Wednesday, June 30, 2010

Can a shareholder propose a resolution for Annual General Meeting? If yes, will the proposal be part of Agenda for AGM which would be circulated to al

Yes . But provisions in section 188 of the companies Act ,1956 and s 257 of the companies Act shall have to be followed.

When a Member can ask the company to circulate the resolution?

Sec : 188 (i) a)Resolution -6 weeks b)Other matters-14 days

S.188 (I) (a) – moving of resolution at AGM ,6 weeks

S.188(i) (b) – Circulation of any matter -14 days

Members entitled under S.188- 1/20 th of total voting power or 100 members holding shares having a paid up value of Rs 1 lakh.

When a company is not bound:

Time limit

Defamatory or needless publicity abuse

Central government to order not to comply with

Banking Co

S 188 (6) – NO obligation to circulate in some cases-if it would prejudice interest of the company

The right of a member to circulate resolution cannot be curtailed by the AOA
S.190 – Special Notice 14 days before the meeting

Cases where special notice is needed- s 224 (5) (a)

Section 284-
On reading section 284 it is found that it requires a special notice and a ordinary resolution to remove a director, but the special notice shall be served by how many shareholders, section 284 is silent on that, infact the word shareholder nowhere appears in section 284, it only says that “Special notice shall be required of any resolution to remove a director under this section”. The relevant part of section 284 is produced hereunder-

Removal of directors under section 284
(1) A company may, by ordinary resolution, remove a director (not being a director appointed by the Central Government in pursuance of section 408) before the expiry of his period of office…..

(2) Special notice shall be required of any resolution to remove a director under this section, or to appoint somebody instead of a director so removed at the meeting at which he is removed.

(3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

Notice moved by a single shareholder, not accepted by the company-

In order to prevent the embarrassment caused by the frivolous notices to remove the director, given by a single shareholder, the companies refuse to circulate the notice to other members (as required by section 284) terming the notice as invalid for non compliance of section 188. Section 188 requires a certain number of shareholders to move a shareholders resolution. The relevant part of the provision is produced hereunder-

In Gopal Vyas vs. Sinclair Hotels and Transportations ltd, the court opined that section 257 is a ‘self contained’ provision and do not need section 188 to be adhered with.

In Karnataka bank vs. AB Datar, it was held that a single shareholder can move resolution for removal of a director.

In the case of Prakash Roadlines vs. Vijay Kumar Narang has reiterated its ratio of Karnataka Banks case and held that the right to move a resolution is a inherent right of the shareholder and the right to move a resolution to elect or remove a director is a individual right which is independent of the requirement of Section 188.

Thus , for removal of director under section 257 , a single shareholder can move the resolution as decided in Gopal Vyas , Karnataka Bank and Prakash Roadlines and for any other matter provisions of section 188 has to be followed.


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