Meetings and resolutions

Company law covers different meetings as under: Meetings of members; Meetings of board of directors and Meetings of lenders or a class of lenders, preference share holders, debenture holders, etc.

Meetings of members

There are three kinds of meetings of the members of a company:

Statutory meeting, which is to be held not less than one month and not more than six months from the date of incorporation of the company. The statutory meeting is held only once in the lifetime of the company. This provision is applicable only to a public limited company.

Annual general meeting, (AGM) to be held not later than six months from the date of the Balance Sheet. The gap between one AGM and another cannot be more than 15 months.

Any meeting other than the AGM is termed an Extraordinary general meeting (EGM)

Meetings of board of directors

The board of directors should meet at least once in three months to comply with the requirements of law. S.292 specifies certain matters that can be transacted only at a meeting of the board of directors. Rest of the procedures can be carried out by a committee constituted by the board of directors or by way of a circular resolution.

Meetings of class of people

Class of people represents a class of those who have a stake in the company. The class could be preference share holders, debenture holders, deposit holders, creditors, lenders, etc. When a particular class of persons feel that their interests are jeopardised, they may call for a meeting of the other members of that class. There is no time-frame for such meetings.

Essentials for a meeting

The following are essential for any valid meeting to be recognised as such by law: Notice; Agenda; Quorum; Proxy; Resolutions and Minutes.

Notice is a legal communication about the day, date, time and venue of the meeting. Under Company law, there should be a 21-day clear notice to hold a meeting of the members of the company, whereas a seven-day notice is required to ho ld a meeting of the board of directors.

In the case of joint holders, notice is sent to the address of the first joint holder. The company is not obliged to send notices to other joint holders.

Under certain circumstances, the members may decide for a notice of less than 21 days also.

The onus on the company is to send the notice, (normally by ordinary post). It is not necessary for the company to ensure that the same is received by the member.

Agenda refers to the business to be transacted at the meeting. In the case of meeting of members, there would be a few matters to be discussed. Therefore, the agenda is built into the notice itself.

The agenda for a meeting of shareholders could be ordinary business or special business. The agenda for an annual general meeting is well set. The agenda for other meetings is to be drafted to cover the points to be discussed. A note ‘any other item with the permission of the chair’ is added to permit taking up any last-minute inclusions.

But in the case of meetings of board of directors, there could be several items to be deliberated upon. Therefore, a separate note containing the details of business to be transacted (the agenda) is sent, along with the notice of meeting, to each of the directors at the address available with the company. To apprise the directors of the deliberations, support papers, notes and briefs, are also sent with the notice.

The concept of corporate governance has come to stay. Companies are now professionally managed and the Securities and Exchange Board of India (SEBI) requires that committees be formed. The members of every committee, the number of meetings held by such committees, etc, should be disclosed in the annual report of the company.

There should be a notice and an agenda for the meetings of various committees of board of directors, meetings of a class of people, etc.

Quorum: There should be a reasonable number of persons to deliberate and take decisions at meetings. The number of persons to be present in person to constitute a valid meeting is called a quorum. The Articles of Association of the co mpany generally contains a clause regarding the quorum. The chairman of the meeting should wait for a reasonable time for quorum before calling the meeting to order. If a quorum is not formed within half an hour after the scheduled commencement of the meeting, the meeting gets adjourned to the same day of the next week at the same time and at the same venue. At such an adjourned meeting, there is no need for a quorum and even one person present in person shall constitute a valid meeting.

Proxy: Where a member is not able to personally attend a meeting, he can depute another person to attend the meeting on his behalf. The member is required to fill in a form giving the particulars of his share holding and of the proxy. Proxy forms are to be deposited with the company sufficiently in advance before the commencement of the meeting These proxies have restricted rights and are not to be counted for quorum.

Resolutions: A resolution is the legal form of a decision taken at a meeting. There are different types of resolutions. In the case of a meeting of shareholders, it could be an ordinary or a special resolution. Certain matters of impo rtance are to be resolved by a postal ballot.

Any decision taken with a simple majority at a meeting of shareholders is called an ordinary resolution. Certain matters of greater importance, such as amendments to the Articles of Association, fresh issue of capital, etc, can be done only by passing a special resolution.

There are four essentials to constitute a special resolution:

Notice to the meeting should state that the resolution shall be passed as a special resolution.

A 14-day special notice to be given to all shareholders.

An explanatory note, stating the circumstances and provisions of law as to why the resolution should be a special resolution, should be appended to the notice of the meeting.

The resolution shall be passed by a majority of not less than 75 per cent of the members present in person.

Law provides that if an ordinary resolution is passed where a special resolution is required, it is deemed that no resolution has been passed.

Any decision to be taken by the board of directors shall be by way of a board resolution. Board resolution could also be a circular resolution. A resolution passed by a committee of the directors shall be valid as a board resolution. S.292 states the list of items to be decided only at a meeting of the board of directors. Rest of the items can be decided by a circular resolution or a resolution passed by a committee.

Minutes: This is a record of the proceedings of the meeting. A Minutes book should be maintained separately for meetings of the members and of the board of directors.

The chairman of the meeting should initial each page of the Minutes book and affix his full signature at the end of each meeting.

Minutes of the previous meeting are read out at each meeting to provide continuity of the procedures. Any director dissenting from the minutes can insist upon his dissent being recorded in the Minutes book.