A Public Ltd. Company called for general meeting and all ten members of the Company appointed to one and only Mr. A as their proxy, will the general meeting will be valid where various provisions passed as per given agenda ?
Please go through the following English Case:
Re El Sombrero Ltd, 3All ER 1 Wynn-parry, J.
Facts: The Company consisted of only three members. No general meeting of the company was ever held .The quorum for general meeting was two persons present in person or by proxy. Two of the members were un willing to attend any meeting of the company .The third member who held 90% of the shares of the company applied unders.135 of the companies Act,1948( s.371 of the 1985 Act)for an order convening a meeting and directing that one person present in person or by proxy to constitute quorum. But this was opposed by the other two members.
In this case there was no impracticability as to convening the meeting but the problem was that the convened meeting could not be conducted because there was reasonable expectation that insufficient members would be present at the meeting either in proxy or in person so as to constitute a quorum.
The court also tried to make distinction between impracticability and impossibility. Impracticability means whether as a practical matter, the desired meeting of the company can be convened or not?Inthis case it could be convened. But the person who ought to convene the meeting was willfully abstaining from doing so. Hence the implication would be that there was impossibility of holding and conducting the meeting.
In the given case , there was no impossibility of holding and conducting the meeting. All the members have given their consent to a proxy to act and vote on behalf of them at the General Meeting.
According to Section 176, a member is entitled to appoint another person as his proxy to attend and vote instead of himself. The term “ person” signifies a natural person meaning thereby an individual .
U/S 189 (2) of the Companies Act 1956 for a valid special resolution , vote casts in favour of the resolution by the members present in person or by proxy are not less than 3 times the vote casted against the resolution.
Before a meeting can transact any business the following requirements must be satisfied:
a. Meeting, must be duly convened by proper authority
b. Proper notice must be served to all persons entitled to receive it
c. A quorum must be present ( Section 174)
Quorum is defined as the minimum number of members present at the meeting for the
business to be transacted validly. In respect of general meetings it is five members in case
of a public meeting and 2 in case of any other company.
It is to be noted that for the purpose of ascertaining the quorum only members present in person, and not in proxies are to be counted .
As a prudent secretarial practice ,for the purpose of a valid quorum , there should be a minimum quorum present by members in person.
Hence , a single proxy present at an AGM shall be invalid quorum and meeting will be held invalid even if article provides for the same