207 s. 92claonline.in/guide_companies_act_2013_chapter4.pdf · 207 (e) its promoters, ... for...

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(e) its promoters, directors, key managerial personnel along with changes thereinsince the close of the previous financial year ;

(f) meetings of members or a class thereof, Board and its various committeesalong with details ;

(g) remuneration of directors and key managerial personnel ;

(h) penalty or punishment imposed on the company, its directors or officersand details of compounding of offences and appeals made against suchpenalty or punishment ;

(i) matters relating to certification of compliances, disclosures as may beprescribed ;

(j) details, as may be prescribed, in respect of shares held by or on behalf ofthe foreign institutional investors indicating their names, addresses, countriesof incorporation, registration and percentage of shareholding held by them; and

(k) such other matters as may be prescribed,

and signed by a director and the company secretary, or where there is no companysecretary, by a company secretary in practice :

Provided that in relation to one person company and small company, the annualreturn shall be signed by the company secretary, or where there is no companysecretary, by the director of the company.

(2) 1[The annual return, filed by a listed company or, by a company having suchpaid-up capital or turnover as may be prescribed], shall be certified by a companysecretary in practice in the prescribed form, stating that the annual return disclosesthe facts correctly and adequately and that the company has complied with all theprovisions of this Act.

(3) An extract of the annual return in such form as may be prescribed shall formpart of the Board’s Report.

(4) Every company shall, file with the Registrar a copy of the annual return, withinsixty days from the date on which the annual general meeting is held or where noannual general meeting is held in any year within sixty days from the date on whichthe annual general meeting should have been held together with the statementspecifying the reasons for not holding the annual general meeting, with such fees oradditional fees as may be prescribed, within the time as specified, under section 403.

(5) If a company fails to file its annual return under sub-section (4), before the

1. Substituted for “The annual return, filed by a listed company or, by a company having such paid-up capital and turnover as may be prescribed” by the Companies (Removal of Difficulties) Order,2014 vide SO 1177(E) dated 29th April 2014 [as corrected by Corrigendum No. SO 1406(E) dated27th May 2014] w.e.f. 29.04.2014.

S. 92CH. VII – MANAGEMENT AND ADMINISTRATION

GUIDE TO COMPANIES ACT, 2013 208

expiry of the period specified under section 403 with additional fees, the companyshall be punishable with fine which shall not be less than fifty thousand rupees butwhich may extend to five lakh rupees and every officer of the company who is indefault shall be punishable with imprisonment for a term which may extend to sixmonths or with fine which shall not be less than fifty thousand rupees but whichmay extend to five lakh rupees, or with both.

(6) If a company secretary in practice certifies the annual return otherwise than inconformity with the requirements of this section or the rules made thereunder, heshall be punishable with fine which shall not be less than fifty thousand rupees butwhich may extend to five lakh rupees.]

GUIDE NOTES

Analogous law

This section corresponds to section 159 (Annual return to be made by companyhaving share capital), section 160 (Annual return to be made by company nothaving share capital), section 161 (Further provisions regarding annual return andcertificate to be annexed thereto) and section 162 (Penalty and interpretation) andSchedule V (Annual Return) of the 1956 Act.

Overview

This section imposes an obligation on all types of companies, whether having sharecapital or not to file annual return. The annual return shall contain the particulars asthey stood on the close of the financial year and not the date of annual generalmeeting as provided under 1956 Act. Further full annual return is required to be filedevery year unlike provisions of section 159(1) of the 1956 Act which provided forfiling full annual return once in 5 years and changes in between.

Additional information to be provided in the annual return : In addition to theinformation required to be specified in the annual return under section 159 of the1956 Act, certain additional information has now been specified which will list outin the annual return such as principal business activities, particulars of holding,subsidiary and associate companies, its shares, debentures and other securities,members, promoters, key managerial personnel along with changes therein, penaltyor punishment imposed on the company directors, appeals made against such penaltyor punishment, details of shares held by or on behalf of foreign institutional investors,etc.

Extract of annual return : The extracts of the annual return shall form part of theBoard’s report instead of balance sheet as provided under 1956 Act.

Signing and certification of annual return : Annual return is required to be signedby one director instead of two directors as provided under 1956 Act along withcompany Secretary and where there is no company secretary by a company secretaryin whole-time practice.

In case of listed company (irrespective of paid up share capital or turnover) or by a

S. 92

209

company having paid up share capital of ten crore rupees or more or turnover offifty crore rupees or more, the annual return shall be certified by a company secretaryin practice stating that the annual return discloses the facts correctly and adequatelyand that the company has complied with all the provisions of this Act. Thus the 2013Act extends the requirement of certification of annual return by a practicing companysecretary to unlisted companies as well having paid up share capital of ten crorerupees or turnover of fifty crore or more. Under the 1956 Act, it was only listedcompanies which was required to get annual return certified by a secretary in wholetime practice.

In relation to one person company and small company, the annual return shall besigned by the company secretary, or where there is no company secretary, by thedirector of the company.

If a company secretary in practice certifies the annual return otherwise than inconformity with the requirements of this section or the rules made thereunder, heshall be punishable with fine which shall not be less than fifty thousand rupees butwhich may extend to five lakh rupees [sub section (6)]

Filing of annual return with the Registrar : Every company shall, file with theRegistrar a copy of the annual return, within sixty days from the date on which theannual general meeting is held or where no annual general meeting is held in anyyear within sixty days from the date on which the annual general meeting shouldhave been held together with the statement specifying the reasons for not holdingthe annual general meeting, with such fees or additional fees as may be prescribed[sub-section (4)].

The Companies (Management and Administration) Rules, 2014

Annual Return : Every company shall prepare its annual return in Form No. MGT.7.

Certification : The annual return, filed by a listed company or a company havingpaid up share capital of ten crore rupees or more or turnover of fifty crore rupees ormore, shall be certified by a Company Secretary in practice and the certificate shallbe in Form No. MGT.8. [rule 11]

Extract of annual return : The extract of the annual return to be attached with theBoard’s Report shall be in Form No. MGT.9. [rule 12]

Secretarial Standard on Board meetings [SS-1] :

The Annual Report and Annual Return of a company shall disclose the number anddates of Meetings of the Board and Committees held during the financial yearindicating the number of Meetings attended by each Director [clause 9, SS-1]

Circulars and Clarifications

Certification of annual return : Sub -section (2) of section 92 of the Act provides forcertification of annual returns by listed companies and companies having prescribedpaid up capital and turnover. Viewing the difficulties arising in the compliance withthe provision of the said sub-section (2) with regard to certification of annual return



for companies having prescribed paid up capital or prescribed turnover, the MCAhas issued Companies 2nd (Removal of Difficulties) Order, 2014 whereby the word“AND” used between paid-up capital and turnover for certification of annual returnhas been replaced by the word “OR”.

Applicability of Form of annual return (MGT-7) for financial year commencingearlier than 1st April, 2014 : It is clarified that Form MGT-7 shall not apply to annualreturns in respect of companies whose financial year ended on or before 1st April,2014 and for annual returns pertaining to earlier years. These companies may filetheir returns in the relevant Form applicable under the Companies Act, 1956.

Companies have also sought clarity about permitting free of cost inspection ofrecords under rule 14(2) and rule 16 of the rules cited above and till a fee is prescribedfor the purpose in the Articles. It is clarified that until the requisite fee is specified bycompanies, inspections could be allowed without levy of fee [General Circular No.22 dated 25th June, 2014]

Judicial Pronouncements

Where director can escape prosecution: Where the petitioner was a non-executivedirector of the company and had resigned as director several years before, he couldnot be held responsible for the alleged defaut of non-filing of balance sheet for arecent year for which complaint was filed by the Registrar of Companies – A.L.Mudaliar v Asst Registrar of Companies [2009] 97 CLA 103 (Mad.)

Not a valid defence : Failure to hold an annual general meeting is no defence fornon-filing or belated filing of annual return – State of Bombay v Bandhan RamBhandani [1961] 31 Comp Cas 1 (SC). Holding of an annual general meeting is nota condition precedent to filing of return before the Registrar – Registrar of Companiesv Utkal Distributors (P) Ltd [1978] 48 Comp Cas 768(Ori)

Offence & Penalty

If a company fails to file its annual return with the Registrar in accordance with sub-section (4), the company shall be punishable with fine and every officer of thecompany who is in default shall be punishable with imprisonment or with fine orwith both [sub-section (5)].

If a company secretary in practice certifies the annual return otherwise than inconformity with the requirements of this section or the rules made thereunder, heshall be punishable with fine [sub-section (6)].

1[Return to be filed with Registrar in case promoters’ stake changes.

93. Every listed company shall file a return in the prescribed form with the Registrarwith respect to change in the number of shares held by promoters and top tenshareholders of such company, within fifteen days of such change.]

1. Enforced w.e.f. 01.04.2014 vide S.O.902(E) dated 26.03.2014

S. 93

211

GUIDE NOTES

Overview

Return of changes in shareholding position of promoters and top ten shareholders :This new section provides that every listed company shall file with the Registrar, areturn in Form No.MGT.10 along with the fee with respect to changes relating toeither increase or decrease of two percent, or more in the shareholding position ofpromoters and top ten shareholders of the company in each case, within fifteen daysof such change. [rule 13 of The Companies (Management and Administration) Rules,2014]

This disclosure is somewhat analogous to filings already done by the listed companiesunder clause 35 of the listing agreement as also the regulations of the SEBI(Substantial Acquisition of shares and Takeovers) Regulations. This compliancewill be in addition to compliance done by listed companies with the stock exchange.


Clarification on filing of MGT.10 : Till e Form MGT 10 is made available,stakeholders are requested to fill Form MGT 10 physically [Circular No 17 dated11th June, 2014]

1[Place of keeping and inspection of registers, returns, etc.

94. (1) The registers required to be kept and maintained by a company under section88 and copies of the annual return filed under section 92 shall be kept at theregistered office of the company :

Provided that such registers or copies of return may also be kept at any other placein India in which more than one-tenth of the total number of members entered in theregister of members reside, if approved by a special resolution passed at a generalmeeting of the company and the Registrar has been given a copy of the proposedspecial resolution in advance :

Provided further that the period for which the registers, returns and records arerequired to be kept shall be such as may be prescribed.

(2) The registers and their indices, except when they are closed under the provisionsof this Act, and the copies of the returns shall be open for inspection by anymember, debenture holder, other security holder or beneficial owner, during businesshours without payment of any fees and by any other person on payment of such feesas may be prescribed.




(3) Any such member, debenture holder, other security holder or beneficial owneror any other person may –

(a) take extracts from any register, or index or return without payment of anyfee ; or

(b) require a copy of any such register or entries therein or return on paymentof such fees as may be prescribed.

(4) If any inspection or the making of any extract or copy required under thissection is refused, the company and every officer of the company who is in defaultshall be liable, for each such default, to a penalty of one thousand rupees for everyday subject to a maximum of one lakh rupees during which the refusal or defaultcontinues

(5) The Central Government may also, by order, direct an immediate inspection ofthe document, or direct that the extract required shall forthwith be allowed to betaken by the person requiring it.]

GUIDE NOTES

Analogous law

This section corresponds to section 163 (place of keeping, and inspection of, registersand returns) of the 1956 Act.

Overview

This section mandates that the register of members, debenture-holders and any othersecurity-holders and copies of annual returns shall be kept at the registered office. Acompany can also keep the said registers at any place other than the registered officewhere more than one-tenth of total number of members reside, if approved by specialresolution and the Registrar has been given a copy of the proposed resolution inadvance.

A copy of the proposed special resolution in advance, shall be filed with the Registrar,at least one day before the date of general meeting of the company in FormNo.MGT.14 [rule 15(6) of Companies (Management and Administration) Rules, 2014]

Inspection of registers : The registers, indices and the copies of all annual returnsshall be open to inspection by any member, debenture-holder, other security holderor beneficial owner, during business hours without payment of any fees and by anyother person on payment of such fees as may be prescribed and if it is refused thecompany and every officer of the company shall be punishable with fine.

The Central Government may by order direct inspection of documents and to havean extract or copy of such registers by any person.

Companies (Management and Administration) Rules, 2014

Inspection of registers, returns, etc. [rule 14]

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(1) The registers and indices maintained pursuant to section 88 and copies ofreturns prepared pursuant to section 92, shall be open for inspection duringbusiness hours, at such reasonable time on every working day as the Board maydecide, by any member, debenture-holder, other security-holder or beneficialowner without payment of fee and by any other person on payment of such feeas may be specified in the articles of association of the company but notexceeding fifty rupees for each inspection.

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

(2) Any such member, debenture-holder, security-holder or beneficial owner orany other person may require a copy of any such register or entries therein orreturn on payment of such fee as may be specified in the articles of associationof the company but not exceeding ten rupees for each page. Such copy orentries or return shall be supplied within seven days of deposit of such fee.

Preservation of register of members, etc., and annual return.[rule 15]

(1) The register of members along with the index shall be preserved permanentlyand shall be kept in the custody of the company secretary of the company orany other person authorised by the Board for such purpose.

(2) The register of debenture-holders or any other security-holders along with theindex shall be preserved for a period of eight years from the date of redemptionof debentures or securities, as the case may be, and shall be kept in the custodyof the company secretary of the company or any other person authorised by theBoard for such purpose.

(3) Copies of all annual returns prepared under section 92 and copies of allcertificates and documents required to be annexed thereto shall be preservedfor a period of eight years from the date of filing with the Registrar.

(4) The foreign register of members shall be preserved permanently, unless it isdiscontinued and all the entries are transferred to any other foreign register orto the principal register. Foreign register of debenture-holders or any othersecurity-holders shall be preserved for a period of eight years from the date ofredemption of such debentures or securities.

(5) The foreign register shall be kept in the custody of the company secretary orperson authorised by the Board.

(6) A copy of the proposed special resolution in advance to be filed with theregistrar as required in accordance with first proviso of sub-section (1) of section94, shall be filed with the Registrar, at least one day before the date of generalmeeting of the company in Form MGT.14.

Copies of the registers and annual return [rule 16] :

Copies of the registers maintained under section 88 or entries therein and annualreturn filed under section 92 shall 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 specified in the articles of association of the companybut not exceeding rupees ten for each page and such copy shall be supplied by thecompany within a period of seven days from the date of deposit of fee to the company.


Clarification on fees to be charged by companies for allowing inspection ofrecords : Companies have sought clarity about permitting free of cost inspection ofrecords under rule 14(2) and rule 16 of the rules cited above and till a fee is prescribedfor the purpose in the Articles. It is clarified that until the requisite fee is specified bycompanies, inspections could be allowed without levy of fee. [Circular No. 22/2014dated 25-6-2014]

Clarification on Form MGT 14 through STP Mode : In order to simplify proceduresand with a view to ensure timely disposal of E-Forms in the office of Registrars ofCompanies and keeping in view the penal provisions for false declaration as containedin section 448 read with section 447, the following E-Forms with the conditionsmentioned along with will be processed and taken on record using the StraightThrough Process mode.

S.No. E-Form Conditions

1. MGT-14 All cases except for change of Name, change of object,resolution for further issue of capital and conversion ofcompanies will be STP Mode.

This circular will be effective from 21.07.2014.[General Circular 28/2014 dated9th July 2014]

Delegation of powers to Regional Directors under sub section (5) of section 94.However such power can be revoked if the Central Government is of the opinion thatsuch a course of action is necessary in the public interest [Notification dated 31st

March, 2015]

Offence & Penalty

If any inspection or the making of any extract or a copy required is refused, thecompany and every officer in default shall be liable to fine [sub-section (4)].

Departure from the 1956 Act

A period of at least 10 days before the date of general meeting was specified forsending an advance copy of the proposed resolution to the Registrar. This period of10 days has now been reduced to one day.

Power of the Central Government to make rules for the preservation and for thedisposal whether by destruction or otherwise in regard to the registers and returnshas been dispensed with.

S. 94

215

1[Registers, etc., to be evidence.

95. The registers, their indices and copies of annual returns maintained undersections 88 and 94 shall be prima facie evidence of any matter directed or authorisedto be inserted therein by or under this Act.]

GUIDE NOTES

Analogous law

This section corresponds to section 164 (Registers, etc., to be evidence) of the 1956Act

Overview

The section provides that the registers, indices and copies of annual return shall beprima facie evidence of any matter.

1[Annual general meeting.

96. (1) Every company other than a one person company shall in each year hold inaddition to any other meetings, a general meeting as its annual general meeting andshall specify the meeting as such in the notices calling it, and not more than fifteenmonths shall elapse between the date of one annual general meeting of a companyand that of the next :

Provided that in case of the first annual general meeting, it shall be held within aperiod of nine months from the date of closing of the first financial year of thecompany and in any other case, within a period of six months, from the date ofclosing of the financial year :

Provided further that if a company holds its first annual general meeting as aforesaid,it shall not be necessary for the company to hold any annual general meeting in theyear of its incorporation :

Provided also that the Registrar may, for any special reason, extend the time withinwhich any annual general meeting, other than the first annual general meeting, shallbe held, by a period not exceeding three months.

(2) Every annual general meeting shall be called during business hours, that is,between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall beheld either at the registered office of the company or at some other place within thecity, town or village in which the registered office of the company is situate :

Provided that the Central Government may exempt any company from the provisionsof this sub-section subject to such conditions as it may impose.




Explanation : For the purposes of this sub-section, “National Holiday” means andincludes a day declared as National Holiday by the Central Government.]

GUIDE NOTES

Analogous law

This section corresponds to section 166 (Annual general meeting) of the 1956 Act.

Overview

This section enjoins on every company (other than one person company) to hold ageneral meeting as its annual general meeting in addition to any other meeting eachyear. To ‘ hold ‘ a meeting means not only to convene it but also complete it byholding it. Further AGM should be held each year, i.e from 1st January to 31st December.A meeting adjourned to next calendar year does not become meeting of that year –Sree Meenakshi Millls Co Ltd v Asstt Registrar of Joint Stock Companies [1938] 8Comp Cas 175 (Mad)

One person company has been exempted from holding AGM, since one person cannotconstitute a meeting. For a meeting atleast two person are required – State of Kerelav West Coast Planters Agencies Ltd [1958] 28 Comp Cas 13 (Ker.)

First annual general meeting : The first annual general meeting shall be held withina period of nine months from the closing of first financial year as against 18 monthsfrom the date of incorporation as provided under the 1956 Act.

If a company holds its first annual general meeting as aforesaid, it shall not benecessary for the company to hold any annual general meeting in the year of itsincorporation. Registrar will not provide any extension of time for holding its firstannual general meeting.

Subsequent annual general meeting : Subsequent annual general meeting shall beheld within a period of six months of closure of financial years. Registrar has thepower to grant extension of time for holding annual general meeting (other than thefirst annual general meeting) by further period of 3 months, provided there arespecial reasons justifying extension of time. There should not be a gap of more thanfifteen months between two annual general meetings.

If a statute requires that a meeting is to be held within a particular period, it impliesthat the meeting should be completed within that period. – Bejoy Kumar Karnani vAsst Registrar of Companies [1985]58 Comp Cas 293 (Cal).

Time, day, place of annual general meeting : Every annual general meeting (‘themeeting’) shall be called during business hours, that is, between 9 a.m. and 6 p.m.Under the 1956 Act, the term used was business hour without actually specifying thetiming of business hour. This has now been made specifically clear.

The meeting shall be held on any day that is not a “National Holiday”. The termused in the 1956 Act, was “public holiday”. The term “National Holiday” means andincludes a day declared as National Holiday by the Central Government.

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The meeting shall be held either at the registered office of the company or at someother place within the city, town or village in which the registered office of thecompany is situate.

Exemption : The Central Government may exempt any company from the aboveconditions of time/day/place of holding meeting subject to such conditions as itmay impose. Under 1956 Act, exemption was given to ‘any class of companies’.

Secretarial Standard on General meetings (SS-2)

Distribution of Gifts : No gifts, gift coupons, or cash in lieu of gifts shall be distributedto Members at or in connection with the Meeting. [clause 14 of SS-2)


The exemptions given to a public company or a private company which is a subsidiaryof a public company or a private company, to fix the time and place of the annualgeneral meeting, as provided in second proviso to sub-section (2) of section 166 hasbeen dispensed with.

Power of Tribunal to call annual general meeting.

97. (1) If any default is made in holding the annual general meeting of a companyunder section 96, the Tribunal may, notwithstanding anything contained in this Actor the articles of the company, on the application of any member of the company,call, or direct the calling of, an annual general meeting of the company and givesuch ancillary or consequential directions as the Tribunal thinks expedient :

Provided that such directions may include a direction that one member of thecompany present in person or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to anydirections of the Tribunal, be deemed to be an annual general meeting of thecompany under this Act.

GUIDE NOTES

Analogous law

This section corresponds to section 167 (Power of Central Government to callannual general meeting) of the 1956 Act.

Overview

This section, which is yet to be enforced, provides that, in case of any default inholding annual general meeting of a company, the Tribunal may, on the application ofany member of the company, call or direct the calling of an annual general meeting. Tothe general rule that a single shareholder cannot constitute a meeting, this section is anexception, which clearly provides that the Tribunal may also direct that one memberof the company present in person or by proxy shall be deemed to constitute a meeting.



The default in holding an annual general meeting must be a default within themeaning of section 96. Mere delay in holding the annual general meeting is not aground for invoking the powers of Tribunal to call AGM.

It is the member and not the company who is empowered to invoke the provisions ofsection 97(1)

Power of Tribunal to call meetings of members, etc.

98. (1) If for any reason it is impracticable to call a meeting of a company, otherthan an annual general meeting, in any manner in which meetings of the companymay be called, or to hold or conduct the meeting of the company in the mannerprescribed by this Act or the articles of the company, the Tribunal may, either suomotu or on the application of any director or member of the company who would beentitled to vote at the meeting, –

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

(b) give such ancillary or consequential directions as the Tribunal thinksexpedient, including directions modifying or supplementing in relation tothe calling, holding and conducting of the meeting, the operation of theprovisions of this Act or articles of the company :

Provided that such directions may include a direction that one member of thecompany present in person or by proxy shall be deemed to constitute a meeting.

(2) Any meeting called, held and conducted in accordance with any order madeunder sub-section (1) shall, for all purposes, be deemed to be a meeting of thecompany duly called, held and conducted.

GUIDE NOTES

Analogous law

This section corresponds to section 186 (Power of Tribunal to order meeting to becalled) of the 1956 Act.

Overview

This section empowers the Tribunal to call meetings of members, if for any reason, itis impracticable to call a meeting of a company other than an annual general meeting.The Tribunal may order for calling the meeting either suo motu or on the applicationof any director or of any member of the company.

The Tribunal can exercise its power, if, and only if, for any reason it is impracticableto call a meeting of a company. It is a condition precedent to the passing of an orderby the Tribunal. The word ‘impracticable’ must be given a practical meaning. It mustbe understood to be impracticable from the business point of view. It must not be

S. 98

219

held impracticable on the slightest excuse that the directors cannot agree – Bengal& Assam Investors Ltd. v. J K Eastern Industries (P.) Ltd. [1957] 27 Comp Cas 86(Cal.). Deadlock in a company may be a sufficient ground for invoking the provisionsof this section. Impracticable does not mean ‘impossible’ – Pasari Flour Mills Ltd.,in re [1962] 32 Comp Cas 896 (MP). Holding of a meeting is impracticable where theregistered office is locked and is not available – MRS Rathnavelusami Chettiar vMRS Manicavelu Chettiar [1951] 21 Comp Cas 93(Mad)

Any meeting called, held and conducted in accordance with any order made byTribunal shall, for all purposes, be deemed to be a meeting of the company dulycalled, held and conducted.

It may be noted that power of Tribunal under section 97 relates to calling or directingthe calling of annual general meeting, whereas power of Tribunal under section 98relates to ordering meeting of a company (other than AGM) to be called.

Punishment for default in complying with provisions of sections 96 to 98.

99. If any default is made in holding a meeting of the company in accordance withsection 96 or section 97 or section 98 or in complying with any directions of theTribunal, the company and every officer of the company who is in default shall bepunishable with fine which may extend to one lakh rupees and in the case of acontinuing default, with a further fine which may extend to five thousand rupees forevery day during which such default continues.

GUIDE NOTES

Analogous law

This section corresponds to section 168 (Penalty for default in complying withsection 166 or 167) of the 1956 Act.

Overview

This section provides that if any default is made in holding a general meeting of thecompany or in complying with any directions of the Tribunal, the company andevery officer of the company who is in default shall be punishable with fine.

1[Calling of extraordinary general meeting.

100. (1) The Board may whenever it deems fit call an extraordinary general meetingof the company.

(2) The Board shall at the requisition made by, –

(a) in the case of a company having a share capital, such number of members

1. Enforced w.e.f. 12.09.2013 vide S.O.2754(E) dated 12.09.2013, except sub-section (6)



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 datecarries the right of voting ;

(b) in the case of a company not having a share capital, such number ofmembers who have, on the date of receipt of the requisition, not less thanone-tenth of the total voting power of all the members having on the saiddate a right to vote,

call an extraordinary general meeting of the company within the period specified insub-section (4).

(3) The requisition made under sub-section (2) shall set out the matters for theconsideration of which the meeting is to be called and shall be signed by therequisitionists and sent to the registered office of the company.

(4) If the Board does not, within twenty-one days from the date of receipt of a validrequisition in regard to any matter, proceed to call a meeting for the considerationof that matter on a day not later than forty-five days from the date of receipt of suchrequisition, the meeting may be called and held by the requisitonists themselveswithin a period of three months from the date of the requisition.

(5) A meeting under sub-section (4) by the requisitionists shall be called and held inthe same manner in which the meeting is called and held by the Board.1[(6) Any reasonable expenses incurred by the requisitionists in calling a meetingunder sub-section (4) shall be reimbursed to the requisitionists by the company andthe sums so paid shall be deducted from any fee or other remuneration under section197 payable to such of the directors who were in default in calling the meeting.]]

GUIDE NOTES

Analogous law

This section corresponds to section 169 (Calling of extraordinary general meetingon requisition) of the 1956 Act.

Overview

This section permits the Board whenever it deems fit to call an extraordinary generalmeeting of the company. Under the 1956 Act, the power to call extraordinary generalmeeting by Board was conferred through Regulation 48 of Table A of Schedule I.

The Board shall at the requisition made by such number of members as specified insub-section (2) call an extraordinary general meeting of the company, i.e., therequisitionist must, on the date of deposit of the requisition, hold not less than onetenth of the paid up capital / voting power of the company, as the case may be.


S. 100

221

Though the section refers to ‘such number of members ‘ in the plural, the requirementof the section would be satisfied even if one member holding the requisite number ofshares or voting rights makes the requisition, since it is well settled that words in theplural include the singular – S. Varadarajan v Ventateshwara Solvent Extraction(P) Ltd [1994]80 Comp Cas 693 (Mad)

The requisition shall set out the matters for the consideration of which the meetingis to be called and shall be signed by the requisitionists and sent to the registeredoffice of the company.

The Board shall proceed within 21 days from the date of receipt of a valid requisitionto convene a meeting. The meeting shall be held within 45 days from the date ofreceipt of such requisition.

In case the Board fails to call the meeting within the said period, the requisitionistthemselves will then call such a meeting within 3 months from the date of the requisition.A meeting by the requisitionists shall be called and held in the same manner in whichthe meeting is called and held by the Board. Any reasonable expenses incurred by therequisitionists in calling a meeting shall be reimbursed by the company.

Explanatory Statement : The obligation to annex an explanatory statement to thenotice of the meeting is only on the company when it calls for a meeting to transactspecial business – S. Vardarajan (supra). However, in the case of LIC v Escorts Ltd(1986) 59 Comp Cas 548, the Supreme Court held that no explanatory statementneed be annexed to the notice of an extraordinary general meeting when convenedpursuant to the requisition.


Rule 17 specifies the manner of calling of Extraordinary general meeting byrequistionists on failure of Board of Directors to call such meeting on requisition asunder :

(1) The members may requisition convening of an extraordinary general meetingin accordance with sub-section (4) of section 100, by providing such requisitionin writing or through electronic mode at least clear twenty-one days prior to theproposed date of such extraordinary general meeting.

(2) The notice shall specify the place, date, day and hour of the meeting and shallcontain the business to be transacted at the meeting –

It is here by clarified that requistionists should convene meeting at Registeredoffice or in the same city or town where Registered office is situated and suchmeeting should be convened on working day.

(3) If the resolution is to be proposed as a special resolution, the notice shall begiven as required by sub-section (2) of section 114.

(4) The notice shall be signed by all the requistionists or by a requistionists dulyauthorised in writing by all other requistionists on their behalf or by sending anelectronic request attaching therewith a scanned copy of such duly signedrequisition.



(5) No explanatory statement need be annexed to the notice and the requistionistsmay disclose the reasons for the resolution(s) which they propose to move atthe meeting.

(6) The notice of the meeting shall be given to those members whose names appearin the Register of members of the company within three days on which therequistionists deposit with the Company a valid requisition for calling anextraordinary general meeting.

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

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

1[Notice of meeting.

101. (1) A general meeting of a company may be called by giving not less than cleartwenty-one days’ notice either in writing or through electronic mode in such manneras may be prescribed :

Provided that a general meeting may be called after giving a shorter notice ifconsent is given in writing or by electronic mode by not less than ninety-five percent of the members entitled to vote at such meeting.

(2) Every notice of a meeting shall specify the place, date, day and the hour of themeeting and shall contain a statement of the business to be transacted at suchmeeting.

(3) The notice of every meeting of the company shall be given to –

(a) every member of the company, legal representative of any deceased memberor the assignee of an insolvent member ;

(b) the auditor or auditors of the company ; and

(c) every director of the company.

(4) Any accidental omission to give notice to, or the non-receipt of such notice by,any member or other person who is entitled to such notice for any meeting shall notinvalidate the proceedings of the meeting.]


S. 101

223

GUIDE NOTES

Analogous law

This section corresponds to section 171 (Length of notice for calling meeting) andsection 172 (Contents and manner of service of notice and persons on whom it is tobe served) of the 1956 Act.

Overview

This section provides that general meeting may be called by giving not less thanclear twenty-one days’ notice to all members, legal representative of any deceasedmember or the assignee of the insolvent members, the auditors and directors inwriting or through electronic mode. The expression ‘clear twenty one days’ means21 days exclusive of the day of service of notice and of the day on which the meetingis to be held - Rex v Turner (1910) 1 KB 346. / N.V. R. Nagappa Chettiar v MadrasRace Club [1949] 19 Comp Cas 175 (Mad). The words “ clear days ’’ were not therein section 171 of the 1956 Act.

The notice of the meeting should be sent to all the directors, otherwise, the resolutionspassed in such meetings are invalid –Col Kuldip Singh Dhillon v Paragaon UtilityFinanciers (P) Ltd [1988] 64 Comp Cas 19 (P &H)

A shorter notice may also be given with the consent of ninety-five per cent of themembers entitled to vote. 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 noticefor any meeting shall not invalidate the proceedings of the meeting.

Accidental omission to give notice of the meeting shall not invalidate the proceedingsof the meeting. The company in such a case has to prove that the omission to give thenotice was accidental and not intentional. Thus if a delay occurs in receiving anotice due to postal delay or omission, the proceedings would not be invalidated –Mankan Investment Ltd., in re (1996) 97 Comp Cas 689 (Cal)

Exemptions/modifications to a private company : Section 101 shall apply unlessotherwise specified in the section or the articles of the company provide otherwise[Notification dated 5th June, 2015]


A company may give notice through electronic mode. Notice may be sent through e-mail as a text or as an attachment. The subject line in e-mail shall state the name ofthe company, notice of the type of meeting, place and the date on which the meetingis scheduled [rule 18]

Secretarial Standard on General Meetings (SS-2)

Entitlement : Notice in writing of every Meeting shall be given to every Member ofthe company. Such Notice shall also be given to the Directors and Auditors of thecompany, to the Secretarial Auditor, to Debenture Trustees, if any, and, whereverapplicable or so required, to other specified persons



Mode : Notice shall be sent by hand or by ordinary post or by speed post or byregistered post or by courier or by facsimile or by e-mail or by any other electronicmeans.

Notice shall be sent to Members by registered post or speed post or courier or e-mailand not by ordinary post in the following cases:

(a) if the company provides the facility of e-voting ;

(b) if the item of business is being transacted through postal ballot;

If a member requests for delivery of notice through a particular mode, other than oneof those listed above, he shall pay such fees as may be determined by the companyin its annual general meeting and the notice shall be sent to him in such mode.

Notice shall be sent to members by registered post or speed post or e-mail if themeeting is called by the requisitionists themselves where the Board had not proceededto call the meeting.

Website : In case of companies having a website, the notice shall be hosted on thewebsite.

Contents : Notice shall specify the day, date, time and full address of the venue ofthe Meeting. Notice shall contain complete particulars of the venue of the Meetingincluding route map and prominent land mark for easy location. In case of companieshaving a website, the route map shall be hosted along with the notice on the website.

Length of notice : Notice and accompanying documents shall be given atleast 21clear days in advance of the meeting. For the purpose of reckoning twenty-one daysclear notice, the day of sending the notice and the day of meeting shall not becounted. Further in case the company sends the notice by post or courier, an additionaltwo days shall be provided for the service of notice

No business shall be transacted at a meeting if notice in accordance with this Standardhas not been given

No postponement of meeting : A meeting convened upon due notice shall not bepostponed or cancelled. If, for reasons beyond the control of the Board, a meetingcannot be held on the date originally fixed, the Board may reconvene the meeting, totransact the same business as specified in the original notice, after giving not lessthan three days intimation to the members. The intimation shall be either sentindividually in the manner stated in this Standard or published in a vernacularnewspaper in the principal vernacular language of the district in which the registeredoffice of the company is situated, and in an English newspaper in English language,both having a wide circulation in that district [clause 1 of SS-2]


Notice : The section specifically provides for 21 days clear notice. The word ‘clear’though implied under 1956 Act, has been categorically added for clarity. Furthernotice of the general meeting can be sent through electronic mode, as a cost savingconcept. This was not provided under the 1956 Act.

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Consent for shorter notice : The present section specifies that a shorter notice maybe given to convene general meeting including annual general meeting if consent of95 per cent of the members entitled to vote has been given in writing or by electronicmode. Under the 1956 Act, consent of 100 per cent of members was required to callan annual general meeting at shorter notice.

Content of notice : The present section specifies that every notice of a meeting shallstate the place, date, day and the hour of the meeting and shall contain a statementof the business to be transacted at such meeting. The ‘date’ was not specified underthe 1956 Act.

Service of notice : There was no requirement of giving notice to directors. This hasnow been included.

1[Statement to be annexed to notice.

102. (1) A statement setting out the following material facts concerning each item ofspecial business to be transacted at a general meeting, shall be annexed to the noticecalling such meeting, namely :

(a) the nature of concern or interest, financial or otherwise, if any, in respectof each items of –

(i) every director and the manager, if any ;

(ii) every other key managerial personnel ; and

(iii) relatives of the persons mentioned in sub-clauses (i) and (ii) ;

(b) any other information and facts that may enable members to understand themeaning, scope and implications of the items of business and to takedecision thereon.

(2) For the purposes of sub-section (1), –

(a) in the case of an annual general meeting, all business to be transactedthereat shall be deemed special, other than –

(i) the consideration of financial statements and the reports of the Boardof directors and auditors ;

(ii) the declaration of any dividend ;

(iii) the appointment of directors in place of those retiring ;

(iv) the appointment of, and the fixing of the remuneration of, the auditors ;and

(b) in the case of any other meeting, all business shall be deemed to be special :

Provided that 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 interestin that other company of every promoter, director, manager, if any, and of everyother key managerial personnel of the first mentioned company shall, if the extentof such shareholding is not less than two per cent of the paid-up share capital of thatcompany, also be set out in the statement.

(3) Where any item of business refers to any document, which is to be considered atthe meeting, the time and place where such document can be inspected shall bespecified in the statement under sub-section (1).

(4) Where as a result of the non-disclosure or insufficient disclosure in any statementreferred to in sub-section (1), 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 directlyor indirectly, the promoter, director, manager or other key managerial personnel, asthe case may be, shall hold such benefit in trust for the company, and shall, withoutprejudice to any other action being taken against him under this Act or under anyother law for the time being in force, be liable to compensate the company to theextent of the benefit received by him.

(5) If any default is made in complying with the provisions of this section, everypromoter, director, manager or other key managerial personnel who is in defaultshall be punishable with fine which may extend to fifty thousand rupees or fivetimes the amount of benefit accruing to the promoter, director, manager or otherkey managerial personnel or any of his relatives, whichever is more.]

GUIDE NOTES

Analogous law

This section corresponds to section 173 (Explanatory statement to be annexed tonotice) of the 1956 Act

Overview

Disclosure of material facts : This section provides for a statement setting out all thematerial facts concerning each item of special business to be transacted at a generalmeeting, to be annexed to the notice calling such meeting. Disclosures of materialfacts is made mandatory with regard to the nature of concern or interest, financial orotherwise, if any, in respect of every director and the manager, every other keymanagerial personnel and relatives of such persons [sub-section (1)].

Where any item of special business to be transacted at a meeting of the companyrelates to or affects any other company, then the explanatory statement shall alsospecify the extent of shareholding interest in that other company of every promoter,director, manager, and key managerial personnel of the first mentioned company, ifthe extent of such shareholding is not less than two per cent of the paid-up sharecapital of that company, as against twenty per cent provided under the 1956 Act[sub-section (2), proviso].

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The object underlying the section is that the shareholders may have before them allfacts which are material to enable them to form a judgment on the business beforethem – Firestone Tyre & Rubber Co v Synthetics & Chemicals Ltd [1971] 41 ComCas 377 (Bom). Material facts will not necessarily include reasons. There is no needto justify the proposed action by giving reasons – Laljibhai C. Kapadia v Lalji B.Desai [1973] 43 Comp Cas 17 (Bom).

Special business : In the case of an annual general meeting, all business transactedthereat shall be special except the following which are of ordinary nature :

(a) the consideration of financial statement ;

(b) the declaration of dividend ;

(c) the appointment of directors in place of those retiring ;

(d) the appointment of, and the fixing of remuneration of the auditors.

Non-disclosure/insufficient disclosure : Where there is non-disclosure orinsufficient disclosure in the explanatory statement made by promoter, director,manager, or other key managerial personnel, which results into any benefit forthemselves or their relatives, they shall hold such benefit in trust for the company,and shall, also be liable to compensate the company to the extent of the benefitso received [sub-section (4)] (a new provision).

Exemptions/modifications to a private company : Section 102 shall apply unlessotherwise specified in the section or the articles of the company provide otherwise[Notification dated 5th June, 2015]

Offence & Penalty

In the case of any default in sending an explanatory statement or in providing thedisclosures therein, every promoter, director, manager or other key managerialpersonnel who is in default shall be punishable with fine which may extend to fiftythousand rupees or five times the amount of benefit accruing to the promoter, director,manager or other key managerial personnel or any of his relatives, whichever is more[sub-section (5)].

1[Quorum for meetings.

103. (1) Unless the articles of the company provide for a larger number, –

(a) in case of a public company, –

(i) five members personally present if the number of members as on thedate of meeting is not more than one thousand ;

(ii) fifteen members personally present if the number of members as on thedate of meeting is more than one thousand but up to five thousand ;




(iii) thirty members personally present if the number of members as onthe date of the meeting exceeds five thousand ;

(b) in the case of a private company, two members personally present, shall bethe quorum for a meeting of the company.

(2) If the quorum is not present within half-an-hour from the time appointed forholding a meeting of the company –

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

(b) the meeting, if called by requisitionists under section 100, shall standcancelled :

Provided that in case of an adjourned meeting or of a change of day, time or placeof meeting under clause (a), the company shall give not less than three days noticeto 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 placewhere the registered office of the company is situated.

(3) If at the adjourned meeting also, a quorum is not present within half-an-hourfrom the time appointed for holding meeting, the members present shall be thequorum.]

GUIDE NOTES

Analogous law

This section corresponds to section 174 (Quorum for meetings) of the 1956 Act.

Overview

Quorum means the minimum number of persons who must be present at the meetingin order to transact the business legally. A meeting cannot be convened without thepresence of requisite quorum. Unlike the provisions of the 1956 Act, which providedfor 5 members personally present in case of public company (irrespective of numberof members), this section has linked the quorum with the number of members as onthe date of a meeting as specified below :

(i) 5 members personally present if the number of members is not more than 1000,

(ii) 15 members personally present if such number is more than 1000 but upto5000,

(iii) 30 members personally present if such number exceeds 5000.

In case of a private company, 2 members personally present shall be the quorum fora meeting. If articles provide for a larger quorum, then such larger quorum shall bethe quorum for the meeting.

For the term ‘meeting’ there must be atleast two persons. A single shareholder cannot

S. 103

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constitute meeting. However when all shares of a particular class are held by oneshareholder. that one person may then constitute a class meeting – East v BennetBros Ltd [1911] 1 Ch 163 (Ch.D)

Non-presence of quorum : If the quorum is not present within half-an hour, themeeting shall stand adjourned for the next week at the same time and place orsuch other time and place as decided by the Board. However, the meeting calledby requisitionist shall stand cancelled in the absence of quorum [sub-section(2)].

In case of adjournment, notice is required to be given to the members : Where thereis adjournment or of change of day, time and place of meeting, the company isrequired to give not less than three days’ notice to the members either individuallyor by publishing an advertisement in the newspapers (one in English and one invernacular language) which is in circulation at the place where the registered officeof the company is situated [sub-section (2), proviso] (a new provision).

Where quorum is not present in the adjourned meeting also, the members presentshall be the quorum.

Exemptions/modifications to a private company : Section 103 shall apply unlessotherwise specified in the section or the articles of the company provide otherwise[notification dated 5th June, 2015]


Quorum : Quorum shall be present throughout the meeting. Quorum shall be presentnot only at the time of commencement of the meeting but also while transactingbusiness.

A duly authorised representative of a body corporate or the representative of thePresident of India or the Governor of a State is deemed to be a member personallypresent and enjoys all the rights of a member present in person.

One person can be an authorised representative of more than one body corporate. Insuch a case, he is treated as more than one member present in person for the purposeof quorum. However, to constitute a meeting, at least two individuals shall be presentin person. Thus, in case of a public company having not more than 1000 memberswith a quorum requirement of five members, an authorised representative of fivebodies corporate cannot form a quorum by himself but can do so if at least one moremember is personally present.

Members who have voted by remote e-voting have the right to attend the generalmeeting and accordingly their presence shall be, counted for the purpose of quorum.

A member who is not entitled to vote on any particular item of business being arelated party, if present, shall be counted for the purpose of quorum.

The stipulation regarding the presence of a quorum does not apply with respect toitems of business transacted through postal ballot. [clause 3 of SS-2]



Presence of Directors and Auditors

Directors : If any Director is unable to attend the meeting, the Chairman shall explainsuch absence at the meeting.

The Chairman of the Audit Committee. Nomination and Remuneration Committeeand the Stakeholders Relationship Committee, or any other Member of any suchCommittee authorised by the Chairman of the Committee to attend on his behalf,shall attend the General Meeting. Directors who attend General Meetings of thecompany and the Company Secretary shall be seated with the Chairman. TheCompany Secretary shall assist the Chairman in conducting the Meeting.

Auditors : The auditors, unless exempted by the company, shall, either by themselvesor through their authorised representative, attend the general meetings of the companyand shall have the right to be heard at such meetings on that part of the businesswhich concerns them as auditors. The authorised representative who attends thegeneral meeting of the company shall also be qualified to be an auditor.

Secretarial Auditor : The Secretarial Auditor, unless exempted by the companyshall, either by himself or through his authorised representative, attend the annualgeneral meeting and shall have the right to be heard at such meeting on that part ofthe business which concerns him as Secretarial Auditor.

The Chairman may invite the Secretarial Auditor or his authorised representative toattend any other general meeting, if he considers it necessary. The authorisedrepresentative who attends the general meeting of the company shall also be qualifiedto be a Secretarial Auditor [clause 4 of SS-2]

1[Chairman of meetings.

104. (1) Unless the articles of the company otherwise provide, the members personallypresent at the meeting shall elect one of themselves to be the chairman thereof on ashow of hands.

(2) If a poll is demanded on the election of the chairman, it shall be taken forthwithin accordance with the provisions of this Act and the chairman elected on a show ofhands under sub-section (1) shall continue to be the chairman of the meeting untilsome other person is elected as chairman as a result of the poll, and such otherperson shall be the chairman for the rest of the meeting.]

GUIDE NOTES

Analogous law

This section corresponds to section 175 (Chairman of meeting) of the 1956 Act.

Overview

This section provides for appointment of chairman. Unless the articles of the company


S. 104

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otherwise provide, the members personally present at the meeting shall elect one ofthemselves to be the chairman thereof on a show of hands. If a poll is demanded onthe election of the chairman, the chairman elected by show of hands shall continueto be the chairman of the meeting until some other person is elected as chairman asa result of poll.

Casting vote of a Chairman is not automatic, it has to be provided for in the articles.It is not a matter of presumption particularly– Firestone Tyre & Rubber Co. vSynthetics & Chemicals Ltd [1971] 41 Comp Cas 377 (Bom)

Exemptions/modifications to a private company : Section 104 shall apply unlessotherwise specified in the section or the articles of the company provide otherwise[Notification dated 5th June, 2015].


Appointment of Chairman : The Chairman of the Board shall take the chair andconduct the meeting. If the Chairman is not present within fifteen minutes after thetime appointed for holding the meeting, or if he is unwilling to act as Chairman ofthe meeting, or if no director has been so designated, the directors present at themeeting shall elect one of themselves to be the Chairman of the meeting. If nodirector is present within fifteen minutes after the time appointed for holding themeeting, or if no director is willing to take the chair, the members present shall elect,on a show of hands, one of themselves to be the Chairman of the meeting, unlessotherwise provided in the articles.

If a poll is demanded on the election of the Chairman, it shall be taken forthwith inaccordance with the provisions of the Act and the Chairman elected on a show ofhands shall continue to be the Chairman of the meeting until some other person iselected as Chairman as a result of the poll, and such other person shall be the Chairmanfor the rest of the meeting.

The Chairman shall ensure that the meeting is duly constituted in accordance withthe Act and the articles or any other applicable laws, before it proceeds to transactbusiness. The Chairman shall then conduct the meeting in a fair and impartial mannerand ensure that only such business as has been set out in the notice is transacted. TheChairman shall regulate the manner in which voting is conducted at the meetingkeeping in view the provisions of the Act.

Role of Chairman : The Chairman shall explain the objective and implications of theresolutions before they are put to vote at the meeting. The Chairman shall provide afair opportunity to members who are entitled to vote to seek clarifications and/or offercomments related to any item of business and address the same, as warranted.

Where Chairman is interested : In case of public companies, the Chairman shall notpropose any resolution in which he is deemed to be concerned or interested nor shallhe conduct the proceedings for that item of business.

If the Chairman is interested in any item of business, without prejudice to his votingrights on resolutions, he shall entrust the conduct of the proceedings in respect ofsuch item to any dis-interested director or to a member, with the consent of the



members present, and resume the Chair after that item of business has been transacted[clause 5 of SS-2]

1[Proxies.

105. (1) Any member of a company entitled to attend and vote at a meeting of thecompany shall be entitled to appoint another person as a proxy to attend and vote atthe meeting on his behalf :

Provided that a proxy shall not have the right to speak at such meeting and shall notbe entitled to vote except on a poll :

Provided further that, unless the articles of a company otherwise provide this sub-section shall not apply in the case of a company not having a share capital :2[Provided also that the Central Government may prescribe a class or classesof companies whose members shall not be entitled to appoint another person as aproxy :]2[Provided also that a person appointed as proxy shall act on behalf of such memberor number of members not exceeding fifty and such number of shares as may beprescribed.]

(2) In every notice calling a meeting of a company which has a share capital, or thearticles of which provide for voting by proxy at the meeting, there shall appear withreasonable prominence a statement that a member entitled to attend and vote isentitled to appoint a proxy, or, where that is allowed, one or more proxies, to attendand vote instead of himself, and that a proxy need not be a member.

(3) If default is made in complying with sub-section (2), every officer of thecompany who is in default shall be punishable with fine which may extend to fivethousand rupees.

(4) Any provision contained in the articles of a company which specifies or requiresa longer period than forty-eight hours before a meeting of the company, for depositingwith the company or any other person any instrument appointing a proxy or anyother document necessary to show the validity or otherwise relating to the appointmentof a proxy in order that the appointment may be effective at such meeting, shallhave effect as if a period of forty-eight hours had been specified in or required bysuch provision for such deposit.

(5) If for the purpose of any meeting of a company, invitations to appoint as proxya person or one of a number of persons specified in the invitations are issued at the

1. Enforced w.e.f. 12.09.2013 vide S.O.2754(E) dated 12.09.2013, except the third and fourth provisoof sub-section (1) and sub-section (7)


S. 105

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company’s expense to any member entitled to have a notice of the meeting sent tohim and to vote thereat by proxy, every officer of the company who knowinglyissues the invitations as aforesaid or wilfully authorises or permits their issue shallbe punishable with fine which may extend to one lakh rupees :

Provided that an officer shall not be punishable under this sub-section by reasononly of the issue to a member at his request in writing of a form of appointmentnaming the proxy, or of a list of persons willing to act as proxies, if the form or listis available on request in writing to every member entitled to vote at the meeting byproxy.

(6) The instrument appointing a proxy shall –

(a) be in writing ; and

(b) be signed by the appointer or his attorney duly authorised in writing or, ifthe appointer is a body corporate, be under its seal or be signed by anofficer or an attorney duly authorised by it.

1[(7) An instrument appointing a proxy, if in the form as may be prescribed, shallnot be questioned on the ground that it fails to comply with any special requirementsspecified for such instrument by the articles of a company.]

(8) Every member entitled to vote at a meeting of the company, or on any resolutionto be moved thereat, shall be entitled during the period beginning twenty-four hoursbefore the time fixed for the commencement of the meeting and ending with theconclusion of the meeting, to inspect the proxies lodged, at any time during thebusiness hours of the company, provided not less than three days’ notice in writingof the intention so to inspect is given to the company.]

GUIDE NOTES

Analogous law

This section corresponds to section 176 (Proxies) and Schedule IX (Form of Proxy)of the 1956 Act.

Overview

This section enables a member, who is entitled to attend and vote to appoint anotherperson as a proxy to attend and vote at the meeting on his behalf. However, a proxyso appointed cannot speak at a meeting neither can he vote except on poll.

The Central Government is vested with the power to prescribe a class or classes ofcompanies whose members shall not be entitled to appoint another person as aproxy. [proviso to sub-section (1)] (a new provision).

Accordingly a member of a company registered under section 8 shall not be entitledto appoint any other person as his proxy unless such other person is also a member of




such company [rule 19(1) of Companies (Management and Administration) Rules,2014]

Limit on proxy : A person can act as proxy on behalf of members not exceeding 50and holding in the aggregate not more than ten percent of the total share capital ofthe company carrying voting rights. A member holding more than ten percent, of thetotal share capital of the company carrying voting rights may appoint a singleperson as proxy and such person shall not act as proxy for any other person orshareholder. [proviso to sub-section (1) read with rule 19(2)]

In the corresponding section 176 of the 1956 Act, there was no such limit. Further, amember of private company can now appoint more than one proxy to attend on thesame occasion. This was restricted by sub clause (b) of sub-section (1) of section 176of the 1956 Act.

Deposit of proxies : A proxy is required to be deposited at the registered office of thecompany not less than 48 hours before the time for holding the meeting or adjournedmeeting [sub-section (4)]. In computing the 48 hours, Sunday or a public holiday arenot excluded. There is nothing in law to exclude Sunday in the computation of the48 hours and, therefore, a proxy delivered on Sunday for a meeting to be held onTuesday would be valid – K P Chackochan v. Federal Bank [1990] 4 CLA 1 (Ker.).

Inspection of proxies : Any member, who is entitled to vote on all or any of theresolutions to be moved at the meeting in respect of which proxies have been lodgedwith the company, can inspect the proxy forms, during the period beginning 24hours before the time fixed for the commencement of the meeting and ending withthe conclusion of the meeting provided a prior notice in writing of his intension toinspect the proxy form is given atleast 3 days before the date of the meeting [sub-section (8)].



Section 8 company : A member of a company registered under section 8 shall not beentitled to appoint any other person as his proxy unless such other person is also amember of such company.

Form of proxy : The appointment of proxy shall be in the Form No. MGT.11 [rule 19]


Right to appoint :A member entitled to attend and vote is entitled to appoint aproxy, or where that is allowed, one or more proxies, to attend and vote instead ofhimself and a proxy need not be a member. However, a proxy shall be a member incase of companies with charitable objects etc. and not for profit registered under thespecified provisions of the Act.

A proxy can act on behalf of members not exceeding fifty and holding in the aggregate

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not more than ten percent of the total share capital of the company carrying votingrights.

However, a member holding more than ten percent of the total share capital of thecompany carrying voting rights may appoint a single person as proxy for his entireshareholding and such person shall not act as a proxy for another person or shareholder.

If a proxy is appointed for more than fifty members, he shall choose any fifty membersand confirm the same to the company before the commencement of specified periodfor inspection. In case, the proxy fails to do so, the company shall consider only thefirst fifty proxies received as valid.

Execution of Proxies : The proxy-holder shall prove his identity at the time ofattending the meeting.

Deposit of Proxies : Proxies shall be deposited with the company either in person orthrough post not later than fortyeight hours before the commencement of the meetingin relation to which they are deposited and a proxy shall be accepted even on aholiday if the last date by which it could be accepted is a holiday.

Any provision in the articles of a company which specifies or requires a longerperiod for deposit of proxy than forty-eight hours before a meeting of the companyshall have effect as if a period of forty-eight hours had been specified in or requiredfor such deposit.

If the articles so provide, a member who has not appointed a proxy to attend and voteon his behalf at a meeting may appoint a proxy for any adjourned meeting, not laterthan forty-eight hours before the time of such adjourned meeting. [clause 6 of SS-2]

Offence & Penalty

(i) In the event of default in stating the provision relating to proxy in every noticecalling the meeting, every officer in default shall be punishable with fine [sub-section (3)].

(ii) Every officer who knowingly issues the invitations to appoint proxy at thecompany’s expense or wilfully authorises or permits their issue shall be punishablewith fine [sub-section (5)].

1[Restriction on voting rights.

106. (1) Notwithstanding anything contained in this Act, the articles of a companymay provide that no member shall exercise any voting right in respect of any sharesregistered in his name on which any calls or other sums presently payable by him havenot been paid, or in regard to which the company has exercised any right of lien.

(2) A company shall not, except on the grounds specified in sub-section (1), prohibitany member from exercising his voting right on any other ground.




(3) On a poll taken at a meeting of a company, a member entitled to more than onevote, or his proxy, where allowed, or other person entitled to vote for him, as thecase may be, need not, if he votes, use all his votes or cast in the same way all thevotes he uses.]

GUIDE NOTES

Analogous law

This section corresponds to section 181 (Restriction on exercise of voting rights ofmembers who have not paid calls, etc.), section 182 (Restriction on exercise ofvoting right in other cases to be void) and section 183 (Right of member to use hisvotes differently) of the 1956 Act.

Overview

Restriction on voting rights : In terms of articles of a company, no member shallexercise any voting right in respect of any shares registered in his name on whichany calls or other sums presently payable by him have not been paid or on whichcompany has exercised any right of lien. No member can be prohibited from exercisinghis voting right on any other ground.

While exercising vote on poll a member can freely distribute some of his votes in‘favour’ of a resolution, while some ‘against’, or he may leave out some of his votes.Thus, he can use his votes differently.


1[Voting by show of hands.

107. (1) At any general meeting, a resolution put to the vote of the meeting shall,unless a poll is demanded under section 109 or the voting is carried out electronically,be decided on a show of hands.

(2) A declaration by the chairman of the meeting of the passing of a resolution orotherwise by show of hands under sub-section (1) and an entry to that effect in thebooks containing the minutes of the meeting of the company shall be conclusiveevidence of the fact of passing of such resolution or otherwise.]

GUIDE NOTES

Analogous law

This section corresponds to section 177 (Voting to be by show of hands in firstinstance) and section 178 (Chairman’s declaration of result by voting by show ofhands to be conclusive) of the 1956 Act.


S. 107

237

Overview

This section provides that at general meeting, a resolution put to vote shall bedecided on a show of hands, unless a poll is demanded or the voting is carried outelectronically. A declaration by the chairman and an entry in the minutes book isconclusive evidence of passing of such resolution or otherwise.

Secretarial Standards : Every company shall, at the meeting, put every resolution,except a resolution which has been put to remote voting, to vote on a show of handsat the first instance, unless a poll is validly demanded. A Proxy cannot vote on ashow of hands. [clause 7.3 of SS-2 on General Meetings]

Exemptions/modifications to a private company : Section 107 shall apply unlessotherwise specified in the section or the articles of the company provide otherwise[notification dated 5th June, 2015].

1[Voting through electronic means.

108. The Central Government may prescribe the class or classes of companies andmanner in which a member may exercise his right to vote by the electronic means.]

GUIDE NOTES

Overview

This section has introduced a new concept of e-voting where shareholders can voteon resolutions in electronic form. In June 2012, SEBI had made it mandatory for thetop 500 listed companies to facilitate e-voting for all resolutions that demand postalballots in accordance with the Companies Act or other relevant regulations.

The Central Government has prescribed following class of companies in which amember may exercise his right to vote by electronic means :

Every company other than a company referred to in Chapter XB or Chapter XCof the Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations, 2009 having its equity shares listed on a recognisedstock exchange or a company having not less than one thousand members,shall provide to its members facility to exercise their right to vote on resolutionsproposed to be considered at general meetings by electronic means. It is thusmandatory for every listed company or a company having not less than 1000shareholders, to provide to its members facility to exercise their right to vote atgeneral meetings by electronic means. [sub rule (2) of Rule 20 amended videCompanies (Mangement and Administration) (Amendment) Rules, 2015 dated19th March 2015]

A member may exercise his right to vote through voting by electronic meansand company shall pass such resolutions [sub rule (3) of rule 20]




A company which provides the facility to its members to exercise their votes atany general meeting by electronic voting system shall follow the procedure aslaid down in sub-rule (4) of rule 20.


E-voting : Every company having its equity shares listed on a recognized stockexchange other than companies whose equity shares are listed on SME Exchange oron the Institutional Trading Platform and other companies as prescribed shall providee-voting facility to their members to exercise their voting rights. Other companiespresently prescribed are companies having not less than one thousand members.

The facility of remote e-voting does not dispense with the requirement of holding ageneral meeting by the company.

Voting at the meeting : Every company, which has provided e-voting facility to itsmembers, shall also put every resolution to vote through a ballot process at themeeting. Ballot process may be carried out by distributing ballot/poll slips or bymaking arrangement for voting through computer or secure electronic systems.

Any member, who has already exercised his votes through remote e-voting, mayattend the meeting but is prohibited to vote at the meeting and his vote, if any, castat the meeting shall be treated as invalid. A proxy can vote in the ballot process[clause 7 of SS-2]

Conduct of e-voting : Every company that is required or opts to provide e-votingfacility to its members shall comply with the provisions in this regard.

Every company providing e-voting facility shall offer such facility to all members,irrespective of whether they hold shares in physical form or in dematerialised form.The facility for remote e-voting shall remain open for not less than three days. Thevoting period shall close at 5 p.m. on the day preceding the date of the generalmeeting.

Notice of the meeting, wherein the facility of e-voting is provided, shall be senteither by registered post or speed post or by courier or by e-mail or by any otherelectronic means. Notice shall inform the members about procedure of remote e-voting, availability of such facility and provide necessary information thereof toenable them to access such facility [clause 8 of SS-2]

Prohibition on withdrawal of resolutions : Resolutions for items of business whichare likely to affect the market price of the securities of the company shall not bewithdrawn. However, any resolution proposed for consideration through e-votingshall not be withdrawn. [clause 10 of SS-2]


Clarifications on issues associated with e-voting Procedure : To provide clarity andensure uniformity in the e-voting procedure, clarifications on certain issues raisedby the stakeholders are given below :

S. 108

239

(i) Show of hands not to be allowed in case of e-voting: In view of clear provisionsof section 107, voting by show of hands would not be allowable in cases whererule 20 of Companies (Management and Administration) Rules, 2014 isapplicable.

(ii) Participation in the general meeting after voting by e-means: It is clarified thata person who has voted through e-voting mechanism in accordance with rule20 shall not be debarred from participation in the general meeting physically.But he shall not be able to vote in the meeting again, and his earlier vote (castthrough e-means) shall be treated as final.

(iii) Applicability of rule 20 for matters specified under rule 22(16): Stakeholdershave asked whether matters specified under rule 22(16) (transactions of certainitems only through postal ballot) can be considered in a general meeting wheree-voting facility is available. It has been examined and it is stated that in viewof clear provisions of section 110(1)(a) read with such rule 22(16) it would benecessary to transact items specified in rule 22(16) only through postal ballotand not at the general meeting.

(iv) Relevance of provisions relating to demand for poll: In case of companieshaving share capital, voting through e-means takes into account ‘Proportionprinciple’ [i.e. ‘one share - one vote] unlike ‘one person one vote’ principleunder ‘show of hands’. This alongwith provisions of section 107 make it clearthat in case of companies which are covered under section 108 read with rule20 of Companies (Management and Administration) Rules, the provisionsrelating to demand for poll would not be relevant.

(v) Permissibility of voting by postal ballot under rule 20: Stakeholders havesought a clarification that in cases (covered under rule 20) where a shareholderwho is not able to participate in the general meeting personally and who is alsonot exercising voting through e-means whether such a person shall have theoption to vote through postal ballot. The matter has been examined and it isfelt that keeping in view the provisions of the Act such an option would not beavailable.

(vi) Manner of voting in case of shareholders present in the meeting: Stakeholdershave sought clarity about manner of voting for shareholders (of a companycovered under rule 20) who are present in the general meeting. It is herebyclarified that since voting through e-means would be on the basis of proportionof share in the paid-up capital or ‘one-share one-vote’, the Chairperson of themeeting shall regulate the meeting accordingly.

(vii) Applying rule 20 voluntarily: Stakeholders have referred to words ‘A companywhich opts to’ appearing in rule 20(3) and have raised a query whether rule 20is applicable to companies not covered in rule 20(1). It is clarified that rule20(3) is being amended to align it with rule 20(1). Regarding voluntaryapplication of rule 20, it is clarified that in case a company not mandated underrule 20(1) opts or decided to give its shareholders the e-voting facility, in such



a case, the whole of procedure specified in rule 20 shall be applicable to such acompany. This is necessary so that any piece-meal application does notprejudice the interest of shareholders. [General Circular No. 20/2014 dated17th June 2014]

1[Demand for poll.

109. (1) Before or on the declaration of the result of the voting on any resolution onshow of hands, a poll may be ordered to be taken by the chairman of the meeting onhis own motion, and shall be ordered to be taken by him on a demand made in thatbehalf, –

(a) in the case a company having a share capital, by the members present inperson or by proxy, where allowed, and having not less than one-tenth ofthe total voting power or holding shares on which an aggregate sum of notless than five lakh rupees or such other 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 inperson or by proxy, where allowed, and having not less than one-tenth ofthe total voting power.

(2) The demand for a poll may be withdrawn at any time by the persons who madethe demand.

(3) A poll demanded for adjournment of the meeting or appointment of chairman ofthe meeting shall be taken forthwith.

(4) A poll demanded on any question other than adjournment of the meeting orappointment of chairman shall be taken at such time, not being later than forty-eighthours from the time when the demand was made, as the chairman of the meetingmay direct.

(5) Where a poll is to be taken, the chairman of the meeting shall appoint suchnumber of persons, as he deems necessary, to scrutinise the poll process and votesgiven on the poll and to report thereon to him in the manner as may be prescribed.

(6) Subject to the provisions of this section, the chairman of the meeting shall havepower to regulate the manner in which the poll shall be taken.

(7) The result of the poll shall be deemed to be the decision of the meeting on theresolution on which the poll was taken.]


S. 109

241

GUIDE NOTES

Analogous law

This section corresponds to section 179 (Demand for poll), section 180 (Time oftaking poll), section 184 (Scrutineers at poll) and section 185 (Manner of takingpoll and result thereof) of the 1956 Act.

Overview

This section provides that a poll can be ordered either before or on declaration ofresult of the voting on any resolution by a show of hands. The chairman of themeeting on his own or on demand made by specified members order for a poll. Thedemand for poll may be withdrawn by the persons who made the demand. A polldemanded for adjournment of the meeting or appointment of chairman of the meetingshall be taken forthwith. A poll demanded on any other question shall be takenwithin 48 hours from the time the demand is made.



Manner in which the Chairman of meeting shall get the poll process scrutinised andreport thereon is specified under rule 21. Polling paper shall be in Form No. MGT.12.The scrutinizers appointed for the poll, shall submit a report to the Chairman of themeeting in Form No. MGT.13.


The Chairman shall order a poll upon receipt of a valid demand for poll either beforeor on the declaration of the result of the voting on any resolution on show of hands.Poll in such cases shall be through a ballot process. While a proxy cannot speak atthe meeting, he has the right to demand or join in the demand for a poll. The poll maybe taken by the Chairman, on his own motion also. [clause 7.4 of SS-2]


Poll can be demanded even without going through formality of a show of hands –Holmes v Keyes [1958] 2 ALL ER 129 (CA)

Proxies can also demand a poll – Berar Trading Co Ltd v Gajanan Gopalrao Dixit[1972] 42 Comp Cas 48 (Bom)

A member may vote at a poll, though not present when the poll was demanded –Compbell v Maund [1836] 5 Ad EL 865

It is not necessary that voting in poll should be by secret ballot. The manner in whichthe voting is to be taken on poll being demanded has been left at the discretion of theChairman by the articles of association – Major Mella Sigh v Jullundur Club Ltd(1969) 39 Comp Cas 1018 (P&H)




The eligibility criteria for demand for poll have been modified. Further the distinctionbetween private company and public company in terms of eligibility of members formaking the demand for poll as provided under the 1956 Act, has also been removed.

The chairman of the meeting shall appoint such number of persons (as against twounder 1956 Act,) as he deems necessary, to scrutinise the poll process and votesgiven on the poll and to report thereon.

Provisions with regard to chairman’s power to remove scruitineers at any time beforethe result of the poll is declared has been dispensed with. Further of the two scrutineers,one has to be member has also been dispensed with.

1[Postal ballot.

110. (1) Notwithstanding anything contained in this Act, a company –

(a) shall, in respect of such items of business as the Central Government may,by notification, declare to be transacted only by means of postal ballot ;and

(b) may, in respect of any item of business, other than ordinary business andany business in respect of which directors or auditors have a right to beheard at any meeting, transact by means of postal ballot,

in such manner as may be prescribed, instead of transacting such business at ageneral meeting.

(2) If a resolution is assented to by the requisite majority of the shareholders bymeans of postal ballot, it shall be deemed to have been duly passed at a generalmeeting convened in that behalf.]

GUIDE NOTES

Analogous law

This section corresponds to section 192A (Passing of resolution by postal ballot) ofthe 1956 Act.

Overview

Unlike the provisions of section 192A of the 1956 Act, wherein postal ballot wasapplicable only for listed public companies, this section has been extended to allcompanies, whether listed or unlisted.

It is mandatory for a company to pass resolution by postal ballot in respect of suchitems of business as the Central Government may, by notification, declare to betransacted only by means of postal ballot. Accordingly Central Government has


S. 110

243

notified following Business items which shall be transacted only by means of votingthrough a postal ballot [rule 22 (16) of Companies (Management and Administration)Rules, 2014] :

(a) alteration of the objects clause of the memorandum and in the case of thecompany 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 ofprovisions which, under sub-section (68) of section 2, are required to be includedin 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 orvillage as specified in sub-section (5) of section 12;

(d) change in objects for which a company has raised money from public throughprospectus and still has any unutilized amount out of the money so raisedunder sub-section (8) of section 13;

(e) issue of shares with differential rights as to voting or dividend or otherwiseunder sub-clause (ii) of clause (a) of section 43;

(f) variation in the rights attached to a class of shares or debentures or othersecurities 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 asspecified under sub-clause (a) of sub-section (1) of section 180;

(j) giving loans or extending guarantee or providing security in excess of the limitspecified under sub-section (3) of section 186:

Exception : One Person Company and other companies having members upto twohundred (such as private companies) are not required to transact any business throughpostal ballot. Thus in case of private company, unless it has more than 200 members,this provision does not apply.

It is, however, discretionary for a company to pass any resolution by way of postalballot other than –

(i) ordinary business items, and

(ii) any business in respect of which directors or auditors have a right to be heard atany meeting.

Ordinary business items such as consideration of annual accounts, declaration of dividend,appointment of directors in place of those retiring and appointment and fixation ofremuneration of auditors shall be transacted only at an annual general meeting.

If a resolution is assented to by the requisite majority of the shareholders by meansof postal ballot, it shall be deemed to have been duly passed at a general meetingconvened in that behalf.



‘Postal ballot’ means voting by post or through any electronic mode.


Procedure to be followed for conducting business through postal ballot is specifiedunder rule 22.

Business items which shall be transacted only by means by postal ballot is specifiedunder rule 22(16) (as stated above).


Every company, except a company having less than or equal to two hundred members,shall transact items of business as prescribed, only by means of postal ballot insteadof transacting such business at a general meeting. Ordinary business shall not betransacted by means of a postal ballot.

In case of companies having a website, notice of the postal ballot shall also beplaced on the website. Such notice shall remain on the website till the last date forreceipt of the postal ballot forms from the members. Notice shall specify the day,date, time and venue where the results of the voting by postal ballot will beannounced and the link of the website where such results will be displayed. Noticeshall also specify the mode of declaration of the results of the voting by postalballot.

Notice of the postal ballot shall inform the members about availability of e-votingfacility, if any, and provide necessary information thereof to enable them to accesssuch facility. In case the facility of e-voting has been made available, the provisionsrelating to conduct of e-voting shall apply, mutatis mutandis as far as applicable.Notice shall describe clearly the e-voting procedure.

Notice shall also clearly specify the date and time of commencement and end of e-voting, if any and contain a statement that voting shall not be allowed beyond thesaid date and time. Notice shall also contain contact details of the official responsibleto address the grievances connected with the e-voting for postal ballot. Noticeshall clearly specify that any member cannot vote both by post and e-voting and ifhe votes.both by post and e-voting, his vote by post shall be treated as invalid[clause 16 of SS-2]


Whether e- voting has the effect of altogether eliminating the need for an actualmeeting being convened. Whether a resolution for approval of a scheme ofamalgamation can be passed by a majority of the equity shareholders casting theirvotes by postal ballot, which includes voting by electronic means, in completesubstitution of an actual meeting. In the case of Godrej Industries Ltd., in re [2014]120 CLA 62 (Bom), it was held that provisions contained in section 110 forcompulsory voting by postal ballot and by electronic voting to the exclusion of anactual meeting cannot and do not apply to court convened meetings for approval ofschemes of arrangement / compromise / amalgamation.

S. 110

245

In the case of Wadala Commodities Ltd., in re [2014] 125 SCL 337 (Bom), it was heldthat provision for postal ballot is an additional facility to the shareholder or member,where he has the option of voting either by postal ballot or e-voting or in person.Ruling out actual meeting is not correct.


The provisions of postal ballot will apply to both listed as well unlisted companies.Earlier this was applicable only to listed entities.

Section 192A of the 1956 Act prescribed the procedural part with regard to passingof resolution by postal ballot. The same is now laid down under the rules separately.

Penalty provision for non-compliance, which was specified under section 192A ofthe 1956 Act, has not been specified.

1[Circulation of members’ resolution.

111. (1) A company shall, on requisition in writing of such number of members, asrequired in section 100, –

(a) give notice to members of any resolution which may properly be movedand is intended to be moved at a meeting ; and

(b) circulate to members any statement with respect to the matters referred toin proposed resolution or business to be dealt with at that meeting.

(2) A company shall not be bound under this section to give notice of any resolutionor to circulate any statement unless –

(a) a copy of the requisition signed by the requisitionists (or two or morecopies which, between them, contain the signatures of all the requisitionists)is deposited at the registered office of the company, –

(i) in the case of a requisition requiring notice of a resolution, not lessthan six weeks before the meeting ;

(ii) in the case of any other requisition, not less than two weeks beforethe meeting ; and

(b) there is deposited or tendered with the requisition, a sum reasonably sufficientto meet the company’s expenses in giving effect thereto :

Provided that if, after a copy of a requisition requiring notice of a resolution hasbeen deposited at the registered office of the company, an annual general meeting iscalled on a date within six weeks after the copy has been deposited, the copy,although not deposited within the time required by this sub-section, shall be deemedto have been properly deposited for the purposes thereof.




(3) The company shall not be bound to circulate any statement as required by clause(b) of sub-section (1), if on the application either of the company or of any otherperson who claims to be aggrieved, the Central Government, by order, declares thatthe rights conferred by this section are being abused to secure needless publicity fordefamatory matter.

(4) An order made under sub-section (3) may also direct that the cost incurred bythe company by virtue of this section shall be paid to the company by the requisitionists,notwithstanding that they are not parties to the application.

(5) If any default is made in complying with the provisions of this section, thecompany and every officer of the company who is in default shall be liable to apenalty of twenty-five thousand rupees.]

GUIDE NOTES

Analogous law

This section corresponds to section 188 (Circulation of members’ resolution) of the1956 Act.

Overview

This section mandates that a company shall, on requisition in writing of certainspecified number of members (as given below) to give notice or circulate statementto members on proposed resolution intended to be moved in the meeting :

(i) in case of company having share capital by members holding 1/10th of sharecapital instead of 1/20th of voting power as provided under the 1956 Act.

(ii) in case of company not having share capital by members holding not less than 1/10th of the voting power instead of 100 members as provided under the 1956 Act.

The statement need not be circulated if the Central Government [power delegated toRegional Director vide notification dated 21st May, 2014] declares that the rightconferred is being abused to secure needless publicity for defamatory matters.

If default is made in circulation of member’s resolution the company and everyofficer of the company shall be punishable with fine.


The expenditure of sending the notice of any resolution to the members and circulationof a statement shall be borne by the company and not by the requisitionists asprovided under the 1956 Act.

The provision of restriction of circulating statement of not more than 1,000 words bythe members has been discontinued.

Exemption given to banking company with regard to circulation of any statement, ifin the opinion of the Board of directors, the circulation will injure the interest of thecompany, has been withdrawn.

S. 111

207 s. 92claonline.in/guide_companies_act_2013_chapter4.pdf · 207 (e) its promoters, ... for...

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