Company
Company
Company
Introduction
There is no definition of the term “meeting” per se in the Companies Act, 2013; in plain
language, a company can be defined as two or more individuals coming together, gathering,
or assembling either by prior notice or unanimous decision for discussing and carrying out
some legitimate activities related to business. A company meeting can be said to be a
concurrence or meeting of a quorum of members to carry out ordinary or special business and
take decisions on important matters of the company.
In the case of Sharp v. Dawes (1971), a meeting is defined as “an assembly of people for a
lawful purpose” or “the coming together of at least two persons for any lawful purpose.”
Further, according to P.K. Ghosh, “any gathering, assembly, or coming together of two or
more persons for the transaction of some lawful business of common concern is called
meeting.”
Meetings are quite important in our everyday social life. Any organization, whether it be a
club, association, or business, must use this democratic procedure for making decisions.
Moreover, group talks are crucial for introducing changes to the business, making decisions,
and fostering better relationships between employers and employees. various sorts of
gatherings have various goals and procedures. We go into great depth on each of them in the
next paragraphs. Additionally, the following are some important guidelines on the
significance of conducting business meetings: According to the Companies Act of 1956,
meetings are an essential component of running a business. With the approval of the
company's members, or shareholders, o make the final decision about the actions done by the
board of directors. Attending meetings gives shareholders the opportunity to discuss various
issues and learn about the company's latest activities and policies. When it comes to calling,
holding, and conducting meetings, there are a number of requirements that must be met.
Participants
The first and foremost requirement of a meeting is to have participants. In the case of a
private meeting, only the individuals having the authority to attend the meeting, like the
members of the organisation, the committee, the sub-committee and the people who have
received an invitation, can participate. At times, in the event of the non-availability of such a
person, he has the right to send his representative or proxy on their behalf. Whereas, in the
case of public meetings, the general public has the authority to attend them.
Chairman
For a valid company meeting, there has to be a chairman at every meeting who has the
authority and duty to carry on the meeting effectively.
Secretary
The secretary of the organisation, committee, sub-committee etc., is entrusted with several
duties right from the beginning to the very end of the meeting. He plays a crucial role in
carrying out such meetings.
Invitees
Apart from those who have the authority to attend the meeting, there are some people who
are invited, for instance, the press reporters.
Material elements
Another major component of the meeting involves material elements. The material elements
include:
Types of meetings
a. Public meetings
These are the meetings that consider matters of public concern and to which all members of
the public have access, subject to physical limitations of the place where the meeting is held
or conditions imposed by any law.
b. Private meetings
These are meetings attended by people who have a specific right to attend. For example,
Committees members of a welfare group or of a registered company. Therefore, company
meetings fall under this category.
Statutory Meeting
Annual General Meeting
Extra ordinary General Meeting
Class Meeting
Meeting of Debenture Holders
Meeting of the Board of Directors
Meeting of Creditors
Meeting of Creditors and Contributories.
1. Statutory meeting
Every public company limited by shares and every company limited by guarantee and having
a share capital, must within a period of not less than one month and not more than 3 months
from the date at which the company is entitled to commence business, hold a general meeting
of the members which is to be called the Statutory Meeting. This meeting is held once in the
lifetime of a company.
In this meeting, the members are to discuss a report by the directors, known as the statutory
report, which contains particulars relating to the formation of the company.
General meeting of a company means a meeting of its members for specified purposes.
Public companies must hold an annual general meeting within or by the end of the six months
of its financial year. Private companies are not required to hold an annual general meeting,
unless they are a traded company (a corporation whose shareholders have a claim to part of
the company’s assets and profits) or their articles require it.
Every company must in each year hold, in addition to any other meeting, AGM. The notice
conveying the meeting must specify that it is a notice of the AGM. Every AGM must be held
during business hours and on working days.
The registrar may, for any special reason, extend the time for holding any AGM by any given
period; but no extension of time is granted for holding the first AGM.
There should be at least one AGM per year and as many meetings as there are years.
The normal business transacted at an AGM depends upon the articles. The article provides
that the ordinary business of such a meeting shall be: –
Any business which is not defined as “ordinary business” of an AGM is known as special
business.
Extra ordinary meetings can be convened either by the directors whenever they think fit or on
the requisition of members of the company.
Where directors think fit to convene a meeting, they do so by resolution passed at a duly
convened and constituted meeting of the Board. Note that everything transacted at an extra
ordinary meeting shall be deemed as special.
(b) By the requisitionists themselves on the failure of Board of Directors to call the meeting
a) On its own: The Board of Directors may call an extra ordinary meeting whenever some
special business is to be transacted which in the opinion of the Board of Directors, cannot be
postponed till the next AGM.
b) On requisition of members: – The requisite number of members of a company may ask for
an extra ordinary general meeting to be held. The Board of Directors shall proceed to call
such a meeting. The requisition for such a meeting by the members shall be signed:
(i) In case of a company with share capital holders of not less than 10% of the paid-up capital
of the company having a right of voting in regard to the matter of acquisition.
(ii) In case of a company with no share capital, by members representing not less than one
tenth of the total voting power in regard to the matter of requisition.
A requisition signed by one of the joint owners of the shares has the same force and effects as
if it has been signed by all of them.
The requisition shall set out all matters for consideration on which the meeting is called and
shall be deposited in the registered office of the company. The directors are required to
convene such a meeting within 21 days from the date of deposit of the requisition, but if they
fail to do so, the requisitionists themselves may convene the meetings, as nearly as possible
in the manner required by the company’s articles for convening the meeting.
The company must compensate the requisitionists for any reasonable expenses incurred and
may repay out of sums payable by the company to such directors as were in default.
Note:
Unless the meeting is called to pass a special resolution, the requisite notice for an extra
ordinary general meeting is 14 days (Saturdays, Sundays, Public holidays are not included).
In case of unlimited company, 7 days’ notice is required, but where special resolution is
required, 21 days.
4. Class meeting
These meetings are held by a particular class of shareholders. The purpose of this meeting is
effecting variation in the Articles in respect of their rights and privileges or for conversion of
one class into another.
The provision for variation must be contained in the Memorandum or Articles. However, this
variation must not be prohibited by the terms of issue of shares of that particular class. Such
resolutions are to be passed by three-fourth majority of the members of that class.
Board meeting must be held once in every three calendar months and at least four times in
every year. This provision may be exempted by the central government. Notice of board
meeting shall be given in writing to every director for the time being in Kenya and at his
usual address in Kenya.
7. Meeting of creditors
These meetings are called when the company proposes to make a scheme of arrangement
with its creditors. The court may order a meeting of the creditors or a class of creditors on the
application of the company or of liquidator in case of a company being wound-up.
Such a meeting is held and conducted in such a manner as the court directs. If the
arrangement is passed by a majority of three-fourth in value of creditors and the same is
sanctioned by the court, it is binding on all the creditors.
1. Notice
Notice prior to the meeting is the most important prerequisite for any meeting. Section 171
lays down that a notice is to be served to the joining members of a meeting twenty one days
prior to such meeting. However the same can be reduced at the admissal of the members to
such modification. Every notice by virtue of Section 172 of the act shall specify the itinerary
of the meeting including the agenda for the meeting. These notices shall be served in writing
to all the members of the company at their residences. Also in case any member’s death or
insolvency, the same shall be addressed to the person entitled to such member’s shares.
Section 173 requires such notices to be annexed with an explanatory note concerning the
‘special’ business to be discussed in the meeting. However, in case a member is
‘accidentally’ omitted this serving of notice, the meeting shall not get invalidated ipso facto.
3. Proxies
Every member by virtue of section 176 of the act is empowered to appoint any other person
as his proxy for the meeting. However, such proxy’s powers are limited to voting on polls.
He at no instance can speak his opinion at the meeting. Also, such empowerment is
prohibited in case of companies with no share capital. Likewise, members of private
companies are limited to use only one proxy per occasion. The member appointing any proxy
has to provide a duly signed written proxy authorizing the proxy to vote in his place and be
deposited to the company before forty-eight business hours of such meeting.
4. Voting
In case of companies with share capital, any member or proxy present in person can ask for
voting on a particular motion; which the same section 179 lays that in companies with no
share capital, one member or a proxy in presence of less than total seven members and two
members or a proxy in presence of more than total seven members can ask for the voting
initiation. After such demand is made under section 179, there shall be a polling procedure by
show of hands by virtue of section 177. The Chairman shall then state conclusively if the
resolution was to be carried out. The same is to be noted down in the minutes’ book of the
company as per section 178. However, section 183 lays down that there is no hard and fast
rule for the members or the proxies to use their multiple votes in the same manner. Later,
section 180 lays down that in case of a decision on adjournment the polling shall be
conducted instantaneously once asked for, while in any other cases such polling shall be
conducted within forty-eight hours of such demand. Section 181 and 182 on the other hand
put restrictions on these polling rights of the members. Through the former, the company can
restrict the defaulter members from voting who are yet to pay on their shares or when their
shares are under a right of lien by the company; while through the latter the company can
restrict the members who did not hold shares preceding the voting or any other ground not
specified in the former section. To scrutinize the votes, under section 184, the chairman is
empowered to appoint two scrutineers amongst whom one has to be the member present at
the voting.
However, an exception to this usual procedure is section 186 where instead of the board, the
tribunal calls for the meeting. As empowered by Section 186 and solidified by cases like ‘R.
Rangachari vs. S. Suppiah and Ors. in situations where it is ‘impracticable’ for the board to
call for meetings other than annual general meetings, the National Company Law Tribunal
has the power to call for such meetings either at its own, or on the requisition of a director or
even a single eligible member to ask for a requisition. Such meetings will also have a status
similar to those held on requisitions by members of the board.