What are the Requisites of a Valid General Meeting?
Requisites of a Valid General Meeting:
A general meeting of the members is said to be valid when it is properly convened and duly constituted. A meeting is said to be properly convened when proper notice of the meeting is issued by a ‘proper authority to all the persons entitled to receive the notice. Following are the requisites of a valid general meeting :
The proper authority to convene a general meeting of the company’s members is the Board of Directors. For this, the Board of Directors has to pass a resolution at its meeting. Such a meeting of the members can be Annual General Meeting, or Extraordinary General Meeting. In certain cases, even such meetings may be called by or requisitioned by the members themselves or by the Tribunal.
Notice: The notice of every meeting of the company shall be given to:
- Every member of the company, legal representative of any deceased member or the assign of an insolvent member,
- The auditor or auditors of the company and
- Every director of the company.
For general meeting of the members, notice has to be given at least 21 days in advance. In calculating 21 days, the date of the issue and the date of meeting are not included. In case the notice is sent by post, two days for postal transit are excluded.
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Therefore, the notice of a general meeting should be sent 25 days before the date of the meeting if the notice is sent by post. The notice should contain the agenda of the meeting which means a ,list of all the items to be discussed in the meeting. The notice must specify the place, time and purpose of the meeting.
The meeting may be held with a shorter notice if it is so agreed by at least 95% of the members entitled to vote in such meeting. Deliberate omission to give notice to any member can render the meeting invalid. An accidental omission to give notice to or non receipt of it by any individual member will not affect the meeting’s validity.
The notice must contain a statement about the business to be transacted at the meeting, clearly dividing the business into Ordinary Business and Special Business. The notice may be sent to a member by post or by courier or by such electronic or other mode as may be prescribed.
Place of the Meeting:
Annual General Meeting: An AGM must be held by a company at its registered office or at i:erne other place in the same city, town or village where the registered office of the company is situated. The Central Government may exempt any company from this provision subject to such conditions as it may impose.
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Extraordinary General Meeting (EGM): Unlike AGM, EGM can be held at a place other than the registered ‘office of the company or the city, town or village in which the registered office of the company is situated.
It means the minimum number of members required to be present at the meeting. If this minimum number of members is not present, then the meeting is held to be invalid and no business can be transacted at it. Generally, it is the Articles of Association of the company wherein the requirement of the quorum is specified regarding various meetings whether it is Board Meeting or General Meeting of the members.
Quorum, is required to be present at the beginning of the meeting. It need not be present throughout or at the time of taking votes on any resolution. A quorum must be present throughout in the case of Board’s Meetings.
Section 103 of the Companies Act contains provisions relating to number of members which would constitute quorum for a meeting of the company.
As per Section 103, unless, the Articles of the company provide for a larger number:
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In case of a public company:
- Five members personally present if the number of members as on the date of meeting is not more than one thousand.
- Fifteen members personally present if the number of members as on the date of meeting is more than one thousand but less than or equal
to five thousand.
- Thirty members personally present if the number of members as on the date of the meeting is more than five thousand.
In the case of a private company, two members personally present, shall be the quorum for a meeting of the company.
If the quorum is not present within half -an -hour from the time appointed for holding the meeting of the company:
The meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine or
The meeting, if called by requisitionists shall stand cancelled.In the case of an adjourned meeting or of a change of day, time or place of meeting, the company shall give not less than three days notice to the members either individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.
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If at the adjourned meeting also, a quorum is not present within half-an -hour from the time appointed for holding the meeting, the members present shall be the quorum. Can one person constitute a quorum?:
Ordinarily, one person present in the meeting can not form a quorum. Under the following circumstances, even one person present may form the quorum for a general meeting.
When the Tribunal calls or directs the calling of an Annual General Meeting, it may give direction to the company that one member present in person or by proxy shall be deemed to constitute a meeting.
In case of class meetings, if all the shares of a particular class are held by one person, he shall constitute the quorum.
If there is only one creditor or debenture-holder, he shall constitute quorum for the creditors debenture-holders’ meeting.
Chairman [Section 104]:
The successful conduct of any meeting is largely dependent upon the personality of the chairman. He acts as the Presiding Officer of the company’s meeting. It is this chairman who is responsible for maintaining order and also conducting the meeting.
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He puts motions before the meeting, counts the votes, announces the results and also certifies the records (minutes) of the meeting by putting his signatures. Unless the Articles of the company provide otherwise, the members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands.
If a poll is demanded on the election of the chairman, it shall be taken in accordance with the provisions of this Act and the chairman elected on a show of hands shall continue to be the chairman of the meeting until some other person is elected as chairman as a result of the poll, and such other person shall be the chairman for the rest of the meeting.
Section 104 leaves the appointment of the chairman to be regulated by the Articles of the company. The provisions of this section would be applicable only if the Articles do not otherwise provide. The Articles generally contain provisions on the lines of Regulations 45 to 47 contained in Table F of Schedule I.
These Regulations are as follows :
Regulation 45: The chairman, if any, of the Board shall preside as chairman at every general meeting of the company.
Regulation 46: If there is no such chairman, or if he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as the chairman of the meeting, the directors present shall elect one of the directors present to be the chairman of the meeting.
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Regulation 47: if at any meeting, no director is willing to act as chairman or if no director is present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of the members present to be the chairman of the meeting.
Powers of the Chairman
- To decide all incidental questions which arise at the meeting.
- To regulate the course of the proceedings at the meeting.
- To decide priority among-st speakers when two or more persons simultaneously rise to speak.
- To stop the speaker when his allotted time is over.
- To check irrelevant and personal references during the course of debate.
- To order and take a poll
- To expel an unruly member
- To exercise casting vote in case of equality of votes.
Duties of the Chairman
- To see that the meeting is properly called.
- To see that proper notice of the meeting has been given to all.
- To see that the requirements of the Companies Act and Articles of Association are duly compiled with.
- To take care that proper discipline is maintained at the meeting.
- To see that the proceedings are conducted in a proper manner.
- To see that the voting is fair.
- To declare the meeting closed when all the business has been transacted.
- To see that proper and correct minutes are entered in the minutes book.
Minutes (Section 118) : Minutes man a written record of all the proceedings of the meeting. Some important points pertaining to minutes are as follows:
- Separate minutes books have to be maintained for each type of meeting.
- Every minutes book shall be in a bound form and not in a loose-leaf form.
- Every page of the minutes book must be serially numbered.
- Minutes must present a fair and proper summary of all the proceedings conducted at the meeting.
- All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.
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Every company shall take steps to get the/Minutes of the proceedings of general meetings, meetings of the Board of Directors and its committees and every resolution passed by postal ballot prepared within 30 days of conclusion of such meeting or passing of resolution by postal ballot.
In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain:
- The names of the directors present at the meeting and
- In the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution.
There shall not be included in the minutes, any matter which, in the opinion of the chairman of the meeting:
- Is or could reasonably be regarded as defamatory of any person or
- Is irrelevant or immaterial to the proceedings or
- Is detrimental to the interests of the company.The chairman shall exercise absolute discretion in regard to the inclusion or non -inclusion of any matter in the minutes on the grounds stated above.
- The minutes kept in accordance with the provisions of the Act shall be evidence of the proceedings recorded therein.
Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed:
In the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting.
In the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of 30 days A or in the event of the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.
In case of every resolution passed by postal ballot, by the chairman of the Board within the aforesaid period of 30 days or in the event of there being no chairman of the Board or the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.
The minutes book of general meetings shall be kept at the registered office of the company, preserved permanently and kept in the custody of the company secretary or any director duly authorized by the Board or at such other place as may be approved by the Board.
Minutes constitute a prima-facie proof of meetings being in order.
The minutes book shall be open for inspection to members during business hours without any charge subject to such restrictions as the company may impose. A member shall be entitled for a copy of any minutes subject to payment of fees. The copy should be made available to him within seven days of his making request.
If any default is made in complying with the provisions of the Act in respect of any meeting, the company shall be liable to a penalty of twenty five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
If a person is. found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty e thousand rupees but which may extend to one lakh rupees.