COMPANIES ACT, 2013

MANA GEMENT
MANAGEMENT
AND
ADMINISTRATION
ADMINISTRA

BACKGROUNDER
 MANAGEMENT AND ADMINISTRATION

Introduction
A company is composed of members, though it has its own entity
distinct from members. The members of a company are the persons
who, for the time being, constitute the company, as a corporate entity.
However, a company, being an artificial person, cannot act on its own.
It, therefore, expresses its will or takes its decisions through resolutions
passed at validly held Meetings. The primary purpose of a Meeting is
to ensure that a company gives reasonable and fair opportunity to
those entitled to participate in the Meeting to take decisions as per the
prescribed procedures.
The decision making powers of a company are vested in the
Members and the Directors and they exercise their respective powers
through Resolutions passed by them. General Meetings of the Members
provide a platform to express their will in regard to the management
of the affairs of the company.
Convening of one such meeting every year is compulsory. Holding
of more general meetings is left to the choice of the management or to
a given percentage of shareholders to exercise their power to compel
the company to convene a meeting. Shareholder Democracy, Class
Action Suits and Protection of interest of investors are the essence and
attributes of the Companies Act, 2013.
Chapter VII of the Companies Act, 2013 read with Companies
(Management and Administration) Rules, 2014 deals with the legal and
procedural aspects of management and administration of companies.
Register of Members, etc.
Section 88 requires every company to keep and maintain the
following Registers along with the Index thereof:
— register of members for each class of equity and preference shares
(separately);
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— register of debenture holders;

— register of any other security holders; and
— foreign register of members and debenture holders etc.
Every company shall, from the date of its registration, keep and
maintain a register of its members in one or more books in in Form
No. MGT.1.
In case of existing companies, registered under the Companies Act,
1956, particulars shall be compiled within six months from the date
of commencement of these rules.
Further, in the case of a company not having share capital, the
register of members shall contain the following particulars in respect
of each member -
(a) name of the member; address (registered office address in case
the member is a body corporate); e-mail address; Permanent
Account Number or CIN; Unique Identification Number, if
any; Father’s/Mother’s/Spouse’s name; Occupation; Status;
Nationality; in case member is a minor, name of the guardian
and the date of birth of the member; name and address of
nominee;
(b) date of becoming member;
(c) date of cessation;

(d) amount of guarantee, if any;

(e) any other interest if any; and
(f) instructions, if any, given by the member with regard to
sending of notices etc.
In the case of existing companies, registered under the Companies
Act, 1956, particulars shall be compiled within six months from the
date of commencement of these rules.
Register of Debenture Holders or any other Security
Holders
Every company which issues or allots debentures or any other
security shall maintain a separate register of debenture holders or
security holders, as the case may be, for each type of debentures or
other securities in one or more books in Form No. MGT.2.
Management and Administration 3

Maintenance of the Register of Members etc.

Every company shall maintain the Registers of members, Register
of debenture holders or any other security holders in the following
manner:-
(1) Entries in the registers maintained under section 88 shall be
made within seven days after the Board of Directors or its duly
constituted committee approves the allotment or transfer of
shares, debentures or any other securities, as the case may be.
(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 one-tenth of the total members entered in the register of
members reside.
(3) Consequent upon any forfeiture, buy-back, reduction, sub-
division, consolidation or cancellation of shares, issue of sweat
equity shares, transmission of shares, shares issued under any
scheme of arrangements, mergers, reconstitution or employees
stock option scheme or any of such scheme provided under
this Act or by issue of duplicate or new share certificates or
new debenture or other security certificates, entry shall be made
within seven days after approval by the Board or committee,
in the register of members or in the respective registers, as the
case may be.
(4) 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 or due to any other reason, entries
thereof explaining the change shall be made in the respective
register.
(5) If any rectification is made in the register maintained under
section 88 by the company pursuant to any order passed by
the competent authority under the Act, the necessary reference
of such order shall be indicated in the respective register.
(6) If any order is passed by any judicial or revenue authority or
by Security and Exchange Board of India (SEBI) or Tribunal
attaching the shares, debentures or other securities and giving
directions for remittance of dividend or interest, the necessary
4 Management and Administration

reference of such order shall be indicated in the respective

register.
(7) In case of companies whose securities are listed on a stock
exchange in or outside India, the particulars of any pledge,
charge, lien or hypothecation created by the promoters in
respect of any securities of the company held by the promoter
including the names of pledgee/pawnee and any revocation
therein shall be entered in the register within fifteen days from
such an event.
(8) If promoters of any listed company, which has formed a joint
venture company with another company have pledged or
hypothecated or created charge or lien in respect of any security
of the listed company in connection with such joint venture
company, the particulars of such pledge, hypothecation, charge
and lien shall be entered in the register members of the listed
company within fifteen days from such an event.
Index of Names to be included in Register
Every register maintained under sub-section (1) of section 88 shall
include an index of the names entered in the respective registers. The
index shall, in respect of each folio, contain sufficient indication to
enable the entries relating to that folio in the register to be readily
found.
The company shall make the necessary entries in the index
simultaneously with the allotment or transfer of any security in such
Register.
The maintenance of index is not necessary in case the number of
members is less than fifty.
Foreign Register of Members, Debenture Holders, other
Security Holders or Beneficial Owners residing outside India
— In terms of sub-section (4) of Section 88, a company, if
authorized by its Articles of Association, can also keep any
part of the Register in any other country. Hence, in all such
countries, where the Company has large number of
shareholders, a Register of Members containing information
about the members from that particular country may be kept.
To be called “foreign register”, this Register should contain the
names and particulars of the members, debenture holders,
other security holders or beneficial owners residing in that
country.
Management and Administration 5

— The Rules provides as under with regard to the foreign register,

the company shall, within thirty days from the date of the
opening of any foreign register, file with the Registrar notice of
the situation of the office in Form No.MGT.3 along with the
fee where such register is kept; and in the event of any change
in the situation of such office or of its discontinuance, shall,
within thirty 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 such change or discontinuance.
— A foreign register shall be deemed to be part of the company’s
register of members or of debenture holders or of any other
security holders or beneficial owners, as the case may be. The
foreign register shall be maintained in the same format as the
Principal Register.
— A foreign register shall be open to inspection and may be closed,
and extracts may be taken there from and copies thereof may
be required, in the same manner, mutatis mutandis, as is
applicable to the principal register, except that the advertisement
before closing the register shall be inserted in at least two
newspapers circulating in the place wherein the foreign register
is kept.
— Entries in the foreign register maintained under sub-section (4)
of section 88 shall be made simultaneously after the Board of
Directors or its duly constituted committee approves the
allotment or transfer of shares, debentures or any other
securities, as the case may be.
— The company shall—
(a) transmit to its registered office in India a copy of every
entry in any foreign register within fifteen days after the
entry is made; and
(b) keep at such office a duplicate register of every foreign
register duly entered up from time to time.
— If a foreign register is kept by a company in any country
outside India, the decision of the Tribunal in regard to the
rectification of the register shall be binding.
— The company shall transmit to its registered office in India a
copy of every entry in any foreign register within fifteen days
after the entry is made; and keep at such office a duplicate
register of every foreign register duly entered up from time to
time.
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— 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
in the same part of the world or to the principal register.
Authentication of Entries in the Registers
The Rules provide that 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 authorized
by the Board for the purpose and the date of the board resolution
authorising the same shall be mentioned.
Entries in the foreign register shall be authenticated by the person
authorized by the Board by appending his signature to each entry.
Shares held by the Members in Electronic Mode
Sub-section (3) of Section 88 provides that in the case of shares
held by the members in electronic mode, 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.
Declaration in Respect of Beneficial Interest in any Shares
Section 89 provides that a declaration is to be given to the company
by any person who is a member but not holding the beneficial interest
in such shares stating therein the name and other particulars of the
person holding the beneficial interest. The declaration to that effect is
required to be filed in Form No.MGT.4 in within thirty days from the
date on which his name is entered in Register of members. In case of
any change, the registered owner is required to make a declaration of
the change in ownership within thirty days of such change.
Further, the person holding beneficial interest (beneficial owner)
shall declare the nature of his interest and particulars on the person in
whose name shares stand registered. The beneficial owner is required
to make the declaration within thirty days after acquiring the
beneficial interest. Likewise, in case of any change, the beneficial owner
is required to make a declaration to the company within thirty days
of such change.
Every person holding and exempted from furnishing declaration
or acquiring a beneficial interest in shares of a company not registered
in his name (hereinafter referred to as “the beneficial owner”) shall file
with the company, a declaration disclosing such interest in Form No.
Management and Administration 7

MGT.5 in duplicate, within thirty days after acquiring such beneficial

interest in the shares of the company.
In terms of section 89(6), where any declaration is received by the
company, the company shall make a note of such declaration in the
register of members 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 90 provides that the Central Government may appoint
one or more competent persons to investigate and report as to the
beneficial ownership with regard to any share or class of shares.
Closure of Register of Members etc.
In terms of Section 91, a company may close its Register of
members or Register of Debenture holders or Register of other security
holders for a period not exceeding forty five days in a year. However,
the Register can not be closed for more than thirty days at any one
time.
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 or such lesser period and in such
manner, as may be specified by Securities and Exchange Board, if such
company is a listed company or companies intends to get its securities
listed. The notice shall be 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 as provided
in the Rules.
The requirement of advertisement giving notice of closure of register
of members is not applicable to a private company provided that the
notice has been served on all members of the private company not less
than seven days prior to closure of the register of members/debenture
holders/other security holders.
Annual Return
Provisions with regard to Annual Return are contained in section
92 and Rules 11 and 12. Every company shall prepare an annual return
8 Management and Administration

in Form No. MGT. 7 as prescribed in Rules containing the following

particulars:
(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) its indebtedness;
(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
(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 indicating their
names, addresses, countries of incorporation, registration and
percentage of shareholding held by them; and
(k) such other matters as may be prescribed,
The annual return of one Person Company and small company
shall be signed by a Company Secretary or where there is no Company
Secretary the return shall be signed by the director of the company.
Sub-section 2 of Section 92 states that (2) the annual return, filed
by a listed company or, by a company having such paid-up capital
and turnover as may be prescribed, shall be certified by a company
secretary in practice in the prescribed form, stating that the annual
return discloses the facts correctly and adequately and that the
company has complied with all the provisions of this Act. The rules
to this section provides that the annual return, filed by a
listed company or a company having paid-up share capital
of ten crore rupees or more or turnover of fifty crore
rupees or more, shall be certified by a Company Secretary
in practice and the certificate shall be in Form No. MGT.8.
Management and Administration 9

The extract of the annual return to be attached with the Board’s

Report in Form No. MGT. 9 shall form part of Board’s Report
The extract of the annual return to be attached with the Board’s
Report and a copy of the annual return shall be filed with the Registrar
with prescribed fee within thirty days from the date on which the
annual general meeting is held or where no annual general meeting is
held in any year within thirty days from the date on which the annual
general meeting should have been held together with the statement
specifying the reasons for not holding the annual general meeting,
with such fees or additional fees as may be prescribed, 30 within the
time as specified, under section 403.
If a company fails to file its annual return under sub-section (4),
before the expiry of the period specified under section 403 with
additional fee, the company shall be punishable with fine which shall
not be less than fifty thousand rupees but which may extend to five
lakhs rupees and every officer of the company who is in default shall
be punishable with imprisonment for a term which may extend to six
months or with fine which shall not be less than fifty thousand rupees
but which may extend to five lakh rupees, or with both.
Company Secretary in practice shall be punishable with fine which
shall not be less than fifty thousand but may extend to five lakh rupees
if he certifies other- wise than in conformity of this section or relevant
rules
Return of Changes in Shareholding position of Promoters
and top ten Shareholders
In terms of section 93 read with rules, every listed company is
required to file with the Registrar, a return in Form No. MGT. 10
along with the fee with respect to changes relating to either increase
or decrease of two percent, or more in the shareholding position of
promoters and top ten shareholders of the company in each case, either
value or volume of the shares, within fifteen days of such change.
Place of keeping Registers
Section 94 provides that the registers and indices maintained
pursuant to section 88 and copies of returns prepared pursuant to
section 92 shall be kept at the registered office of the company. The
registers or copies of returns may also be kept at any 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 general meeting of the company and the Registrar has been
10 Management and Administration

given a copy of the proposed resolution at least one day before the date
of general meeting of the company in Form No. MGT. 14.
Inspection etc. of Registers, Returns etc.
The registers and copies of return shall be open for inspection during
business hours 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.
Any such member, debenture holder, security holder or beneficial
owner or any other person may require a copy of any such register or
entries therein or return on payment of such fee as may be specified in
the articles of association of the company but not exceeding ten rupees
for each page.
Copies of the Registers and Annual Return
Copies of the registers maintained under section 88 or entries therein
and annual return filed under section 92 may be furnished to any
member, debenture-holder, other security holder or beneficial owner of
the company or any other person on payment of such fee as may be
prescribed in the Articles of Association of the company but not
exceeding rupees ten for each page.
Preservation of Register of Members etc. and Annual
Return
The provisions with regard to preservation of records are contained
in Rule 15
— The register of members along with the index shall be preserved
permanently 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; and
— The register of debenture holders or any other security holders
along with the index shall be preserved for a period of 15 years
from 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.
— 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 years from the date of filing
with the Registrar.
Management and Administration 11

— 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 15 years from the date of redemption
of such debentures/ securities. The foreign register shall be kept
in the custody of the person authorized by the Board for
authentication of the entries made therein.
Members’ Meetings
A company is required to hold meetings of the members to take
approval of certain business items, as prescribed in the Act.
The meetings to be held for seeking approval to ordinary business
and special business are called annual general meeting and
extraordinary general meeting. In certain cases, a company may have
to hold a meeting of the members of a particular class of members.

Members’ Meetings

Annual General Extraordinary Class Meeting

Meeting General Meeting

Annual General Meeting

Annual general meeting (AGM) is an important annual event where
members get an opportunity to discuss the activities of the company.
Section 96 provides that every company, other than a one person
company is required to hold an annual general meeting every year.
Following are the key provisions regarding the holding of an annual
general meeting:
Holding of annual general meeting
1. Annual general meeting should be held once every year.
2. 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.
3. Subsequent annual general meeting of the company should be
held within 6 months from the closing of the financial year.
12 Management and Administration

4. 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,
Time and place for holding an annual general meeting
An annual general meeting can be called during business hours,
that is, between 9 a.m. and 6 p.m. on any day that is not a National
Holiday. It should 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 situate. The Central Government is
empowered to exempt any company from these provisions, subject to
such conditions as it may impose.
“National Holiday” for this purpose means and includes a day
declared as National Holiday by the Central Government.
Default in holding the annual general meeting
Section 99 provides that if any default is made in complying or
holding a meeting of the company, the company and every officer of
the company who is in default shall be punishable with fine which
may extend to 1 lakh and in case of continuing default, with a further
fine which may extend to Rs. 5,000/- for each day during which
such default continues.
If any default is made in holding the annual general meeting of a
company, any member of the company may make an application to
the Tribunal to 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. 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.
Business to be transacted at annual general meeting:
Sub-section (2) of Section 102 provides that all other businesses
transacted at an Annual General Meeting except the following are
special business:
(i) the consideration of financial statements and the reports of
the Board of Directors and auditors;
Management and Administration 13

(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.
Extra Ordinary General Meeting
All general meetings other than annual general meetings are called
extraordinary general meetings.

Calling of EGM

By By By By
Board Board on requisition requisitionists Tribunal
of shareholders

All businesses items can be transacted at the extraordinary general

meetings are special business. Following are the key provisions, provided
in section 100, regarding calling and holding of an extraordinary
general meeting:
(I) By Board
The Board may, whenever it deems fit, call an extraordinary
general meeting of the company.
(II) By Board on requisition
The Board must call an extraordinary general meeting on receipt
of the requisition from the following number of members:
(a) in the case of a company having a share capital: 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;
(b) in the case of a company not having a share capital: 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
The requisition should set out the matters to be considered at the
proposed meeting and the same should be signed by the
requisitionists and sent to the registered office of the company.
14 Management and Administration

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.
(III) By requisitionists
If the Board does not within 21 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 45 days from the date of receipt of such requisition, the
meeting may be called and held by the requisitonists themselves.
However in such case, the meeting should be held within a period
of 3 months from the date of the requisition.
Reasonable expenses incurred by the requisitionists in calling such
a meeting shall be reimbursed by the company to the
requisitionists. The company in turn recover such expenses from
any fee or other remuneration under section 197 payable to
such of the directors who were in default in calling the meeting.
In case, the quorum is not present within half-an-hour from the
time appointed for holding a meeting called by requisitionists,
the meeting shall stand cancelled.
Rules 17 provides as under with regard to calling of extraordinary
general meeting by requisitionists :
— 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 twenty-
one days prior to the proposed date of such extraordinary
general meeting.
— The notice shall specify the place, date, day and hour of the
meeting and shall contain the business to be transacted at
the meeting. The requistionists 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 working day.
— 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.
— The notice shall be signed by all the requistionists or by a
requistionists duly authorised in writing by all other
Management and Administration 15

requistionists on their behalf or by sending an electronic

request attaching therewith a scanned copy of such duly
signed requisition.
— No explanatory statement as required under section 102
need be annexed to the notice of an extraordinary general
meeting convened by the requistionists and the
requistionists may disclose the reasons for the resolution(s)
which they propose to move at the meeting.
— 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 requistionists
deposit with the Company a valid requisition for calling
an extraordinary general meeting.
— Where the meeting is not convened, the requistionists 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.
— 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.
(IV) By Tribunal
Section 98 provides that if for any reason it is impracticable to
call a meeting of a company or to hold or conduct the meeting
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:
order a meeting of the company to be called, held and conducted
in such manner as the Tribunal thinks fit; and
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.
16 Management and Administration

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. Meeting held pursuant to such order shall
be deemed to be a meeting of the company duly called, held and
conducted.
Notice of Meeting
A general meeting of a company may be called by giving not less
than 21 clear days’ notice either in writing or through electronic mode.
Notice through electronic mode shall be given in such manner as
may be prescribed.
Short notice
A general meeting may be called after giving a shorter notice also
if consent is given in writing or by electronic mode by not less than
95% of the members entitled to vote at such meeting.
Contents of Notice
Place of meeting
The notice should state the place where the general meeting is
scheduled to be held. In case of an annual general meeting, the place of
the meeting has to be either the registered office of the company or
some other place within the city, town or village in which the registered
office of the company is situated. No such restriction applies to an
extraordinary general meeting.
Day of meeting
The day and date of the meeting should be clearly stated in the
notice. In case of an annual general meeting, the day should be one
that is not a National Holiday. An extraordinary general meeting can
however be held on any day.
Time of meeting
Exact time of holding the meeting should be given in the notice.
An annual general meeting can be called during business hours only,
that is, between 9 a.m. and 6 p.m. There is no need to follow such
timings in case of an extraordinary general meeting.
Agenda
A statement of the business to be transacted at the general meeting
should be given in the notice. In case, the meeting is to transact a
special business, a explanatory statement should be attached about
such item.
Management and Administration 17

Proxy clause with reasonable prominence

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, should carry 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.
Notice through Electronic Mode
A company may give notice through electronic mode. Electronic
mode’ means any communication sent by a company through its
authorized and secured computer programme which is capable of
producing confirmation and keeping record of such communication
addressed to the person entitled to receive such communication at the
last electronic mail address provided by the member.
Conditions for notice send through e-mail are as under:
A notice may be sent through e-mail as a text or as an attachment
to e-mail or as a notification providing electronic link/ Uniform
Resource Locator (URL) for accessing such notice.
— The e-mail shall be addressed to the person entitled to receive
such e-mail as per the records of the company. The company
has to provide an advance opportunity atleast once in a
financial year, to the member to register his e-mail address
and changes therein and such request may be made by only
those members who have not got their email id recorded or
to update a fresh email id and not from the members whose
e-mail ids are already registered.
— The subject line in e-mail shall state the name of the company,
notice of the type of meeting and the date on which meeting
is scheduled.
— If notice is sent in the form of an attachment to e-mail, such
attachment shall be in the Portable Document Format (PDF)
or electronic documentation format together with a facility
for recipient for downloading relevant version of the software
for accessing such notice along with instructions for
downloading such software and alternative contact details
in case of inability of the recipient to open or read the
attachment.
— There shall be no difference in the text of the physical version
18 Management and Administration

of the notice and electronic version except in respect of mode

of dispatch of notice.
— Sending of notice via e-mail shall be subject to such option
being confirmed by the member and e-mail address being
updated in writing at least 30 days prior to dispatch of notice.
In such cases, the company shall not be under obligation to
deliver physical copy of the notice unless specifically requested
by the member in writing before the date of the meeting.
— When notice or notifications of availability of notice are sent
by e-mail, the company should ensure that it uses a system
which produces confirmation of the total number of
recipients e-mailed and a record of each recipient to whom
the notice has been sent. A copy of such record and any notices
of any failed transmissions and subsequent re-sending shall
be retained by or on behalf of the company as ‘proof of
sending’.
— The company’s obligation shall be satisfied when it transmits
the e-mail and the company will not be held responsible for a
failure in transmission beyond its control. However the
company shall, where it is aware of the failure in delivery of
the e-mail (and subsequent attempts do not rectify the
situation), revert to sending physical copy of the notice at
the member’s registered address within 72 hours of the
original attempt.
— If a member entitled to receive notice fails to provide or update
relevant e-mail address to the company, company shall not
be in default for not delivering notice via e-mail.
— Company may send e-mail through in-house facility or
authorize any third party agency providing bulk e-mail
facility.
— Notice made available on the electronic link/ URL has to be
readable, and the recipient should be able to obtain and retain
copies. The company shall give the complete URL/address of
the website and full details of how to access the document/
information.
— The notice is taken to be ‘sent’ on the date the notification is
sent. The notice must be available on the electronic link/ URL
provided from the date of notification until the conclusion of
the meeting. The failure to make notice available throughout
Management and Administration 19

the required period shall be disregarded if it is made available

for part of that period and the failure is wholly attributable
to circumstances that the company could not reasonably
have prevented or avoided.
The notice of the general meeting of the company shall be
simultaneously placed on the website of the company and on the
website as may be notified by the Central Government.
Persons entitled to receive Notice
In terms of Section 101(3), notice of every meeting of the company
must be given to:
(a) every member of the company, legal representative of any
deceased member or the assignee of an insolvent member;
(b) the auditor or auditors of the company; and
(c) every director of the company.
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.
Statement to be Annexed to Notice
In case of special business items to be transacted at a general
meeting, a statement setting out the following material facts, shall be
annexed to the notice calling the meeting:
(I)(a) the nature of concern or interest, financial or otherwise, if any,
in respect of each item of:
— every director and the manager, if any;
— every other key managerial personnel; and
— 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.
Where any item of special business to be transacted at a meeting
of the company relates to or affects any other company, the
extent of shareholding interest in that other company of every
promoter, director, manager, if any, and of every other key
20 Management and Administration

managerial personnel of the first mentioned company shall, if

the extent of such shareholding is not less than 2% of the paid-
up share capital of that company, also be set out in the
statement.
(II) Where any item of business refers to any document, which is
to be considered at the meeting, the time and place where such
document can be inspected.
Where as a result of the non-disclosure or insufficient disclosure in
any statement referred as above, being made by a promoter, director,
manager, if any, or other key managerial personnel, any benefit which
accrues to such promoter, director, manager or other key managerial
personnel or their relatives, either directly or indirectly, the promoter,
director, manager or other key managerial personnel, as the case may
be, shall hold such benefit in trust for the company, and shall, without
prejudice to any other action being taken against him under 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.
Quorum for Meetings
Quorum refers to the minimum number of members required to
constitute a valid meeting. Following are the minimum numbers
provided in section 103, for various categories of companies. However
the Articles of Association of the company may provide for a higher
number.
(a) Public company:
— 5 members personally present if the number of members as
on the date of meeting is not more than 1000;
— 15 members personally present if the number of members
as on the date of meeting is more than 1000 but up to
5000;
— 30 members personally present if the number of members
as on the date of the meeting exceeds 5000.
(b) Private company:
2 members personally present, shall be the quorum for a meeting
of the company.
Absence of quorum
If the quorum is not present within half-an-hour from the time
appointed for holding a meeting of the company:
(a) the meeting shall stand adjourned to the same day in the next
Management and Administration 21

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, shall stand cancelled.
Adjourned meeting
In case of an adjourned meeting or of a change of day, time or
place of meeting, the company shall give not less than 3 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.
If at the adjourned meeting also, a quorum is not present within
half-an-hour from the time appointed for holding meeting, the
members present shall be the quorum.
Chairman of Meetings
Unless the articles of the company otherwise provide, the members
personally present at the meeting shall elect one of themselves to be
the Chairman thereof on a show of hands.
If a poll is demanded on the election of the Chairman, it shall be
taken forthwith in accordance with the provisions of this Act and the
Chairman elected on a show of hands shall continue to be the Chairman
of the meeting until some other person is elected as Chairman as a
result of the poll, and such other person shall be the Chairman for the
rest of the meeting.
Proxies
Appointment of a proxy is an important right of a member of the
company. The Act contains elaborate provisions regarding exercise of
this right by a member.
Any member of a company 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.
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, should carry 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. Hence a company
not having a share capital can abstain from complying with this
provision by incorporating necessary clause in its articles of association.
22 Management and Administration

A proxy shall not have the right to speak at the meeting. A proxy
shall be entitled to vote only on a poll.
A member of a company registered under section 8 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 appointed as proxy shall not act as proxy on behalf of
more than fifty members and members holding in the aggregate more
than ten percent of the total share capital of the company carrying
voting rights.
The instrument appointing the proxy must be deposited with the
company, 48 hours before the meeting. Any provision contained in
the articles, requiring a longer period than 48 hours shall have effect
as if a period of 48 hours had been specified.
The instrument appointing a proxy must be in Form No.
MGT. 11. It needs to be in writing and signed by the appointer or his
attorney duly authorised in writing. If the appointer is a body corporate,
the instrument should be under its seal or be signed by an officer or an
attorney duly authorised by the body corporate. For execution of proxy,
the Articles of Association of a company can not specify any special
requirement to be complied with.
Every member entitled to vote at a meeting of the company, or on
any resolution to be moved thereat, is entitled to inspect the proxies
lodged with the company, if at least 3 days notice is given to the
company. Such inspection can be taken during the period beginning
24 hours before the time fixed for the commencement of the meeting,
during the business hours of the company, and ending with the
conclusion of the meeting.
Restriction on Voting Rights
A member shall not exercise any voting right in respect of any
shares registered in his name on which any calls or other sums
presently payable by him have not been paid or on which company
has exercised any right or lien. No member can be prohibited from
exercising his voting right on any other ground.
Voting by Show of Hands
At any general meeting, a resolution put to the vote of the meeting
shall in the first instance be decided on a show of hands. A declaration
by the Chairman of the meeting of the passing of a resolution or
otherwise, by show of hands shall be conclusive evidence of the fact of
Management and Administration 23

passing of such resolution or otherwise, unless a poll is demanded before

or immediately on declaration by Chairman.
Voting through Electronic Means
Every listed company or a company having five hundred or more
shareholders may provide to its members facility to exercise their right
to vote at general meetings by electronic means. a member may
exercise his right to vote at any general meeting by electronic means
and company may pass any resolution by electronic voting system .
It may be noted that ‘voting by electronic means’ or ‘electronic
voting system’ means a ‘secured system’ based process of display of
electronic ballots, recording of votes of the members and the number
of votes polled in favour or against, such that the entire voting exercised
by way of electronic means gets registered and counted in an electronic
registry in a centralized server with adequate ‘cyber security’.
‘Secured system’ means computer hardware, software, and
procedure that –
(a) are reasonably secure from unauthorized access and misuse;
(b) provide a reasonable level of reliability and correct operation;
(c) are reasonably suited to performing the intended functions;
and
(d) adhere to generally accepted security procedures.
“Cyber security ” means protecting information, equipment,
devices, computer, computer resource, communication device and
information stored therein from unauthorized access, use, disclosures,
disruption, modification or destruction.
A company which opts to provide the facility to its members to
exercise their votes at any general meeting by electronic voting system
shall follow the following procedure:
— The notices of the meeting shall be sent to all the members,
auditors of the company, or directors either - (a) by registered
post or speed post ; or (b) through electronic means like registered
e-mail id; (c) through courier service.
— The notice shall also be placed on the website of the company,
if any and of the agency forthwith after it is sent to the
members.
— The notice of the meeting shall clearly mention that the business
24 Management and Administration

may be transacted through electronic voting system and the

company is providing facility for voting by electronic means.
— The notice shall clearly indicate the process and manner for
voting by electronic means and time schedule including the
time period during which the votes may be cast, address of
places for casting votes duly sorted in order of name of states
or union territories, where the members can cast their votes
electronically.
— The company shall cause an advertisement to be published,
not less than five days before the date of beginning of the voting
period, 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 in an English
newspaper having a wide circulation in that district, about
having sent the notice of the meeting and specifying therein,
inter alia, the following matters:
— statement that the business may be transacted by electronic
voting;
— the date of completion of sending of notices;
— the date and time of commencement of voting through
electronic means;
— the date and time of end of voting through electronic means;
— the statement that voting shall not be allowed beyond the
said date and time;
— website address of the company and agency, if any, where
notice of the meeting is displayed; and
— contact details of the person responsible to address the
grievances connected with the electronic voting;
— The e-voting shall remain open for not less than one day and
not more than three days. Provided that in all such cases, such
voting period shall be completed three days prior to the date of
the general meeting;
— During the e-voting period, shareholders of the company,
holding shares either in physical form or in dematerialized form,
as on the record date, may cast their vote electronically. Once
the vote on a resolution is cast by the shareholder, he shall not
be allowed to change it subsequently
Management and Administration 25

— At the end of the voting period, the portal where votes are cast
shall forthwith be blocked.
— The Board of directors shall appoint one scrutinizer, who may
be chartered Accountant in practice, Cost Accountant in
practice, or Company Secretary in practice or an advocate,
but who is not in employment of the company and is a person
of repute who, in the opinion of the Board can scrutinize the e-
voting process in a fair and transparent manner. It may be
noted that the scrutinizer so appointed may take assistance
of a person who is not in employment of the company and
who is well-versed with the e-voting system.
— The scrutinizer shall be willing to be appointed and be available
for the purpose of ascertaining the requisite majority.
— The scrutinizer shall, within a period of not exceeding three
working days from the date of conclusion of e-voting period,
unblock the votes in the presence of at least two witnesses and
make a scrutinizer’s report of the votes cast in favour or against,
if any, forthwith to the Chairman.
— The scrutinizer shall maintain a register either manually or
electronically to record the consent or otherwise, received,
mentioning the particulars of name, address, folio number or
client ID of the shareholders, number of shares held by them,
nominal value of such shares and whether the shares have
differential voting rights.
— The register and all other papers relating to electronic voting
shall remain in the safe custody of the scrutinizer till the
chairman considers, approves and signs the minutes. Thereafter,
the scrutinizer shall return the register and other related papers
to the company.
— The results declared along with the scrutinizer’s report shall be
placed on the website of the company and on the website of
the agency within two days of passing of the resolution at the
relevant general meeting of members.
— Subject to receipt of sufficient votes, the resolution shall be
deemed to be passed on the date of the relevant general meeting
of members.
Demand for Poll
Before or on the declaration of the result of the voting on any
resolution on show of hands, a poll may be ordered to be taken by the
26 Management and Administration

Chairman of the meeting on his own motion, and shall be ordered to

be taken by him on a demand made in that behalf by the following
person(s):
(a) in the case a company having a share capital: by the members
present in person or by proxy, where allowed, and having not
less than one-tenth of the total voting power or holding shares
on which an aggregate sum of not less than Rs.5,00,000/- or
such higher amount as may be prescribed, has been paid-up;
and
(b) in the case of any other company: by any member or members
present in person or by proxy, where allowed, and having not
less than one-tenth of the total voting power.
The demand for a poll may be withdrawn at any time by the
persons who made the demand.
Time for taking poll and declaring the result
A poll shall be taken forthwith, if it is demanded for adjournment
of the meeting or appointment of Chairman of the meeting.
A poll shall be taken at such time, not being later than 48 hours
from the time when the demand was made on any other question.
Where a poll is to be taken, the Chairman of the meeting shall
appoint such number of persons, as he deems necessary, to scrutinise
the poll process and votes given on the poll and to report thereon to
him in the manner as may be prescribed.
The result of the poll shall be deemed to be the decision of the meeting
on the resolution on which the poll was taken.
Manner the Chairman of Meeting get the poll process
scrutinised and Report thereon
Rule 21 provides that the chairman of a meeting shall ensure that –
— The Scrutinizers are provided with the Register of Members,
specimen signatures of the members, Attendance Register and
Register of Proxies.
— The Scrutinizers are provided with all the documents received
by the Company.
— The Scrutinizers initial the 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
Management and Administration 27

named holder or in his absence to the joint holder attending

the meeting as appearing in the chronological order in the folio.
The Polling paper shall be in Form No. MGT.12.
— The Scrutinizers keep a record of the polling papers issued.
— The Scrutinizers lock and seal an empty polling box in the
presence of the members and proxies.
— The Scrutinizers open the Polling box in the presence of two
persons as witnesses after the voting process is over.
— In case of ambiguity about the validity of a proxy, the
Scrutinizers decide the validity in consultation with the
Chairman.
— The Scrutinizers shall ensure that if a member who has
appointed a proxy has voted in person, the proxy’s vote shall
be disregarded.
— The Scrutinizers count the votes cast on poll and prepare a
report thereon addressed to the Chairman.
— Where voting is conducted by electronic means, the company
shall provide all the necessary support, technical and otherwise,
to the Scrutinizers in orderly conduct of the voting and
counting the result thereof.
— The Scrutinizers’ report state total votes cast, valid votes, votes
in favour and against the resolution including the details of
invalid polling papers and votes comprised therein.
— The Scrutinizers submit the Report to the Chairman who shall
counter-sign the same.
— The Chairman declare the result of Voting on poll. The result
may either be announced by him or a person authorized by
him in writing.
The scrutinizer/s appointed for the poll, shall submit a report to
the Chairman of the meeting in Form No. MGT No. 13. The report
shall be signed by the scrutinizer / all the scrutinizers, in case there is
more than one scrutinizer, and be submitted by them to the Chairman
of the meeting within 7 days from the date the poll is taken.
Postal Ballot
As per section 2(65) “postal ballot” means voting by post or
through any electronic mode.
28 Management and Administration

The Act provides that a company shall in respect of such items of

business as the Central Government by notification declare shall be
transacted only by postal ballot.
Rule 22 provides as under with regard to conducting business
through postal ballot.
The rules provide that 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;
(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
(j) Giving loans or extending guarantee or providing security in
excess of the limit prescribed under sub-section (3) of
section 186;
Section 110(1)(b) further provides that a company may pass any
item of business, other than ordinary business and any business in
respect of which director or auditors have a right to be heard.
Management and Administration 29

Procedure for conducting business through postal ballot

(1) 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 therefor and requesting them to send their assent or
dissent in writing on a postal ballot or by electronic means
within a period of thirty days from the date of dispatch of the
notice.
(2) 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.
(3) 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 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:
— a statement to the effect that the business is to be transacted
by postal ballot which includes voting by electronic means;
— the date of completion of dispatch of notices;
— the date of commencement of voting;
— the date of end of voting;
— 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;
— 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
— contact details of the person responsible to address the
grievances connected with the voting by postal ballot
including voting by electronic means.
(4) The notice of the postal ballot shall also be placed on the website
of the company forthwith after the notice is sent to the
30 Management and Administration

members and such notice shall remain on such website till the
last date for receipt of the postal ballots from the members.
(5) 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. (6) The scrutinizer shall be willing to
be appointed and be available for the purpose of ascertaining
the requisite majority.
(7) If a resolution is assented to by the requisite majority of the
shareholders by means of postal ballot including voting by
electronic means, it shall be deemed to have been duly passed
at a general meeting convened in that behalf.
(8) Postal ballot received back from the shareholders shall be kept
in the safe custody of the scrutinizer. 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.
(9) 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;
(10) The scrutinizer shall maintain a register either manually or
electronically to record their assent or dissent received,
mentioning the particulars of name, address, folio 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;
(11) 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. Thereafter, the scrutinizer shall return
the ballot papers and other related papers/register to the
company who shall preserve such ballot papers and other
related papers/register safely;
(12) 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;
(13) The results shall be declared by placing it, along with the
scrutinizer’s report, on the website of the company;
Management and Administration 31

(14) The resolution shall be deemed to be passed on the date of

declaration of its result;
(15) The provisions regarding voting by electronic means shall apply,
as far as applicable, mutatis mutandis in respect of the voting
by electronic means.
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. In case of
One Person Company and other companies having members upto fifty
are not required to transact any business through postal ballot.
Circulation of Members’ Resolution
As per Section 111, a company shall, on requisition in writing of
certain number of members, give notice to members of any proposed
resolution intended to be moved in the meeting or circulate any
statement with respect to matters referred in proposed resolution. The
company shall be bound to give notice of resolution only if the
requisition is deposited not less than six weeks before the meeting. In
case of other requisition not less than 2 weeks before the meeting. The
statement need not be circulated if the Central Government declares
that the right conferred is being abused to secure needless publicity for
defamatory matters. If default is made the company and every officer
of the company shall be punishable with fine.
Representation of President and Governors in Meetings
Section 112 of the Act provides that 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
of the company. The person so appointed shall be deemed to be a
members and have the same rights including the right vote by proxy
or postal ballot, as the President or Governor could exercise as a member
of the company..
Representation of Corporations at Meeting of Companies
and of Creditors
In terms of Section 113, 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.
32 Management and Administration

Ordinary and Special Resolutions

Section 114 provides with regard to Ordinary and Special
Resolution
Ordinary Resolution
A resolution shall be an ordinary resolution if the notice has been
duly given and it is required to be passed by the votes cast, in favour of
the resolution, including the casting vote, if any, of the Chairman,
exceed the votes, if any, cast against the resolution.
Special Resolution
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
(c) the votes cast in favour of the resolution, are required to be not
less than 3 times the number of the votes, if any, cast against
the resolution.
Resolutions requiring Special Notice
Section 115 provides that where, by any provision contained in
this Act or in the articles of a company, special notice is required of
any resolution, 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 total voting power or holding shares on which such
aggregate sum not exceeding Rs.5,00,000/- as may be prescribed has
been paid-up and the company shall give its members notice of the
resolution in the following manner as prescribed in Rules.
Procedure for special notice:
— 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
five lakh rupees has been paid up on the date of the notice.
— Such notice shall be sent by members to the company not earlier
than three months but at least 14 days before the date of the
meeting at which the resolution is to be moved, exclusive of
the day on which the notice is given and the day of the meeting.
Management and Administration 33

— 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.
— 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. Such notice shall also be posted on the
website, if any, of the Company. Such 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
As per Section 116 where a resolution is passed at an adjourned
meeting of a company; or the holders of any class of shares in a
company; or the Board of Directors, the resolution shall be treated as
passed on the day it was actually passed and not on any earlier date.
Resolutions and Agreements to be filed with the Registrar
Section 117 provides that a copy of every resolution and an
agreement in respect of matters specified therein together with a
explanatory statement shall be filed in Form No. MGT.14 with the
Registrar within thirty days of its passing. The Registrar shall register
the same and in case of any default, a company and every officer who
is in default including the liquidator shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to five
lakh rupees.
Resolutions and agreements to be filed with the Registrar are as under:
(a) special resolutions;
(b) 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;
(c) 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;
34 Management and Administration

(d) 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;
(e) resolutions passed by a company according consent to the
exercise by its Board of Directors of any of the powers under
clause (a) and clause (c) of sub-section (1) of section 180;
(f) resolutions requiring a company to be wound up voluntarily
passed in pursuance of section 304;
(g) resolutions passed in pursuance of sub-section (3) of
section 179; and
(h) any other resolution or agreement as may be prescribed and
placed in the public domain.
Maintenance of Minutes of Meetings
Section 118 provides that every company shall prepare, sign and
keep minutes of proceedings of every general meeting, including the
meeting called by the requisitionists and all proceedings of meeting of
any class of share holders or creditors or Board of Directors or
committee of the Board and also resolution passed by postal ballot
within thirty days of the conclusion of every such meeting concerned.
In case of meeting of Board of Directors or of a committee of Board,
the minutes shall contain name of the directors present and also name
of dissenting director or a director who has not concurred the
resolution. The chairman shall exercise his absolute discretion in respect
of inclusion or non-inclusion of the matters which is regarded as
defamatory of any person, irrelevant or detrimental to company’s
interest in the minutes. Minutes kept shall be evidence of the proceedings
recorded in a meeting.
As per section 118(10) every company shall observe Secretarial
Standards with respect to General and Board Meetings specified by the
Institute of Company Secretaries of India constituted under section 3 of the
Company Secretaries Act, 1980, and approved as such by the Central
Government.
Rule 25 contains provisions with regards to minutes of meetings.
A distinct minute book shall be maintained for each type of meeting
namely:
(i) general meetings of the members;
Management and Administration 35

(ii) meetings of the creditors;

(iii) meetings of the Board; and
(iv) meetings of the committees of the Board.
It may be noted that 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. In no case the minutes of
proceedings of a meeting or a resolution passed by postal ballot shall
be pasted to any such book.
In case of every resolution passed by postal ballot, a brief report on
the postal ballot conducted 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
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.
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 by:
— 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;
— 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 authorized by
the Board for the purpose;
— 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.
Minute books of general meetings shall be kept at the registered
office of the company. Minutes of the Board and committee meetings
shall be kept at the registered Office or at such other place as may be
approved by the Board.
36 Management and Administration

Minutes books shall be preserved permanently and kept in the

custody of the company secretary of the company or any director
duly authorized by the Board for the purpose and shall be kept in the
registered office or such place as the members may decide by passing
special resolution pursuant to requirement of section 88 read with
section 94 of the Act.

Inspection of Minute book of General Meeting

In terms of Section 119, the minute’s book of general meetings

shall be kept at the registered office of a company and shall be open for
inspection to members during business hours without any charge
subject to such restrictions as the company may impose. A member
shall be entitled for a copy of any minutes subject to payment of fees
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.
The copy should be made available to him within seven days of his
making request.

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 the company but not exceeding
a sum of ten rupees for each page or part of any page. 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 of immediately
preceding three financial years shall be entitled to be furnished, with
the same free of cost.

Where the company refuses inspection or fails to furnish a copy of

minutes within specified time, the Tribunal is empowered to direct
immediate inspection or sending a copy of minutes in the matter and
the company and every officer of the company shall be punishable
with fine.

Maintenance and Inspection of Document in Electronic

Form

According to section 120 the documents, records, registers, minutes

may be kept and inspected in electronic form.

According to Rule 27, every listed company or a company having

not less than one thousand share holders, debenture holders and other
security holders, shall maintain its records, as required to be maintained
under the Act or rules made there under, in electronic form.
Management and Administration 37

The records in electronic form shall be maintained in such manner

as the Board of directors of the company may think fit, provided that-
— the records are maintained in the same formats and in
accordance with all other requirements as provided in the Act
or the rules made there under;
— the information as required under the provisions of the Act or
the rules made there under should be adequately recorded for
future reference;
— the records must be capable of being readable, retrievable and
reproducible in printed form;
— the records are capable of being dated and signed digitally
wherever it is required under the provisions of the Act or the
rules made there under;
— the records, once dated and signed digitally, shall not be capable
of being edited or altered;
— the records shall be capable of being updated, according to the
provisions of the Act or the rules made there under, and the
date of updation shall be capable of being recorded on every
updation;
it may be noted that the term “records” means any register, index,
agreement, memorandum, minutes or any other document required
by the Act or the rules made there under to be kept by a company.
Security of Records maintained in electronic form
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-
— provide adequate protection against unauthorized access,
alteration or tampering of records;
— ensure against loss of the records as a result of damage to, or
failure of the media on which the records are maintained;
— ensure that the signatory of electronic records does not
repudiate the signed record as not genuine;
— ensure that computer systems, software and hardware are
38 Management and Administration

adequately secured and validated to ensure their accuracy,

reliability and consistent intended performance;
— ensure that the computer systems can discern invalid and
altered records;
— ensure that records are accurate, accessible, and capable of being
reproduced for reference later;
— ensure that the records are at all times capable of being retrieved
to a readable and printable form;
— ensure that records are kept in a non-rewriteable and non-
erasable format like pdf. version or some other version which
cannot be altered or tampered;
— ensure that at least two backups, 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;
— limit the access to the records to the managing director,
company secretary or any other director or officer as may be
authorized by the Board in this behalf;
— ensure that any reproduction of non-electronic original records
in electronic form is complete, authentic, true and legible when
retrieved;
— arrange and index the records in a way that permits easy
location, access and retrieval of any particular record; and
— take necessary steps to ensure security, integrity and
confidentiality of records.
Inspection and Copies of Records maintained in Electronic
Form
Where a company maintains its records in electronic form, any
duty imposed by the Act or rules made there under to make those
records available for inspection or to provide copies of the whole or a
part of those records, shall be construed as a duty to make the records
available for inspection in electronic form or to provide copies of those
records containing a clear reproduction of the whole or part thereof,
as the case may be.
Penalty
If any default is made in compliance with any of the provisions of
this rule, the company and every officers or such other person who is
Management and Administration 39

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.
Report on Annual General Meeting
In terms of section 121(1) every listed public company required to
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 annual
general meeting along with the prescribed fee.
According to Rule 31, the report shall be prepared in the following
manner:
(a) A 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.
(c) Such report shall contain the details in respect of the following:
— The day, date, hour and venue of the annual general meeting.
— Confirmation with respect to appointment of Chairman
of the meeting.
— Number of members attending the meeting.
— Confirmation of quorum.
— Confirmation with respect to compliance of the Act and
the Rules, secretarial standards made there under with
respect to calling, convening and conducting the meeting.
— Business transacted at the meeting and result thereof.
— Particulars with respect to any adjournment, postponement
of meeting, change in venue.
— Any other points relevant for inclusion in the Report.
(d) Such Report shall contain fair and correct summary of the
proceedings of the meeting.