BOARD MEETINGS UNDER SECTION 173 OF THE COMPANIES ACT 2013

BOARD MEETINGS UNDER SECTION 173 OF THE COMPANIES ACT 2013

1.After incorporation of a company, first board meeting has to be held within 30 days.

2.Four meetings have to be held in a year and gap between two board meeting shall not exceed 120 days.(Earlier 90 days).

3.Board Meeting can be held by either in person or through audio, video-conferencing.

4.A minimum 7 days notice is to be given for a board meeting and it should be either hand-delivery or by post or through e-mail or fax.

5.A shorter notice can be given provided if at least one independent director is present at such meeting . If no independent director is not present at the meeting , then , copy of the proceedings of such board meeting to be circulated among the directors and it should be ratified at least one independent director.

6.If there is a default in providing the notice , every officer (Company Secretary)  who is responsible to pay a fine of Rs 25,000 /=

7.One Person Company and Dormant companies shall have to convene at least two board meetings in a year.

8.A director who is attending the board meeting either through audio or video shall be counted for quorum for the board meeting.

9.As per draft rules , that it is compulsory for a director of a company to attend at least one board meeting in person  in a year.

10.Notice of the board meeting shall specify that a director can participate either through audio or video means instead of personal presence.

11.Directors who wants to attend the meeting through videoconference  or audio means shall communicate his intention at least 3 days before the meeting.

12.The draft minutes of the meeting shall be circulated among all the directors within seven days of the meeting either in writing or in electronic mode

13. Matters relating to Approval of accounts and approval of directors report shall have to be held in physical meeting .

14. A whole-time director has to attend at least one  board meeting personally  in a year  else he would lose his directorship.

15. Under Section 168 of the Companies Act 2013, if a director resigns, he has to send a copy of his resignation  letter to the concerned ROC stating the reason for his resignation.

16. Under CA 2013 , the office of the Chairman and Managing Director have been separated unless Articles permits .

17.For independent directors , there should be a separate board meeting exclusively to be attended by the independent directors during a year.

 

 

 

What is the Valid Quorum for an Annual General Meeting ?

What is the Valid Quorum for an Annual General Meeting ?


Quorum refers to the minimum number of members who must be present at a meeting in order to constitute a valid meeting. A meeting without the minimum quorum is invalid and decisions taken at such a meeting are not binding. The articles of a company may provide for a quorum without which a meeting will be construed to be invalid. As per Section 174 of the Companies Act 1956, unless the articles of a company provide for larger quorum, 5 members personally present (not by proxy) in the case of a public company and 2 members personally present (not by proxy) in the case of a private company shall be the quorum for a general meeting of a company.

An authorised agent for many companies present in AGM shall have to be construed as a single member for the purpose of quorum.

Section 175. Chairman of meeting. (1) Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands. Even selection of chairman a meeting to be made by members personally present at the meeting .

We have to make a harmonious reading of both the section 174 & Section 175 of the Companies Act 1956, members personally present shall be a valid quorum for a meeting.


Whether Authorised representative of many corporation has to be considered to be present in person for such companies ?

There is no wrong when a single individual being the nominee or authorised agent for three members. But , the issue is , if he alone present in the AGM or EGM , then it will not be a proper quorum. If two members or fives members personally present along with the proxy holder , then it would be a valid quorum.

If that individual is also member of the company and acts as a proxy for other three shareholders , then one additional member or four present in person in case of pvt ltd or public company respectively , shall be a valid quorum for the meeting.

There is no legal bar for an individual to act as a proxy for 100 other members and he can represent them as their proxy in the meeting . However , such individual cannot be construed as 100 members personally present in the meeting for the purpose of quorum.
In Kelantan Coconut Estates Ltd where the verdict was given in 1920 did speak about the authorised representatives of corporate’s should be treated individual members present in the meeting for the purpose of quorum.

This is English case law and we don't know the wordings of English Company Law that prevailed in 1920. Many amendments have come later including the last 2006 Amendment in UK Company Law.

We have to see the UK company law wordings for the interpretation of case law of Kelantan Coconut Estates Ltd.

But our Indian company law provision is so precise that it demands members personally present will be the quorum of a AGM.

In most of the cases, quorum is presumed unless there is a question about it. As a company secretary, as a prudent secretarial practice, it is better to show both in attendance and in minutes at least minimum two members present in person in private limited companies excluding proxies and authorized representatives . This is mainly to avoid unnecessary questioning of quorum if any disputes arise later on the subject.

CAN AGM BE HELD WITH ONE PROXY REPRESENTING ALL MEMBERS?

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, [1958]3All ER 1 Wynn-parry, J.
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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.
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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.
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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