniser to be placed on websites : The
results declared along with the report of the scrutiniser shall be placed on the website
7 - 36
 

of the company, if any, and on the website of the agency immediately after the result
is declared by the Chairman :

Provided that in case of companies whose equity shares are listed on a recognised
stock exchange, the company shall, simultaneously, forward the results to the
concerned stock exchange or exchanges where its equity shares are listed and such
stock exchange or exchanges shall place the results on its or their website.
xvi) Date when resolution shall be deemed to be passed : Subject to receipt of
requisite number of votes, the resolution shall be deemed to be passed on the date
of the relevant general meeting.

xvii) Resolution not to be withdrawn : A resolution proposed to be considered through

voting by electronic means shall not be withdrawn.
DEMAND FOR POLL [SECTION 109] :

„ Members who can demand for poll :

a) In case of a company having a share capital, by the members present in person or

proxy, where allowed, and having not less than 1/10th of the total voting power or
holding shares on which an aggregate sum of not less than `5,00,000 or such higher
amount as may be prescribed has been paid–up.

b) In case of any other company, by any member or members present in person or by

proxy, where allowed, and having not less than 1/10th of the total voting power.

„ Withdrawal of demand for poll : The demand for a poll may be withdrawn at any time by
the persons who made the demand.

„ To take forthwith poll demanded for adjournment of meeting or appointment of

Chairman :A poll demanded for adjournment of the meeting or appointment of Chairman
of the meeting shall be taken forthwith.
„ When to take poll demanded on any other question : A poll demanded on any question
other than adjournment of the meeting or appointment of Chairman shall be taken at
such time, not being later than 48 hours from the time when the demand was made, as
the Chairman of the meeting may direct.

„ Duties of scrutinizer :The duties of a scrutinizer shall be as follows :

a) To ensure proper conduct of the polling process;

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b) To maintain proper records of the poll;

c) To submit a report to the Chairman of the meeting which shall contain the details of
votes cast in the favour and against the resolution; and
„ Rule 21lays down the procedure describing the manner in which the Chairman shall get
the poll process scrutinized-
„ According to Rule 21 (1), the Chairman of the meeting shall ensure that :
a) The Scrutinizers are provided with the Register of Members, specimen signatures
of the members, Attendance Register and Register of Proxies.
b) The Scrutinizers are provided with all the documents received by the Company
pursuant to sections 105, 112 and section 113.
c) The Scrutinizers shall arrange for Polling papers and distribute them to the members
and proxies present at the meeting; in case of joint shareholders, the polling paper
shall be given to the first named holder or in his absence to the joint holder
attending the meeting as appearing in the chronological order in the folio and the
Polling paper shall be in Form No. MGT-12.
d) The Scrutinizers shall keep a record of the polling papers received in response to
poll, by initialling it.
e) The Scrutinizers shall lock and seal an empty polling box in the presence of the
members and proxies.
f) The Scrutinizers shall open the Polling box in the presence of two persons as
witnesses after the voting process is over.
g) In case of ambiguity about the validity of a proxy, the Scrutinizers shall decide the
validity in consultation with the Chairman.

h) The Scrutinizers shall ensure that if a member who has appointed a proxy has voted
in person, the proxy’s vote shall be disregarded.

i) The Scrutinizers shall count the votes cast on poll and prepare a report thereon
addressed to the Chairman.

j) Where voting is conducted by electronic means under the provisions of section 108
and rules made thereunder, the company shall provide all the necessary support,
technical and otherwise, to the Scrutinizers in orderly conduct of the voting and
7 - 38
 

counting the result thereof.

k) The Scrutinizers’ report shall state total votes cast, valid votes, votes in favour and
against the resolution including the details of invalid polling papers and votes
comprised therein.

l) The Scrutinizers shall submit the Report to the Chairman who shall counter-sign the same.
m) The Chairman shall declare the result of voting on poll. The result may either be
announced by him or a person authorized by him in writing.
„ The scrutinizers appointed for the poll, shall submit a report to the Chairman of the meeting
in Form No. MGT-13. The report shall be signed by the scrutinizer and, in case there is more
than one scrutinizer by all the scrutinizers, and the same shall be submitted by them to the
Chairman of the meeting within seven days from the date the poll is taken. [Rule 21 (2)]

The results of the poll shall be deemed to be the decision of the meeting on the
resolution. [Section 109 (7)]

„ Applicability of section 101 to 107 and 109 to Private companies - Section 101 to
107 and 109 shall apply unless otherwise specified in respective sections or the articles
of the company provide otherwise. This exception shall be applicable to a private
company which has not committed a default in filing its financial statements under
section 137 or annual return under section 92 of the Act, with the Registrar.
PSTAL BALLOT [SECTION 110]

„ Section 2(65) defines the term “postal ballot” to mean voting by post or through any
electronic mode.
„ The provisions relating to passing of resolutions by means of ‘postal ballot’ are contained
in Section 110.
Extract of Section 110 of the Companies Act, 2013

(1) Notwithstanding anything contained in this Act, a company :

a) shall, in respect of such items of business as the Central Government may, by

notification, declare to be transacted only by means of postal ballot; and

b) may, in respect of any item of business, other than ordinary business and any business
in respect of which directors or auditors have a right to be heard at any meeting,
transact by means of postal ballot, in such manner as may be prescribed, instead of
7 - 39


 

transacting such business at a general meeting.

Provided that any item of business required to be transacted by means of postal

ballot under clause (a), may be transacted at a general meeting by a company which
is required to provide the facility to members to vote by electronic means under
section 108, in the manner provided in that section.

(2) If a resolution is assented to by the requisite majority of the shareholders by means of

postal ballot, it shall be deemed to have been duly passed at a general meeting convened
in that behalf.”
„ Section 110 seeks to provide that the Central Government may declare certain items of
business that can be transacted only by postal ballot. In addition, in respect of any
other item of business (except ordinary business and any business in respect of which
directors or auditors have a right to be heard at any meeting) postal ballot may be used.
„ Sub-section (2) of Section 110 makes a deeming provision that if a resolution is
assented by requisite majority of shareholders by means of postal ballot, it shall be
deemed to have been passed at a general meeting convened in that behalf.
„ Manner in which postal ballot shall be conducted is prescribed in Rule 22of the Companies
(Management & Administration) Rules, 2014. The same is described as under

„ Where a company is required or decides to pass any resolution by way of postal ballot, it
shall send a notice to all the shareholders, along with a draft resolution explaining the
reasons there for and requesting them to send their assent or dissent in writing on a
postal ballot because postal ballot means voting by post or through electronic means
within a period of thirty days from the date of dispatch of the notice.

„ The notice shall be sent either :

a) by Registered Post or speed post, or
b) through electronic means like registered e-mail id or
c) through courier service for facilitating the communication of the assent or dissent of
the shareholder to the resolution within the said period of thirty days.

„ An advertisement shall be published at least once in a vernacular newspaper in the principal

vernacular language of the district in which the registered office of the company is
situated, and having a wide circulation in that district, and at least once in English language
7 - 40
 

in an English newspaper having a wide circulation in that district, about having dispatched
the ballot papers and specifying therein, inter alia, the following matters, namely :-

a) a statement to the effect that the business is to be transacted by postal ballot

which includes voting by electronic means;
b) the date of completion of dispatch of notices;
c) the date of commencement of voting;
d) the date of end of voting;

e) the statement that any postal ballot received from the member beyond the said
date will not be valid and voting whether by post or by electronic means shall not be
allowed beyond the said date;

f) a statement to the effect that members, who have not received postal ballot forms
may apply to the company and obtain a duplicate thereof; and
g) contact details of the person responsible to address the grievances connected with
the voting by postal ballot including voting by electronic means.

„ The notice of the postal ballot shall also be placed on the website of the company
forthwith after the notice is sent to the members and such notice shall remain on such
website till the last date for receipt of the postal ballots from the members.
„ The Board of directors shall appoint one scrutinizer, who is not in employment of the
company and who, in the opinion of the Board can conduct the postal ballot voting
process in a fair and transparent manner.

„ The scrutinizer shall be willing to be appointed and be available for the purpose of
ascertaining the requisite majority.
„ Postal ballot received back from the shareholders shall be kept in the safe custody of
the scrutinizer and after the receipt of assent or dissent of the shareholder in writing
on a postal ballot, no person shall deface or destroy the ballot paper or declare the
identity of the shareholder.
„ The scrutinizer shall submit his report as soon as possible after the last date of receipt
of postal ballots but not later than seven days thereof.
„ The scrutinizer shall maintain a register either manually or electronically to record
their assent or dissent received, mentioning the particulars of name, address, folio
7 - 41


 

number or client ID of the shareholder, number of shares held by them, nominal value
of such shares, whether the shares have differential voting rights, if any, details of
postal ballots which are received in defaced or mutilated form and postal ballot forms
which are invalid.

„ The postal ballot and all other papers relating to postal ballot including voting by
electronic means, shall be under the safe custody of the scrutinizer till the Chairman
considers, approves and signs the minutes and thereafter, the scrutinizer shall return
the ballot papers and other related papers or register to the company who shall
preserve such ballot papers and other related papers or register safely.

„ The assent or dissent received after thirty days from the date of issue of notice shall
be treated as if reply from the member has not been received.

„ The results shall be declared by placing it, along with the scrutinizer’s report, on the
website of the company.

„ The provisions of rule 20 regarding voting by electronic means shall apply, as far as
applicable, mutatis mutandis to this rule in respect of the voting by electronic means.

„ Pursuant to clause (a) of sub-section (1) of section 110, the following items of business
shall be transacted only by means of voting through a postal ballot—

a) alteration of the objects clause of the memorandum and in the case of the company
in existence immediately before the commencement of the Act, alteration of the
main objects of the memorandum;
b) alteration of articles of association in relation to insertion or removal of provisions
which, under sub-section (68) of section 2, are required to be included in the
articles of a company in order to constitute it a private company;
c) change in place of registered office outside the local limits of any city, town or
village as specified in sub-section (5) of section 12;
d) change in objects for which a company has raised money from public through
prospectus and still has any unutilized amount out of the money so raised under sub-
section (8) of section 13;
e) issue of shares with differential rights as to voting or dividend or otherwise under
sub-clause (ii) of clause (a) of section 43;
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f) variation in the rights attached to a class of shares or debentures or other

securities as specified under section 48;

g) buy-back of shares by a company under sub-section (1) of section 68;

h) election of a director under section 151 of the Act;
i) sale of the whole or substantially the whole of an undertaking of a company as
specified under sub-clause (a) of sub-section (1) of section 180;
j) giving loans or extending guarantee or providing security in excess of the limit
specified under sub-section (3) of section 186:
„ Provided that any aforesaid items of business under this sub-rule, required to be
transacted by means of postal ballot, may be transacted at a general meeting by a
company which is required to provide the facility to members to vote by electronic
means under section 108, in the manner provided in that section.
„ Provided further that One Person Companies and other companies having members upto
two hundred are not required to transact any business through postal ballot.
„ How does the counting happen at the time of postal ballot?
„ It is important to know here that, a member who is voting by way of postal ballot, has
votes in proportion to his share in the paid-up share capital of the company.
„ And in this regard, he need not use all his votes in the same way. Therefore, following
types of postal ballots may be received from the shareholders :

i) Ballots which contain assents;

ii) Ballots which contain dissents;

iii) Ballots wherein the member has voted partially assenting, partially dissenting or
using not all his shares in any particular way; and
iv) Invalid ballots (due to absence/mismatch of signature, overwriting, etc.) The postal
ballots shall be segregated as per the above criteria and resolution shall be deemed
as passed if assents are greater in number.
7.7 CIRCULATION OF MEMBERS’ RESOLUTIONS [SECTION 111]
Crculation of members’ resolution and statements :While the board enjoys the primacy in

setting the agenda of the meetings, the members are given a right under section 111 to
propose resolutions for consideration at the general meetings.
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1) Prerequisites of a valid Requisition:The prerequisites for a valid requisition prescribed in

sub-section (2) of section 111 are as under:

a) Requisition must be made in writing and signed

i) in the case of a company having a share capital, such number of members who
hold, on the date of the receipt of the requisition, not less than one-tenth of
such of the paid-up share capital of the company as on that date carries the
right of voting;
ii) in the case of a company not having a share capital, such number of members
who have, on the date of receipt of the requisition, not less than one-tenth of
the total voting power of all the members having on the said date a right to vote.
b) Two or more copies of the said requisition are required to contain signatures of all
the requisitionists.
c) The requisition must be deposited at the registered office of the company not less
than six weeks before the meeting in the case of a requisition requiring notice of a
resolution. In case of other resolutions, the same is to be deposited not less than
two weeks before the meeting.
d) A sum reasonably sufficient to meet the company’s expenses in giving effect to
proposing the resolution is deposited or tendered. When the money is tendered, no
payment is made but an unconditional offer is made to pay money.
The proviso to sub-section (2) of section 111 provides that the time period provided
above need not be complied with in case an annual general meeting is called on a date
within six weeks after the copy has been deposited. The copy of requisition, in such a
case, shall be deemed to have been properly deposited for the purposes thereof
although not deposited within the time required by this sub-section. The company is not
duty bound to circulate the notice of the resolution when the prerequisites are not
complied with.
(2) Notice to members :As per section 111 of the Companies Act, 2013, a company shall, on
requisition in writing of such number of members, as required in section 100 (calling of
EGM), give notice to members of any resolution which may properly be moved and is
intended to be moved at a meeting; and circulate to members any statement with

7 - 44
 

respect to the matters referred to in proposed resolution or business to be dealt with

at that meeting.
(3) Exemption from circulation of any statement : The Company shall not be bound to
circulate any statement, if on the application either on behalf of the company or of any
other person who claims to be aggrieved, the Central Government, by order, declares that
the rights conferred are being abused to secure needless publicity for defamatory matter.
(4) Order to bear the cost :An order made as above by the Central Government may also
direct that the cost incurred by the company shall be paid to the company by the
requisitionists, notwithstanding that they are not parties to the application.
(5) Default in complying with the provisions :If any default is made in complying with the
provisions of this section, the company and every officer of the company who is in
default shall be liable to a penalty of twenty-five thousand rupees.

7.8 REPRESENTATION OF THE PRESIDENT & GOVERNORS IN MEETING OF

COMPANIES TO WHICH THEY ARE MEMBER [SECTION 112]

Section 112 of the Companies Act, 2013 provides that the President of India or the
Governor of a State, if he is a member of a company, may appoint such person as he
thinks fit to act as his representative at any meeting and such other person 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

7 - 45


 

member of the company.

7.9 REPRESENTATIONS OF CORPORATIONS MEETING OF COMPANIES & CREDITORS
[SECTION 113]

Section 113 of the Companies Act, 2013 seeks to provide that where a body corporate is a
member or a creditor including a holder of debentures of the company and it authorises
any person as its representative at any meeting of the company or any class of members
of the company or at any meeting of creditors of the company, such representative shall
be entitled to exercise the same rights and powers including right to vote by proxy and
by postal ballot on behalf of the body corporate which he represents.
7.10 RESOLUTIONS [SECTION 114–117] ORDINARY & SPECIAL RESOLUTION [SECTION 114]

As per the Companies Act, 2013, resolutions are of two types :

„ Ordinary Resolutions – which are passed by simple majority; and

„ Special Resolutions – votes cast in favour are not less than 3 times the number of the
votes, if any, cast against the resolution by members so entitled and voting
Ordinary Resolution :

„ Section 114(1) states that a resolution shall be ordinary resolution, if the notice
required under this Act has been duly given and it is required to be passed by the votes
cast, whether on a show of hands, or electronically or on a poll, as the case may be, in
favour of the resolution, including the casting vote, if any, of the Chairman, by
members, who, being entitled so to do, vote in person, or where proxies are allowed, by
proxy or by postal ballot, exceed the votes, if any cast against the resolution by
members, so entitled and voting.

„ Simply put, the votes cast in the favour of the resolution by any mode of voting should
exceed the votes cast against it.
Special Resolution :

As per Section 114(2) of the Act, a resolution shall be a special resolution, when :

(a) The intention to propose the resolution as a special resolution has been duly specified in
the notice calling the general meeting or other intimation given to the members of the
resolution;

(b) The notice required under this Act has been duly given; and

7 - 46
 

(c) The votes cast in favour of the resolution, whether on a show of hands, or electronically
or on a poll, as the case may be, by members who, being entitled so to do, vote in person
or by proxy or by postal ballot, are required to be not less than 3 times the number of
the votes, if any, cast against the resolution by members so entitled and voting.
Characteristics of Special Resolution :

Illustration 11 : The Annual General Meeting of Super Star Bakers Limited was
attended by 60 members. In respect of a particular business, the resolution was to
be passed as a special resolution. Ten members voted against the resolution whereas
five abstained themselves from the voting. The Chairman of the meeting Mr.
Ravinder declared that the resolution was passed as a special resolution. Whether
the declaration is valid.
Answer : n case of a special resolution, the requirement is that the votes cast in
favour of the resolution must be three times the number of the votes cast against it.
In the above case, ten members voted against the resolution which implies that
minimum thirty members (three times of ten) must vote in favour of the resolution.
Ignoring five members who abstained themselves from voting, fortyfive members
(sixty minus ten minus five) voted in favour of the resolution which far exceeds the
required majority of thirty members. Therefore, declaration by Mr. Ravinder,
Chairman of the meeting, that the resolution was passed as a special resolution is
valid.
Illustration 12 : In the annual general meeting of Steel Products Limited, the notice
contained the agenda for 8 special businesses to be transacted. The Chairman
decided to move all the resolutions at one time in order to save time of the members
present at the meeting. Discuss whether two or more resolutions can be moved
together as per the provisions of the Companies Act, 2013
Answer : For the sake of avoiding confusion and mixing up, the resolutions are moved
separately. However, there is nothing illegal if the Chairman of the meeting decides
that two or more resolutions should be moved together, unless any member requires
that each resolution should be put to vote separately or unless a poll is demanded in
respect of any.
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The only case where a resolution should be moved separately is the one which
requires that as regards the appointment of directors at a general meeting of a
public or private company, where two or more directors may not be appointed as
directors by a single resolution.
Where notice has been given of several resolutions, each resolution must be put
separately. However, if the meeting unanimously adopts all the resolutions, this would
be immaterial.

RESOLUTIONS REQUIRING SPECIAL NOTICE [SECTION 115]

Section 115 of the Companies Act, 2013 read with rule 23 of Companies (Management and
Administration) Rules, 2014 deals with resolutions requiring special notice

According to Section 115 where, by any provision contained in this Act or in the Articles
of a company, special notice is required for passing any resolution, then the notice of
the intention to move such resolution shall be given to the company by such number of
members holding not less than 1% of the total voting power, or holding shares on which
such aggregate sum not exceeding five lakh rupees, as may be prescribed, has been
paid-up.
Special notice for passing a resolution is required in the following cases 

(a) Resolution for appointment of an auditor other than the retiring auditor at an annual
general meeting. [Section 140 (4)]
(b) Resolution at an annual general meeting providing expressly that a retiring auditor shall
not be re-appointed. [Section 140 (4)]
(c) Resolution to remove a director before the expiry of his period of office. [Section 169 (2)]
(d) Resolution to appoint another person as director in place of the removed director at the
meeting at which he is removed. [(Section 169 (2)]
Rule 23 specifies the procedure to be followed in respect of Special Notice as under :

1. A special notice required to be given to the company shall be signed, either individually
or collectively by such number of members holding not less than one percent of total
voting power or holding shares on which an aggregate sum of not less than 5,00,000
rupees has been paid up on the date of the notice.

2. The afore-mentioned notice shall be sent by members to the company not earlier than 3
months but at least 14 days before the date of meeting at which the resolution is to
7 - 48
 

be moved, exclusive of the day on which the notice is given and the day of the meeting.

3. The company shall immediately after receipt of the notice, give its members notice of
the resolution at least seven days before the meeting, exclusive of the day of dispatch
of notice and day of the meeting, in the same manner as it gives notice of any general
meetings.

4. Where it is not practicable to give the notice in the same manner as it gives notice of
any general meetings, the notice shall be published in English language in English
newspaper and in vernacular language in a vernacular newspaper, both having wide
circulation in the State where the registered office of the Company is situated and
such notice shall also be posted on the website, if any, of the Company.

5. The notice shall be published at least seven days before the meeting, exclusive of the
day of publication of the notice and day of the meeting.
RESOLUTIONS PASSED AT ADJOURNED MEETING [SECTION 116] :

„ As per Section 116 of the Companies act, 2013, where a resolution is passed at an
adjourned meeting of :

a) a company; or
b) the holders of any class of shares in a company; or
c) the Board of Directors of a company,
the resolution shall be treated as having been passed on the day on which it was actually
passed and not on any earlier date.
Example:

„ The extra-ordinary general meeting of the company, Purple Cosmetics Private Limited
was due to be held on Thursday, 23rd June, 2022. However, due to want of quorum, the
meeting was adjourned to a later date on Thursday, 30th June, 2022 and two resolutions
were passed on that date.

„ According to section 116 of the Companies Act, 2013, the said two resolutions shall be
deemed to have been passed on the adjourned date of meeting, i.e. Thursday, 30th June,
2022 and not on the earlier date.

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RESOLUTIONS AND AGREEMENTS TO BE FILED [SECTION 117] :

„ Section 117 of the Companies Act, 2013provides that a copy of every resolution or any

agreement, in respect of matters specified in sub-section (3) together with the

explanatory statement under section 102, if any, annexed to the notice calling the
meeting in which the resolution is proposed, shall be filed with the Registrar within
thirty days of the passing or making thereof in such manner and with such fees as may
be prescribed.

„ According to Rule 24 of the Companies (Management and Administration) Rules, 2014, a

copy of every resolution or any agreement required to be filed, together with the
explanatory statement under section 102, if any, shall be filed with the Registrar in
Form No. MGT-14along with the fee.
Resolutions and agreements to be filed with the Registrar as per Section 117 (3) are as under:

„ Special Resolutions
„ Resolutions which have been agreed to by all the members of a company, but which, if
not so agreed to, would not have been effective for their purpose unless they had been
passed as special resolutions;

„ Any resolution of the Board of Directors of a company or agreement executed by a

company, relating to the appointment, re-appointment or renewal of the appointment, or
variation of the terms of appointment, of a managing director;

„ Resolutions or agreements which have been agreed to by any class of members but
which, if not so agreed to, would not have been effective for their purpose unless they
had been passed by a specified majority or otherwise in some particular manner; and all
resolutions or agreements which effectively bind such class of members though not
agreed to by all those members.

„ Resolutions requiring a company to be wound up voluntarily passed in pursuance of

section 59 of the Insolvency and Bankruptcy Code, 2016.

„ Resolutions passed in pursuance of sub-section (3) of section 179.

Provided that no person shall be entitled under section 399 to inspect or obtain copies
of such resolutions;
Provided further that nothing contained in this clause shall apply in respect of a
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resolution passed to grant loans, or give guarantee or provide security in respect of

loans under clause (f) of sub-section (3) of section 179 in the ordinary course of its
business by,—

a) a banking company;

b) any class of non-banking financial company registered under Chapter IIIB of the
Reserve Bank of India Act, 1934, as may be prescribed in consultation with the
Reserve Bank of India;

c) any class of housing finance company registered under the National Housing Bank
Act, 1987, as may be prescribed in consultation with the National Housing Bank; and
„ any other resolution or agreement as may be prescribed and placed in the public domain.

7.11 MINUTES (SECTION 118)

„ Section 118 of the Companies Act, 2013, states that every company shall prepare, sign

and keep minutes of every general meeting of any class of shareholders or creditors,
including the meeting called by the requisitionists, and every resolution passed by postal
ballot and every meeting of its Board of Directors or of every committee of the Board,
within 30 days of the conclusion of every such meeting concerned, or passing of resolution
by postal ballot in books kept for that purpose with their pages consecutively numbered
[Sub-section (1)]

„ The minutes of each meeting shall contain a fair and correct summary of the proceedings
that took place at the concerned meeting.
„ All appointments made at any of the meetings aforesaid shall be included in the minutes
of the meeting.
„ In the case of a Board Meeting or a meeting of a committee of the Board, the minutes
shall also contain :
a) the names of the directors present at the meeting; and
b) in the case of each resolution passed at the meeting, the names of the directors, if
any, dissenting from, or not concurring with the resolution.

„ There shall not be included in the minutes, any matter which, in the opinion of the
Chairman of the meeting :
a) is or could reasonably be regarded as defamatory of any person; or

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b) is irrelevant or immaterial to the proceedings; or

c) is detrimental to the interests of the company.

„ The matter to be included or excluded in the minutes of the meetings on the afore-said
grounds shall be at the absolute discretion of the Chairman of the meeting.

„ Where the minutes have been kept in accordance with Section 118 (1), 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.
Penalty for contravention :

a) 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 `25,000 and every officer
of the company who is in default shall be liable to a penalty of `5,000.

b) If a person is found guilty of tampering with the minutes of the proceedings of the
meeting, he shall be punishable with imprisonment for a term which may extend to
2 years and with fine which shall not be less than `25,000 but which may extend to
`1,00,000.

„ Distinct minute books to be maintained for each type of meeting : A distinct minute
book shall be maintained for each type of meeting namely:
i) general meetings of the members;
ii) meetings of the creditors
iii) meetings of the Board; and
iv) meetings of each of the committees of the Board.
Note : Resolutions passed by postal ballot shall be recorded in the minute book of
general meetings as if it has been deemed to be passed in the general meeting.

„ Maximum time allowed for entering minutes of proceedings : The minutes of proceedings
of each meeting shall be entered in the books maintained for that purpose along with
the date of such entry within thirty days of the conclusion of the meeting.

„ Data to be entered when a resolution is passed by Postal Ballot : In case of every

resolution passed by postal ballot, a brief report on the postal ballot conducted
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including the resolution proposed, the result of the voting thereon and the summary of
the scrutinizer’s report shall be entered in the minutes book of general meetings along
with the date of such entry within thirty days from the date of passing of resolution.

„ Signing of Minute Books : Each page of every such book shall be initialled or signed and
the last page of the record of proceedings of each meeting or each report in such books
shall be dated and signed :
i) in the case of minutes of proceedings of a meeting of the Board or of a committee
thereof, by the chairman of the said meeting or the Chairman of the next
succeeding meeting;

ii) in the case of minutes of proceedings of a general meeting, by the Chairman of the
same meeting within the aforesaid period of thirty days or in the event of the death
or inability of that Chairman within that period, by a director duly authorised by the
Board for the purpose;

iii) In case of every resolution passed by postal ballot, by the Chairman of the Board
within the aforesaid period of thirty days or in the event of there being no
Chairman of the Board or the death or inability of that Chairman within that period,
by a director duly authorized by the Board for the purpose.

„ Place of keeping minute books of general meetings and their preservation : The minute
books of general meetings shall be kept at the registered office of the company and
shall be preserved permanently and kept in the custody of the company secretary or any
director duly authorised by the board.

„ Exemption to Section 8 companies :In case of section 8 companies (companies formed

with charitable objects, etc.), section 118 shall not apply as a whole except that minutes
may be recorded within 30 days of the conclusion of every meeting in case of companies
where the articles of association provide for confirmation of minutes by circulation.

The exceptions, modifications and adaptations, shall be applicable to a section 8 company

which has not committed a default in filing its financial statements under 137 or Annual
Return under section 92 with the Registrar.
7.12 INSPECTION OF MINUTES-BOOKS OF GENERAL MEETING [SECTION 119]

„ The books containing the minutes of the proceedings of any general meeting of a company
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a) be kept at the registered office of the company; and

b) be open for inspection, during business hours, by any member, without charge,
subject to such reasonable restrictions as specified in the articles of the company
or as imposed in the general meeting. However, at least 2 hours in each business day
shall be allowed for inspection [Section 119 (1)].

„ Any member shall be entitled to be furnished, within seven working days after he has
made a request in that behalf to the company, and on payment of such fees as may be
prescribed, with a copy of any minutes. [Section 119 (2)].

„ In other words, within 7 working days of making a request along with the requisite fees,
the member shall be furnished with a copy of any minutes.
Penalty for contravention [Section 119 (3)]

„ If any inspection under sub-section (1), is refused by the company to the member, or if
the copy of minute-book is not furnished within the time specified under subsection (2),
then the company shall be liable to a penalty of ` 25,000 and every officer of the
company who is in default shall be liable to a penalty of `5,000 for each such refusal or
default, as the case may be.
Power of Tribunal to order inspection [Section 119 (4)]

In case of any such refusal or default, the Tribunal may, without prejudice to any action
being taken under sub-section (3), by order, direct an immediate inspection of the
minute-books or direct that the copy required shall forthwith be sent to the person
requiring it.

Copy of minute book of general meeting [Rule 26]

„ Any member shall be entitled to be furnished, within seven working days after he has
made a request in that behalf to the company, with a copy of any minutes of any general
meeting, on payment of such sum as may be specified in the articles of association of
the company, but not exceeding a sum of ten rupees for each page or part of any page

„ Provided that a member who has made a request for provision of soft copy in respect of
minutes of any previous general meetings held during a period immediately preceding
three financial years shall be entitled to be furnished, with the same free of cost.

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MAINTENANCE & INSPECTION OF DOCUMENTS IN ELECTRONIC FORM [SECTION 120]

„ Section 120 of the Companies Act, 2013 seeks to provide that any document, record,
register or minute, etc., required to be kept by a company or allowed to be inspected or
copies given to any person by a company under this Act, may be kept or inspected or
copies given, as the case may be, in electronic form in such form and manner as may be
prescribed.

„ Every listed company or a company having at least 1000 shareholders, debenture-

holders and other security holders, may maintain its records, as required to be
maintained under the Act or rules made thereunder, in electronic form.
„ Provided that :

a) the records are maintained in the same formats and in accordance with all other
requirements as provided in the Act or the rules made thereunder;

b) the information as required under the provisions of the Act or the rules made
thereunder should be adequately recorded for future reference;

c) the records must be capable of being readable, retrievable and reproducible in

printed form;

d) the records are capable of being dated and signed digitally wherever it is required
under the provisions of the Act or the rules made thereunder;

e) the records, once dated and signed digitally, shall not be capable of being edited or
altered;

f) the records shall be capable of being updated, according to the provisions of the
Act or the rules made thereunder, and the date of updating shall be capable of
being recorded on every updating.

„ Who is responsible for the maintenance and security of electronic records: Rule 28 sets
out that the Managing Director, Company Secretary or any other director or officer of
the company as the Board may decide shall be responsible for the maintenance and
security of electronic records.
„ The person who is responsible for the maintenance and security of electronic records shall
a) provide adequate protection against unauthorized access, alteration or tampering of
records;

7 - 55


 

b) ensure against loss of the records as a result of damage to, or failure of the media
on which the records are maintained;
(c) ensure that the signatory of electronic records does not repudiate the signed
record as not genuine;
(d) ensure that computer systems, software and hardware are adequately secured and
validated to ensure their accuracy, reliability and consistent intended performance;
(e) ensure that the computer systems can discern invalid and altered records;
(f) ensure that records are accurate, accessible, and capable of being reproduced for
reference later;
(g) ensure that the records are at all times capable of being retrieved to a readable
and printable form;
(h) ensure that records are kept in a non-rewritable and non-erasable format like pdf.
version or some other version which cannot be altered or tampered;
(i) ensure that at least one backup, taken at a periodicity of not exceeding one day, are
kept of the updated records kept in electronic form, every backup is authenticated
and dated and such backups shall be securely kept at such places as may be decided
by the Board;
(j) limit the access to the records to the managing director, company secretary or any
other director or officer or persons performing work of the company as may be
authorized by the Board in this behalf;
(k) ensure that any reproduction of non-electronic original records in electronic form is
complete, authentic, true and legible when retrieved;

(l) arrange and index the records in a way that permits easy location, access and
retrieval of any particular record; and

(m) take necessary steps to ensure security, integrity and confidentiality of records.

„ Inspection and copies of records maintained in electronic form : Rule 29 states that the
records maintained in electronic form shall be made available for inspection by the
company in electronic form. Copies of the records maintained in electronic form,
containing a clear reproduction of the whole or part thereof, shall be provided on
payment of not exceeding ` 10 per page.

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7.13 GENERAL MEETINGS

„ Now that we have understood the basic terms which are required to call, convene and

ANNUAL GENERAL MEETING (AGM) [SECTION 96]

„ Section 96(1) of the Companies Act, 2013 states that every company, whether public or
private, except One Person Company, shall hold an annual general meeting every year and
that the gap between two AGMs shall not be more than 15 months.

„ The company shall specify the meeting as such [i.e. Annual General Meeting (AGM)] in
the notices calling it.
Holding of Annual General Meeting (AGM) :

„ Annual general meeting should be held once every year.

„ First annual general meeting of the company should be held within 9 months from the
closing of the first financial year. Hence it shall not be necessary for the company to
hold any annual general meeting in the year of its incorporation.
„ Subsequent annual general meetings of the company should be held within 6 months
from the closing of the financial year.
„ The gap between two annual general meetings should not exceed 15 months.
Extension of validity period of AGM :

In case, it is not possible for a company to hold an annual general meeting within the
prescribed time, the Registrar may, for any special reason, extend the time within which
any annual general meeting shall be held. Such extension can be for a period not
exceeding 3 months. No such extension of time can be granted by the Registrar for the
holding of the first annual general meeting.

Illustration 13 : Abbeys Grocers Private Limited closed its financial year on 31st
March, 2022. When should it hold is Annual General Meeting (AGM) for the financial
year 2021-22?

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Answer : According to section 96 (1) of the Companies Act, 2013, Abbeys Grocers
Private Limited should hold its annual general meeting for the financial year 2021-22
latest by 30th September 2022 unless an extension is granted by jurisdictional
Registrar of Companies for any special reason.
Illustration 14 : Abbyrush Mechanics Limited was incorporated on 12th July, 2022.
When should the company hold its first Annual General Meeting (AGM)?
Answer : In the above case, the financial year of Abbyrush Mechanics Limited will
close on 31st March, 2023. According to section 96 (1),the company must hold its first
AGM latest by 31st December 2023 i.e. within 9 months of the close of its financial
year on 31st March 2023. If Abbyrush Mechanics Limited holds its first AGM in this
manner, it shall not be necessary for the company to hold any AGM in the year of its
incorporation.

„ Time and place for holding an annual general meeting:Section 96 (2) states that every
annual general meeting shall be called during business hours, i.e., between 9 a.m. and 6
p.m. on any day that is not a National Holiday and shall be held either at the registered
office of the company or at some other place within the city, town or village in which
the registered office of the company is situated.

„ Provided that annual general meeting of an unlisted company may be held at any place in
India if consent is given in writing or by electronic mode by all the members in advance.

„ Provided further that the Central Government may exempt any company from the
provisions of this sub-section subject to such conditions as it may impose.
Exemption to Section 8 companies :

„ In case of Section 8 company- In Sub-section (2) of Section 96 after the proviso and
before the explanation the following proviso shall be inserted; Provided further that
the time, date and place of each annual general meeting are decided upon before-hand
by the board of directors having regard to the directions, if any, given in this regard by
the company in its general meeting. -

„ The above-mentioned exception shall be applicable to a section 8 company which has not
committed a default in filing of its financial statements under section 137 or annual
return under section 92 with the Registrar. -
Exemption to Government companies :

In case of Government company, section 96(2) shall be read as :

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„ ‘Every annual general meeting shall be called during business hours, that is, between 9
a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the
registered office of the company or at such other place within the city, town or village
in which the registered office of the company is situate or such other place as the
Central Government may approve in this behalf .

„ The above-mentioned exception/ modification/ adaptation shall be applicable to

Government company which has not committed a default in filing of its financial
statements under section 137 or annual return under section 92 with the Registrar. -

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POWER OF TRIBUNAL TO CALL ANNUAL GENERAL MEETING [SECTION 97] :

1) If any default is made in holding the annual general meeting of a company under section
96, the Tribunal may, notwithstanding anything contained in this Act or the articles of
the company, on the application of any member of the company, call, or direct the calling
of, an annual general meeting of the company and give such ancillary or consequential
directions as the Tribunal thinks expedient :
Provided that such directions may include a direction that one member of the company
present in person or by proxy shall be deemed to constitute a meeting.

POWER OF TRIBUNAL TO CALL MEETINGS OF MEMBERS, ETC. [SECTION 98]

(1) If for any reason it is impracticable to call a meeting of a company, other than an annual
general meeting, in any manner in which meetings of the company may be called, or to
hold or conduct the meeting of the company in the manner prescribed by this Act or the
articles of the company, the Tribunal may, either suo motu or on the application of any
director or member of the company who would be entitled to vote at the meeting,—

a) order a meeting of the company to be called, held and conducted in such manner as
the Tribunal thinks fit; and

b) give such ancillary or consequential directions as the Tribunal thinks expedient,

including directions modifying or supplementing in relation to the calling, holding and
conducting of the meeting, the operation of the provisions of this Act or articles of
the company :
Provided that such directions may include a direction that one member of the
company present in person or by proxy shall be deemed to constitute a meeting.

2) Any meeting called, held and conducted in accordance with any order made under sub-
section (1) shall, for all purposes, be deemed to be a meeting of the company duly called,
held and conducted.
PUNISHMENT FOR DEFAULT IN COMPLYING WITH THE PROVISIONS OF
SECTION 96 TO 98 [SECTION 99]
Section 99 lists out the punishment for contravention of section 96 to 98.

Accordingly, if any default is made in holding a meeting of the company in

accordance with section 96 (i.e. AGM) or section 97 (i.e. AGM called by Tribunal) or
7 - 60
 

section 97 (a meeting of members other than AGM called by Tribunal) or in complying

with any the directions issued by the Tribunal, then the company and every officer of
the company who is in default shall be punishable with fine which may extend to
`1,00,000 and in the case of a continuing default, with a further fine which may extend
to `5,000 for every day during which the default continues.
REPORT ON ANNUAL GENERAL MEETING [SECTION 121] :
„ According to Section 121 of the Companies Act, 2013, every listed public company shall
prepare a report on each annual general meeting including the confirmation to the
effect that the meeting was convened, held and conducted as per the provisions of the
Act and the rules made thereunder.

„ A copy of the report is to be filed with the Registrar in Form No. MGT-15 within thirty
days of the conclusion of AGM along with the prescribed fee. the report shall be
prepared in the following manner :
a) the report under this section shall be prepared in addition to the minutes of the
general meeting;

b) the report shall be signed and dated by the Chairman of the meeting or in case of
his inability to sign, by any two directors of the company, one of whom shall be the
Managing Director, if there is one and company secretary of the company;
c) the report shall contain the details in respect of the following, namely :-
i) the day, date, hour and venue of the AGM;
ii) confirmation with respect to appointment of Chairman of the meeting;
iii) number of members attending the meeting;
iv) confirmation of Quorum;
v) confirmation with respect to compliance of the Act and the Rules, secretarial
standards made thereunder with respect to calling, convening and conducting
the meeting;
vi) business transacted at the meeting and result thereof;
vii) particulars with respect to any adjournment, postponement of meeting, change
in venue; and
viii) any other points relevant for inclusion in the report.
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d) the report shall contain fair and correct summary of the proceedings of the meeting.

„ Penalty for default : If the company fails to file the report within 30 days of
conclusion of AGM, such company shall be liable to a penalty of one lakh rupees and in
case of continuing failure, with further penalty of five hundred rupees for each day
after the first during which such failure continues, subject to a maximum of five lakh
rupees and every officer of the company who is in default shall be liable to a penalty
which shall not be less than twenty-five thousand rupees and in case of continuing
failure, with further penalty of five hundred rupees for each day after the first during
which such failure continues, subject to a maximum of one lakh rupees.
EXTRA-ORDINARY GENERAL MEETINGS [SECTION 100] :

All general meetings other than annual general meetings are called extra-ordinary
general meetings (EGMs). Section 100 of the Companies Act, 2013 contains provisions
regarding the calling of EGMs.
Calling of EGM :
@ By Board of Directors on its own :

a) The Board may, whenever it deems fit, call an extraordinary general meeting of the
company.

b) Provided that an extraordinary general meeting of the company, other than of the
wholly owned subsidiary of a company incorporated outside India, shall be held at a
place within India. [Section 100 (1)]

@ By the Board of Directors at the requisition of 

a) In the case of company having a share capital, such number of members who hold, on
the date of receipt of requisition, at least 1/10th of such paid-up share capital of
the company as on that date carries the right of voting;
b) In the case of company not having a share capital, such number of members who
have, on the date of receipt of requisition, at least 1/10th of total voting power of all
the members having on the said date a right to vote. [Section 100 (2)]

The requisition shall set out the matters for the consideration of which the meeting is
to be called and shall be signed by the requisitionists and sent to the registered office
of the company. [Section 100 (3)]
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Note : The Board must, within 21 days from the date of receipt of a valid requisition,
proceed to call a meeting on a day not later than 45 days from the date of receipt of
such requisition.

3] By requisitionists themselves :If the Board does not, within twenty-one days from the
date of receipt of a valid requisition in regard to any matter, proceed to call a meeting
for the consideration of that matter on a day not later than forty-five days from the
date of receipt of such requisition, the meeting may be called and held by the
requisitionists themselves within a period of three months from the date of the
requisition. [Section 100 (4)]

„ Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-
section (4) shall be reimbursed to the requisitionists by the company and the sums so
paid shall be deducted from any fee or other remuneration under section 197 payable to
such of the directors who were in default in calling the meeting. [Section 100 (6)]

1) The members may requisition convening of an extraordinary general meeting in

accordance with sub-section (4) of section 100, by providing such requisition in
writing or through electronic mode at least clear twentyone days prior to the
proposed date of such extraordinary general meeting.

2) The notice shall specify the place, date, day and hour of the meeting and shall
contain the business to be transacted at the meeting.-

Explanation - For the purposes of this sub-rule, it is hereby clarified that

requisitionists should convene meeting at Registered Office or in the same city or
town where Registered office is situated and such meeting should be convened on
any day except National Holiday.

3) If the resolution is to be proposed as a special resolution, the notice shall be given

as required by sub-section (2) of section 114.
4) The notice shall be signed by all the requisitionists or by a requisitionist duly
authorised in writing by all other requisitionists on their behalf or by sending an
electronic request attaching therewith a scanned copy of such duly signed requisition.
5) No explanatory statement as required under section 102 need be annexed to the
notice of an extraordinary general meeting convened by the requisitionists and the
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requisitionists may disclose the reasons for the resolution(s) which they propose to
move at the meeting.

6) The notice of the meeting shall be given to those members whose names appear in
the Register of members of the company within three days on which the
requisitionists deposit with the Company a valid requisition for calling an
extraordinary general meeting.

7) Where the meeting is not convened, the requisitionists shall have a right to receive
list of members together with their registered address and number of shares held
and the company concerned is bound to give a list of members together with their
registered address made as on twenty first day from the date of receipt of valid
requisition together with such changes, if any, before the expiry of the forty-five
days from the date of receipt of a valid requisition.

8) The notice of the meeting shall be given by speed post or registered post or through
electronic mode. Any accidental omission to give notice to, or the non-receipt of such
notice by, any member shall not invalidate the proceedings of the meeting.

Illustration 15 : The members of Blumove Peacocks Appliances Private Limited,

holding more than 1/10th voting power of the company, requisitioned the Board of
Directors to call a general meeting on 14th July, 2022. However, the directors did not
pay any heed to such a requisition and therefore, no general meeting was called.
Discuss the consequences of the contravention of not calling a general meeting on the
requisition of required number of members in accordance with the Companies Act,
2013.
Answer : In the above case, the requisition for calling a general meeting is made by
the sufficient number of requisitionists and therefore, the Board Directors is
required to initiate the process of calling the meeting. According to section 100 (4), if
the Board does not, within 21 days from the date of receipt of a valid requisition,
proceed to call a meeting within 45 days from the date of receipt of such requisition,
then the requisitionists may themselves call and hold the meeting.

This can be done within a period of three months from the date of the requisition.
According to section 100 (5), a meeting by the requisitionists shall be called and held
in the same manner in which the meeting is called and held by the Board of Directors.

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Accordingly, the requisitionists being members of Blumove Peacocks Appliances

Private Limited can call and hold the general meeting within a period of three months
from the date of the requisition since the Board was not inclined to call such a
meeting within the stipulated time after the requisition was made.
Illustration 16 : The Board of Directors of Vishnu Orchards Limited, a company
having its registered office in New Delhi, did not proceed to call a meeting despite
receipt of a requisition from the required number of requisitionists. In view of this,
requisitionists themselves decided to call the meeting to be held in Madrid, Spain on
2nd October, 2022. Discuss whether the general meeting can be convened on the said
date and place.
Keeping in view the facts of the above case, the meeting cannot be convened as
proposed to be held by the requisitionists. As per Rule 17 (2) of the Companies
(Management and Administration) Rules, 2014, the requisitionists should hold the
meeting at the registered office of the company or in the same city or town in which
the registered office is situated. In addition, the day of holding the meeting should
be a working day and not a National Holiday. It is to be noted that 2 October, 2022
nd

is a National Holiday.

7.14 APPLICABILITY OF THIS CHAPTER TO ONE PERSON COMPANY [SECTION 122]

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(1) Section 122 (1) of the Companies Act, 2013 states that the provisions of section 98 and
section 100 to 111 shall not apply to a One Person Company (OPC). An overview of these
sections is as under :

Section No. Heading of Section

Section 98 Power of Tribunal to call meetings of members, etc.

Section 100 Calling of EGM

Section 101 Notice of meeting

Section 102 Statement to be annexed to notice

Section 103 Quorum for meetings

Section 104 Chairman of meetings

Section 105 Proxies

Section 106 Restrictions on voting rights

Section 107 Voting by show of hands

Section 108 Voting through electronic means

Section 109 Demand for poll

Section 110 Postal ballot

Section 111 Circulation of Members’ Resolution

following procedure shall be adopted for any business to be transacted at an AGM or

any other meeting (i.e. EGM) of OPC:

i) The resolution of AGM or EGM shall be communicated by the member to the

company;

ii) The said resolution shall be entered in the relevant minutes book.

iii) The minutes book shall be signed and dated by the member.
Note : The date on which the minutes book is signed by the member shall be deemed
to be the date of the meeting for all the purposes.

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In case OPC has only one director, following procedure shall be adopted for any business
to be transacted at the meeting of Board of Directors:
i) The resolution by such director shall be entered in the relevant minutes book.

ii) The minutes book shall be signed and dated by such director.
Note : The date on which the minutes book is signed by the director shall be deemed
to be the date of the meeting for all the purposes.
Penalty :

If any default is made in compliance with any of the provisions of this rule, the company
and every officer or such other person who is in default shall be punishable with fine
which may extend to five thousand rupees and where the contravention is a continuing
one, with a further fine which may extend to five hundred rupees for every day after
the first during which such contravention continues. [Rule 30]

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