CHAPTER-11 MEETINGS

After reading this lesson, you will be conversant with:

11.1 Procedure and Requisites of Valid Meeting
11.2 Kinds of Meetings
In this lesson, we shall discuss the provisions relating to meetings of the members, directors
and creditors.
11.1 PROCEDURE AND REQUISITES OF VALID MEETING
Meeting Should be called by Proper Authority
Every company meeting has to be called by the directors except in the case when the meeting
has, in the event of default by the directors, been called by the requisitionists or by the Central
Government. The directors have to fix the date, time and place of the meeting. Notice of a
meeting given by the Secretary without the sanction of the Board of Directors is invalid, but
such a notice may be ratified by the directors before the meeting.
Shareholders are also empowered u/s 169 to requisition holding an extraordinary general
meeting subject to compliance of the provisions of the said section.
Central Government is also empowered to call for a general meeting other than an annual
general meeting.
Section 167 empowers the Central Government to call for an annual general meeting in case
of default in holding the meeting in accordance with Section 166.
Proper and Adequate Notice
The second requirement of a valid meeting is that a proper notice should be given to every
member of the company. Deliberate omission to give notice to a single member may
invalidate the meeting. Accidental omissions can however, be ignored. It must follow the
General Rules in relation to notice and rules as laid down in the Articles and the Companies
Act.
The notice should be clear, explicit and unconditional, conveying to the person all the
required information like the date, time and place of meeting; statement of business general
and special business, that will enable the person to attend the meeting and take part in the
deliberations.
For a general meeting of any kind (statutory, annual or extraordinary), at least 21 days notice
must be given to members (Section 171). If the notice is for the annual general meeting, a
shorter notice is allowed if all the eligible members (members who are entitled to vote and not
merely present) give their consent to it. In case of any other meeting, a shorter notice will be
valid if members holding at least 95 percent of the voting power give their consent to it
[Section 171(2)].
The notice in writing shall be sent to the shareholders giving at least 21 clear days time
excluding the day on which the notice is issued, 48 hours for postal transit and the day on
which the meeting is to be held [Section 171 (1)].
Any resolution passed in the meeting called with shorter notice cannot be effective unless the
latter is ratified by all the shareholders. A person who is present and who votes at the meeting,
will not be entitled to challenge the resolution on the ground of any invalidity in notice.

For the companies covered under Section 25, a general meeting may be called by giving a
notice in writing of less than 14 days.
Contents of the Notice
Section 172 lays down the contents and manner of service of notice and persons on whom it is
to be served. Every notice of meeting of a company shall specify the place, the day and hour
of the meeting, and shall contain a statement of the business to be transacted thereat. An
interesting judgment was made in case of Rathnavelusami vs. Manickavelu Chettair (1951).
On failure of the directors of a company to call a meeting on a requisition, the requisitionists
themselves sent a notice to all the members for a meeting to be held at the registered office of
the company. But the managing director locked the premises of the registered office. It was
held that the resolutions passed thereat were valid.
If the notice is given by newspaper advertisement, the statement of material facts need not be
annexed to, but it should be mentioned that the same has been forwarded to the members.
The notice should also state that a member is entitled to appoint a proxy who need not be a
member [Section 176(2)].
The notice must contain a statement of business to be transacted at the meeting.
Meeting to be Legally Constituted
A legally constituted meeting has a proper quorum, a proper person in the chair and proper
compliance with the relevant provision of the Articles of Association and the Act.
Chairman: The articles may provide that the Chairman of the Board of Directors shall also
preside over the general meetings of the company. In the absence of such a provision, the
members may on a show of hands elect a person to chair the meeting. Where a poll is
demanded it shall be taken forthwith, with the Chairman elected on a show of hands
exercising all the powers of a Chairman relating to conduct of poll.
If no Chairman is designated beforehand or he is not present within fifteen minutes of the
appointed time of the meeting or is unwilling to act as chairman of the meeting then the
directors present shall elect one amongst themselves to be the chairman of the meeting. If this
is not possible by reason that no director is willing to act as a chairman or if no director is
present within 15 minutes after the appointed time, then the members present may elect one
amongst themselves to be chairman of the meeting. A chairman is required to maintain order
and decorum at a meeting, to give ruling on points of order, to decide priority of speakers, to
maintain relevancy and order in debate, to adjourn a meeting, to exercise a casting vote in
case of a tie and to ascertain the sense of meeting and declare the result of voting.
Quorum: Quorum is the minimum number of members who must be present at a meeting
required by Law/Rules. The idea is to avoid situations where decisions taken by minority of
people are imposed to the vast majority of members. A minimum of five members should be
personally present at meeting of a public company and a minimum of two members in case of
a private company. The members present as quorum should be those members who are
eligible to vote in respect of business on the agenda of the meeting. The number may be
higher as provided by the articles of the company. Where the total number of members of a
company is reduced to below the quorum fixed by the articles, the rule as to quorum will be
deemed to be satisfied if all the members of the company attend the meeting in person. If the
quorum is not present within half an hour from the appointed time, (i) the meeting if called
upon the requisition of members shall stand dissolved; (ii) in any other case, the meeting shall
be adjourned to the same day in the next week at the same time and place or to such other day,

time and place as the Board of Directors may determine. As the adjourned meeting is only a
continuation of the original meeting, the requirement of issuing notices can be dispensed with.
However, if the Board fixes any other date for the adjourned meeting, notices will have to be
issued to every member in accordance with the provisions relating to issue of notice for
general meetings. If at the adjourned meeting also, the quorum is not present within half an
hour from the appointed time of the meeting, the members present will be the quorum. As far
as directors are concerned, there should be a quorum of 1/3rd of the total strength of the
Board or two directors, whichever is higher
In case of following circumstances only one member can be allowed to constitute a valid
quorum:
i.

if all the shares are held by one person, the single shareholder shall constitute a
valid quorum in case of a general meeting;

ii.

where the Company Law Board directs under Section 167 or Section 186 that
one member present in person or by proxy shall constitute quorum.
Meeting to be Properly Conducted
Proper conduct of the meeting means that proper rules for ascertaining the sense of the
meeting, the rules for discussion and order in debate as must be observed. Voting rights cannot
be given to preference shareholders unless the resolution directly affects the rights attached to
the preference shares held by them.
Proxy (Section 176): A member who is entitled to attend and vote at a meeting can appoint
another person (whether a member or not) to vote on his behalf. A person so appointed is a
proxy. A proxy has no right to participate in the discussions in the meeting. However, he may
demand or join in a demand for a poll.
Section 176(1) will not be applicable in the following cases except if the articles provide
otherwise.
a.
Members of a company having no share capital will not be able to attend and
vote by proxy.
b.
A member of a private company cannot appoint more than one proxy to attend
the same meeting.
c.
A proxy may vote only on a poll. This implies that he is not eligible to vote by
show of hands
Resolutions: A proposal made at a meeting by any member is called as Motion. A motion
when passed is called resolution. Motions may relate to closure of discussion or postponement
of the discussion.
With respect to general body meetings, there are two kinds of resolutions-ordinary resolutions
and special resolutions. As per Section 189 (1), a motion passed by simple majority of the
members voting at a general meeting is said to have been passed by an ordinary resolution. An

ordinary resolution is a simple majority resolution which requires that votes cast in favor of
the resolution should be more than votes cast against the resolution. Also, the notice as per the
provisions of the Companies Act must have been duly given specifying the intention to propose
the resolution as a special resolution.
According to Section 189 (2), a resolution is a special resolution when
i.

the intention to propose the resolution as a special resolution has been duly
specified in the notice calling the general meeting or other intimation given to the
members;

ii.

and

iii.

the notice required under the Act has been duly given of the general meeting;

the votes cast in favor of the resolution by members present (in person or in
proxy either by poll or by show of hand, as applicable) are not less than three times the
number of votes, if any, cast against the resolution. Abstentions, if any, are not to be
taken into account.

11.2 KINDS OF MEETINGS

Meetings under Companies Act, 1956 may be classified as follows:
a.

Shareholders Meetings:

Statutory meeting as per Section 165 of the Act;

Annual General Meeting (AGM) as per Section 166 of the Act;

Extraordinary General Meeting (EGM) (Section 169): Those convened by the

Board of Directors to transact business of special importance that arises in between the
two annual general meetings and justifies the convening and holding a meeting of the
shareholders; and

Class Meetings of Shareholders.

a.

Board Meetings.

b.

Meetings of the Committees of Board.

c.

Meetings with the Debenture holders.

d.

Meetings of Creditors.

Each of the above meetings are elucidated below.

Statutory Meeting
Section 165 of the Companies Act, 1956 lays down:

Every company limited by shares, and every company limited by guarantee and having a share
capital, shall, within a period of not less than one month nor more than six months from the date
at which the company is entitled to commence business hold a general meeting of the members
of the company, which shall be called statutory meeting. This is the first meeting of the
shareholders of a public company and there would be only one such meeting in the lifetime of the
company.
Exemptions: This section is not applicable to:
i.

a private company, whether independent or subsidiary of a public company;

ii.

a public company not having share capital;

iii.

a public company having liability of its members unlimited;

iv.
a public company having liability of its members limited by guarantee and not
having share capital; and
v.
a Government company, whether registered as a private company or a public
company.
However, if a private company becomes or converts itself into a public company within a
period of six months from the date of its incorporation, it will have to comply with the
provision of this section. If a private company becomes public company after six months of
its incorporation, it will not be required to hold the statutory meeting.
Purpose: The main purpose of this meeting is to enable the members to know at any early
date the financial position and prospects of the company. Also, the statutory meeting provides
an opportunity to the shareholders to discuss various aspects arising out of the promotion and
formation of the company.
Annual General Meeting
An annual meeting known as an annual general meeting is required to be held by every
company every year whether public or private, limited by shares or by guarantee, with or
without share capital or an unlimited company. Every annual general meeting shall be held
during business hours, not on a public holiday and at the registered office or at some place
within the city, town or village in which the registered office is situated.
Purpose: The object of the meeting is to allow shareholders to periodically review the working
of the company. It also provides a forum for the shareholders to exercise their discretion in
electing/re-electing new or retiring directors/auditors, and in having a direct interaction with
the members of the board regarding the progress made by the company, and on matters relating
to accounts or affairs of the company.
Time frame: According to Section 166(1), the first annual general meeting of a company should
be held within a period of 18 months from the date of its incorporation. The period of 18
months will not be extended in any case. When a meeting is so held, it will not be necessary for

a company to hold any annual general meeting in the year of its incorporation or in the
following year.
Thus, if a company is incorporated in December, 1994, it may hold its first annual general
meeting in April, 1996 and that meeting will be deemed to be the annual general meeting for
1994, 1995 and 1996.
Further, in compliance with Section 210(3), it should be ensured that the first annual general
meeting is held within 9 months of the close of the financial year.
Other than the first annual general meeting, every company shall in each calendar year hold an
annual general meeting by giving due notice. The gap between two annual general meetings
must not be more than 15 months and the meeting must be held within six months from the
close of the financial year.
The annual general meeting should be held whether or not the annual accounts are ready.
Taking into consideration Section 166 and 210 it may be noted that an annual general meeting
(other than the first) should be held on the earliest of the following dates:
a. fifteen months from the date of the last annual general meeting;
b. the last day of the calendar year;
c. 6 months from the close of the financial year.
Place and time of holding annual general meeting
According to Section 166(2)(a), a public or a private company which is a subsidiary of a public
company may fix the time for its annual general meeting either through its articles, or it may
also by passing a resolution in one annual general meeting fix the time for the subsequent
annual general meeting.
A private company which is not a subsidiary of a public company, may in like manner and also
by a resolution agreed to by all the members thereof, fix the time as well as the place for its
annual general meeting.
An annual general meeting should be held at a time during the business hours and in the city,
town or village in which the registered office is situated and not elsewhere.
Where an annual general meeting is adjourned, the board has the power to hold the adjourned
meeting at any place other than the place where the annual general meeting was held.
However, so far as possible, it should be ensured that the meeting is held at the same place as
the original meeting and if that is not possible, the meeting should be held either at the
registered office of the company or at a place within the city in which the registered office is
located.

Default: The Company Law Board may on its own or on the application of any director of the
company or of any member of the company entitled to vote at the meeting, call for a meeting.
This is permitted only when there occurs a default in holding the annual general meeting or it is
impracticable for the company to call, hold or conduct a general meeting other than an annual
general meeting.
Extraordinary General Meetings
All the general meetings of the company with the exception of the Statutory Meeting and
Annual General Meeting are Extraordinary General Meetings (EGM).
Object: The purpose of EGM is to transact special business defined in the previous which
arises between two annual general meetings. The special business transacted at the EGM has to
be urgent, which cannot be deferred to the next annual general meeting. For instance, a change
in the objects or shift of registered office or alteration of capital or removal of a
director/auditors require immediate attention which cannot be deferred till the next annual
general meeting.
An Extraordinary General Meeting may be called by,
The board of directors on its own or on the requisition of a specified number of
members entitled to vote.

By the requisitionists themselves in case of failure by the board to call for a

meeting.

By the Company Law Board.

Class Meetings

Class meetings are those meetings which are held by holders of a particular class of shares, e.g.
preference shares. Need for such meetings arises when it is proposed to vary the rights of a
particular class of shares. Thus, for effecting such changes, it is necessary that a separate
meeting of the holders of that particular class is held. The meeting is necessary only if the
variation involves the curtailments of the rights of any classes of shareholders.
It was held in House of Fraser v. ACGEE Investments Ltd.(1987) that a cancellation of
preference shares by repayment of the capital paid upon those shares and in accordance with
rights attached to those shares does not involve any modification or variation of class rights so
as to require a meeting of the preference shareholders.
Section 107 gives a right to a minority group of shareholders belonging to a class, not being
holders of less than ten percent of the issued shares of that class, to challenge the variation of
the rights attached to the shares of that class. That is, a class meeting should be called if
variation of the class of shares in question would unfairly prejudice the shareholders of that
class.
Board Meetings

The meetings of the Board of the Directors for the purpose of collectively taking decisions for
smooth functioning of the company are referred as Board Meetings.
Object: To formulate management policies, take decisions of importance pertaining to running
of the company, review of progress made by the company among other matters related to the
company.
Section 291 lays down that the Board can exercise all the powers which the company is
authorized to exercise.
However, where it is specifically provided that a power or act should be exercised by the
company in a general meeting, the board shall not exercise such power.
Moreover, the board shall not exercise any power or do any act which is inconsistent with the
provisions of the Act, or the Memorandum or the Articles of the company.
Section 291(2) provides that a regulation passed by the company in a general meeting shall not
invalidate any prior act of the board which would have been valid if that regulation had not
been made.
The power delegated to the Board of Directors will have to be exercised at properly convened
board meeting unless the articles provide otherwise.
Powers: Section 292 lays down that the following decisions have to be taken only at the
meeting of the board of directors:
i.

make calls on shareholders in respect of unpaid money on their shares;

ii.

to issue debentures;

iii.

to borrow moneys otherwise than on debentures;

iv.

to invest the funds of the company; and

v.

to make loans.

It has to be noted that the meeting does not require any agenda for the meeting of the
directors. Any business whatsoever, thus can be transacted at a board meeting.
Frequency of Board Meetings: Section 285 provides that a board meeting should be held at
least once in every 3 calendar months. There should be at least four such meetings in every
year. This provision is applicable to every company except where the Central Government
notifies otherwise.
So long as the four board meetings are held in a calendar year, one in each quarter, the interval
between two meetings may be more than three months.

The Act does not make it compulsory for a director to attend all the board meetings. However,
the director can be held liable for any losses incurred by the company which could have been
avoided/prevented by his presence at the board meeting.
Place and Time of Board Meetings: There is no restriction as to the place at which the board
meeting should be held. Thus a board meeting need not be held at the registered office of the
company. It can be held at any place according to the convenience of the board. It may also be
held in a foreign country if circumstances warrant.
A board meeting may be held on any day (even a public holiday) or outside business hours.
However, according to Section 288, a board meeting adjourned for want of quorum should be
held on a day which is not a public holiday.
Notice of Meeting: A written notice of the board meeting should be sent to every director for
the time being in India and to his usual address in case of every other director. The notice
should be issued under the authority of the company.
An officer who fails to give such a notice will be punishable with fine which may extend to
rupees one thousand.
Any such failure to give notice will render the proceedings of the meeting invalid.
Quorum: The quorum for a board meeting shall be 1/3 of its total strength (any fraction
contained in that 1/3 being rounded off as one) or 2 directors whichever is higher.
Where the number of interested directors equals or exceeds 2/3 of the total strength, then the
remaining non-interested directors present at the meeting and being not less than 2 in number
will be the quorum during such time.
At a board meeting, presence of quorum is required at each and every stage of the meeting.
In a situation, where all the directors are interested, it is advised to increase the number of
directors who are not interested or appoint additional directors not interested in the contract, if
authorized by the articles.
If this is not practicable, the proposed contract should be placed before the general meeting for
consent.
Meetings of Committee of Directors
Any meeting by the committee consisting of individuals who have been delegated the powers
as permitted by Section 292 is referred to as Meeting of Committee of Directors. Section 292
allows the power to borrow money otherwise than on securitites, power to invest funds of the
company and power to make loans to be delegated subject to the limits and terms and
conditions as resolved by the Board of Directors. The committee so formed cannot delegate its
powers further.
The provisions relating to the meetings of a committee of directors and provisions relating to
directors meetings are by and large same as those of board meetings.

The minutes of the proceedings of a committee of directors is not open for inspection to
general public.
Meeting of Debenture Holders
As in the case of Class Meetings, if any variation is proposed to be made in terms of security or
to alter the rights of debentureholders in certain circumstances, then a Meeting of Debenture
holders is called. All the matters connected with the holding, conduct and proceedings of the
meetings of the debenture holders are given in the Debenture Trust Deed. The decisions arrived
at such meetings with the requisite majority, are valid and binding upon the minority.
Meeting of Creditors
Meeting of creditors for certain arrangements with the company either in case of a running
concern or in the event of winding-up is referred to as Meeting of Creditors. These kind of
meetings are not company meetings in the real sense.
Section 391 to Section 393 authorize the company to enter into arrangements with the creditors
with the sanction of the Court. The court, on application, may order the holding of a creditors
meeting. If the scheme of arrangement is agreeable to, by majority of creditors in number
holding debts to the value of three-fourths majority, the courts may sanction the scheme.
When a company goes into liquidation, a meeting of creditors and of contributors is held to
ascertain the total amount due by the company to its creditors and also to appoint a liquidator to
wind-up the affairs of the company.