Management and Administration – CA Inter Law Study Material

Management and Administration – CA Inter Law Study Material is designed strictly as per the latest syllabus and exam pattern.

Management and Administration – CA Inter Law Study Material

Question 1.
Mr. Zoey purchased the shares of Luxy Hairstyles Private Limited, at market price. In the name of his daughter, Mita, who is 4 years old. Mr. Joe, the Director of the Company, has approached you to advise him on the updation of said change In the register of members, since Mita, being a minor is
incompetent to contract in her capacity.
Answer:
Register of Members:

Minors are not competent to enter into any contract, thus their names cannot be entered in the
register of members. The names of the minor can only be entered only lithe details of the guardian
are present.
In the given case, Mua is a minor. Hence, Zoey’s name shall appear in the register of members of
Luxy Hairstyles Private Limited.

Question 2.
Mrs. and Mr. Taneja, recently got married and jointly purchased the shares of New Hopes India Private Limited on 14th August 2022. Mr. Taneja intimated the company that only the name of his wife should appear in the records of the company, for the shares purchased by them. The secretary of the company is not sure whether this is possible, given that the shares are held ¡n the names of both the persons.
Answer:
Entry in the Register of Members In case of joint Shareholding:

Joint holders of shares may request the company to enter their names on the register in a certain order, or execute transfers to have their holding split, with the result that part of the holding is entered showing the name of one holder and part showing the name of another.
in the given case, intimation of Mr. Taneja that only the name of his wife should appear in the register as a member cannot be considered, although the names can be entered in the order such that the name of his wife appears first.
The reason for this is that the articles of most companies provide that, in the case of exclusion of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the register of members.

Question 3.
Bazaar Limited called its AGM in order to lay down the financial statements for Shareholders’ approval. Due to want of Quorum, the meeting was cancelled. The directors did not file the annual returns with the Registrar. The directors were of the idea that the time for filing of returns within 60 days from the date of AGM would not apply, as AGM was cancelled.

Has the company contravened the provisions of Companies Act, 2013? If the company has contravened the provisions of the Act, how will it be penalized? [May 18 (4 Marks), MTP-Oct. 20]
Or
Nutty Buddy Limited is manufacturing premium quality milk based ice cream in two flavors first chocolate and second butter scotch. The company called its Annual General Meeting (AGM) in order to lay down the financial statements for Shareholders’ approval. However, due to want of quorum, the meeting was cancelled. Also, the Directors of the company did not file the Annual Return with the Registrar.

The directors were of the idea that the time for filing of returns within 60 days from the date of AGM would not apply, as AGM was cancelled. Has the company contravened the provisions of Companies Act, 2013? If the company has contravened the provisions of the Act, how will it be penalized? [RTP-Nov. 21]
Answer:
Filing of copy of Annual return with the Registrar:

As per Sec. 92(4) of the Companies Act, 2013, every company shall file with the Registrar a copy of the annual return, within 60 days from the date on which the AGM is held or where no AGM is held in any year within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the annual general meeting.

As per Sec. 92(5) of the Companies Act, 2013, if any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of ₹ 10,000 and in case of continuing failure, with further penalty of ₹ 100 for each day during which such failure continues, subject to a maximum of ₹ 2 lakh in case of a company and ₹ 50,000 in case of an officer who is in default.

In the given case, the idea of the directors that since the AGM was cancelled, the provisions requiring the company to file annual returns within 60 days from the date of AGM would not apply, is incorrect.

Conclusion: AGM of the company should have been held within a period of 6 months, from the date of closing of the financial year but it did not take place. Hence, company has contravened the provisions of Sec. 92 of the Companies Act, 2013 for not filing the annual return and shall attract the penal provisions along with every officer of the company who is in default as specified in Sec. 92(5) of the Act.

Question 4.
As per the provisions of the Companies Act, 2013, every company is required to file with the Registrar of Companies, the Annual Return as prescribed in section 92, in Form MGT-7. Explain the particulars required to be contained in it. [May 18 (6 Marks)]
Answer:
Particulars stated in the annual return (Sec. 92):
Every company is required to file with the Registrar, the annual return as prescribed in section 92, in
Form MGT-7 as per Rule 11(1) of the Companies (Management & Administration) Rules, 2014.

The particulars contained in an annual return, to be filed by every company are as follows:

Its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
Its shares, debentures and other securities and shareholding pattern;
Its members and debenture-holders along with the changes therein since the close of the previous financial year;
Its promoters, directors, KMP along with changes therein since the close of the previous financial year;
Meetings of members or a class thereof, Board and its various committees along with attendance
details;
Remuneration of directors and key managerial personnel;
Penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
Matters relating to certification of compliances, disclosures;
Details in respect of shares held by or on behalf of the Foreign Institutional Investors including their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and
Such other matters as may be prescribed.

Question 5.
Due to heavy rains and floods Chennal Handloom Limited was unable to convene annual general meeting upto 30th September, 2022. The company has not filed the annual financial statements, or the annual return as the directors of the company are of the view that since the annual general meeting did not take place, the period of 60 days for filing of annual return is not applicable and thus, there is no contravention of Section 92of the Companies Act, 2013. Discuss whether the contention of directors is correct. (Nov. 18(3 Marks))

Question 6.
Tulip Ltd. maintains its Register of Members at its registered office in Mumbai. A group of members residing in Kolkata want to keep the register of members at Kolkata.

(i) Explain with provisions of Companies Act, 2013, whether the company can keep the Registers and Returns at Kolkata.
(ii) Does Mr. Rich, holding 400 shares of total worth ₹ 4,000 only, has the right to inspect the Register of Members? [May 18 (5 Marks)]

Answer:
Place of keeping and inspection of Registers, Returns, etc.:

(i) Maintenance of the Register of Members etc.:
As per Sec. 94(1) of the Companies Act, 2013, the registers required to be kept and maintained by a company u/s 88 and copies of the annual return filed u/s section 92 shall be kept at the registered office of the company:

Provided that such registers or copies of return may also be kept at any other place in India in which more than 1/10th of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company.

Conclusion: Tulip Ltd. can also keep the registers and returns at Kolkata after compliance with the provisions of Sec. 94(1), provided more than l/10th of the total number of members entered in the register of members reside in Kolkata.

(ii) Inspection of register of Members:
As per Sec. 94(2) of the Companies Act, the registers and their indices, except when they are closed under the provisions of this Act, and the copies of all the returns shall be open for inspection by any member, debenture holder, other security holder or beneficial owner, during business hours without payment of any fees and by any other person on payment of such fees as may be prescribed.

Conclusion: Mr. Rich, who is a shareholder of the company, has a right to inspect the Register of Members during business hours without payment of any fees.

Question 7.
Mr, Bheem is holding 500 shares (of ZYZ Limited) of total worth ₹ 5,000 only. Advise, whether he has the right to inspect the Register of Members? [MTP-March 19)

Question 8.
Answer the following:

Abbeys Private Limited closed its financial year on 31st March 2022. By when the company should hold its AGM for the year 2022.
Abbyrush Limited was incorporated on 11th December 2022. When should the company hold its AGM?

Answer:
Annual General Meetings:

As per Sec. 96(1) of the Companies Act, 2013, the Company should hold its AGM for the year 2021-22 by 30.09.2022 unless an extension is granted by Registrar on special reasons.
Company’s financial year will close on 31st March 2023. As per Sec. 96(1) of the Companies Act, 2013, company may hold its first AGM by 31.12.2023, i.e. within 9 months of the close of its financial year.

Question 9.
Infotech Ltd. was incorporated on 1.4.2021. No General Meeting of the company has been held till 30.4.2023. Discuss the provisions of the Companies Act, 2013 regarding the time limit for holding the first annual general meeting of the Company and the power of the Registrar to grant extension of time for the First Annual General Meeting. [RTP-Nov. 19, May 20]
Or
Shambhu Limited was incorporated on 1.4.2021. The company did not have much to report to its shareholders, so no general meeting of the company has been held till 30.4.2023. The company has recently appointed a new accountant. The new accountant has pointed out that the company required to hold the Annual General Meeting.

The company has approached you as a senior Chartered Accountant. Please advise the company regarding the time limit for holding the first annual general meeting of the Company and the power of the Registrar to grant extension of time for the First Annual General Meeting. (MTP-March 21]
Answer:
Time limit for holding the first AGM and the power of the Registrar to grant extension of time:

As per Sec. 96 of the Companies Act, 2013, every company shall be required to hold its first AGM within a period of 9 months from the date of closing of its first financial year.
However, Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first AGM, shall be held, by a period not exceeding 3 months.

Conclusion: First financial year of Infotech Ltd. is for the period 1st April 2021 to 31st March 2022, hence the first AGM of the company should be held on or before 31st December, 2022.
Further, the Registrar does not have the power to grant extension to time limit.

Question 10.
Rijwan Limited, a listed company, is in the business of garment manufacturing and has its registered office at 123, N Tower, Commercial Beta Complex, Biwadi, Rajasthan. The company has called its 6th Annual General Meeting at 3 P.M. on 22nd August, 2022 at Ansal Plaza, Bhiwadi. Some of the members of the company have opposed to calling of the meeting at Ansal Plaza. The company has approached you to advise them in this regard.

Suppose, Rijwan Limited is an unlisted company and wants to call their 6th AGM at Jaipur, will your answer differ. [RTP-Nov. 19]
Answer:
Place for holding AGM:

As per Sec. 96(2) of the Companies Act, 2013, every AGM shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate.

However, AGM of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance.

Conclusion: Based on the above stated provisions, following conclusions may be drawn:

In the first situation, the company is rightful in calling the AGM at Ansal Plaza.
In the second situation, i.e. in case of an unlisted company, AGM may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance. Hence, if consent is given in writing or by electronic mode by all the members in advance, the AGM can be called at Jaipur, otherwise not.

Question 11.
Examine the validity of the following statements in respect of Annual General Meeting (AGM) as per
the provisions of the Companies Act, 2013:

(i) The first AGM of a company shall be held within a period of six months from the date of closing of the first financial year.
(ii) The Registrar may, for any special reason, extend the time within which the first AGM shall be held.
(iii) Subsequent (second onwards) AGMs should be held within 6 months from closing of the financial year.
(iv) There shall be a maximum interval of 15 months between two AGMs. (July 21 (4 Marks), MTP-March 22]

Answer:

Annual General Meetings:
Provisions relating to annual general meetings are covered u/s 96 of the Companies Act, 2013. In accordance with that answer of the various statements are:

(i) First annual general meeting of the company should be held within 9 months from the closing of the first financial year.
Hence, the statement that the first AGM of a company shall be held within a period of 6 months from the date of closing of the first financial year is incorrect.

(ii) Registrar may, for any special reason, extend the time within which any AGM, other than the first AGM, shall be held, by a period not exceeding 3 months.
Thus, the Registrar cannot extend (for any reason) the time period within which the first AGM shall be held. Given statement is incorrect.

(iii) Subsequent AGM (i.e. second AGM onwards) of the company should be held within 6 months from the closing of the financial year.
Hence, the given statement that subsequent (second onwards) AGMs should be held within 6 months from closing of the financial year is correct.

(iv) Gap between two AGMS should not exceed 15 months.
Hence, the given statement that there shall be a maximum interval of 15 months between two AGMs is correct.

Question 12.
The Board of directors of IllusIons Private Limited, a company registered in New Delhi, has decided to call an EGM In Madrid, Spain on 2nd October 2022. Discuss whether the general meeting can be
convened on the said date.
Answer:
Place of EGM:
As per Rule 17(2) of the Companies (Management and Administration) Rules, 2014, the requisitionists should hold the meeting in the registered office of the company or in the same city or town in which the registered office is situated and it should be a working day.

Hence, the meeting cannot be convened in the manner as stated in the facts of the question.

Question 13.
The members of the Blumove Peacocks Private Limited, holding 1/10th voting power of the company, requisitioned a meeting on 14th August, 2022 to the Board of Directors. However, the directors did not pay any heed to such a requisition and did not call an extraordinary meeting. Discuss the consequences of the contravention of the same in accordance with the Companies Act, 2013.
Answer:
Calling of EGM:
As per Sec. 100 of the Companies Act, 2013, on receipt of a valid requisition, the Board shall within 21 days proceed to call an EGM to be held not later than 45 days from the date of receipt of the requisition.

If the Board fails to call an EGM, it may be called by the requisitionists themselves, as follows:

Time period for holding EGM: The EGM shall be held within 3 months from the date of requisition.
Manner of calling EGM; The requisitionists shall call the EGM in the same manner in which a meeting is called and held by the BOD.

Question 14.
Primal Limited is a company incorporated in india. It owns two subsidiaries: Privy Limited (in which holds 75% shares) and Maivy Limited (a wholly owned subsidiary). Both the subsidiaries are Incorporated outside India. The Board of Directors of Primal Limited intends to call an Extraordinary General Meeting (EGM) of Primal Limited on urgent basis. Advise the Board of Directors on the following:

EGM be held in India
EGM be held in Netherlands. IRTPMay 191

Answer:
Place for holding EGMs:
As per Sec. loo of the Companies Act, 2013, the Board may, whenever it deems fit, call an EGM of the
company. However, an EGM of the company, other than of the wholly owned subsidiary ola company incorporated outside India, shall be held at a place within India. Based on that, following conclusions may be drawn:

Board can call the EGM in India.
Board cannot call the EGM of Primal Limited outside India as it is a company incorporated in India.

Question 15.
M. H. Company Limited served a notice of general meeting upon its shareholders. The notice stated that the issue of sweat equity shares would be considered at such meeting. Mr. ‘A’, a shareholder of the M. H. Company Limited complains that the issue of sweat equity shares was not specified fully in the notice. Is the notice issued by M. H. Company Limited regarding issue of sweat equity shares valid according to the provisions of the Companies Act, 2013? Explain in detail.
Answer:
Statement to be annexed to notice:
As per Sec. 102(1) of the Companies Act, 2013, for each item of special business to be transacted at a general meeting, a statement shall be annexed to the notice calling such meeting, setting out the following material facts:

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items, of every director and the manager, if any or every other KMP and relatives of such persons; and
(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.

As per Sec. 102(2)(b) of the Companies Act, 2013, in the case of any meeting other than an AGM, all business transacted thereat shall be deemed to be special business.

Conclusion: Objection of the member is valid since the complete details about the issue of sweat equity should be sent with the notice. The notice is, therefore, not a valid notice u/s 102 of the Companies Act, 2013.

Question 16.
Zorab Limited served a notice of General Meeting upon its members. The notice stated that a resolution to increase the share capital of the Company would be considered at such meeting. A shareholder complained that the amount of the proposed increase was not specified in the notice. Is the notice valid? [MTP-Oct. 18]
Answer:
Statement to be annexed to notice:

As per Sec. 102(1) of the Companies Act, 2013, for each item of special business to be transacted at a general meeting, a statement shall be annexed to the notice calling such meeting, setting out the following material facts:

As per Sec. 102(2)(b) of the Companies Act, 2013, in the case of any meeting other than an AGM, all business transacted thereat shall be deemed to be special business.

Conclusion: Objection of the member is valid since the complete details with reference to the proposed increase of share capital should be sent with the notice. The notice is, therefore, not a valid notice u/s 102 of the Companies Act, 2013.

Question 17.
Madurai Ltd. issued a notice for holding of its Annual general meeting on 7th November 2022. The notice was posted to the members on 16th October 2022. Some members of the company allege that the company had not complied with the provisions of the Companies Act, 2013 with regard to the period of notice and as such the meeting was valid. Referring to the provisions of the Act, decide:

(i) Whether the meeting has been validly called?
(ii) If there is a shortfall, state and explain by how many days does the notice fall short of the statutory requirement?
(iii) Can the delay in giving notice be condoned? [May 19 (6 Marks), RTP-Nov. 20]

Answer:
Provisions related with Notice of Meetings:

As per Sec. 101(1) of the Companies Act, 2013, a general meeting of a company may be called by giving not less than clear 21 days notice either in writing or through electronic mode in such manner as may be prescribed.
Also, it is to be noted that 21 clear days mean that the date on which notice is served and the date of meeting are excluded for sending the notice.
Further, Rule 35(6) of the Companies (Incorporation) Rules, 2014, provides that in case of delivery by post, such service shall be deemed to have been effected in the case of a notice of a meeting, at the expiration of 48 hours after the letter containing the same is posted.

Conclusion: Based on the above provisions, following conclusions may be drawn:

In the given question, only 19 clear days notice is served (after excluding 48 hours from the time of its posting and the day of sending and date of meeting). Therefore, the meeting was not validly called.
As explained in (i) above, notice falls short by 2 days. Date on which notice is served (i.e. 16.10.2021) and the date of meeting (i.e. 07.11.2021) are excluded. In addition, service of notice is deemed to have been effected, at the expiration of 48 hours after the letter containing the same is posted.
The Companies Act, 2013 does not provide anything specific regarding the condonation of delay in giving of notice. Hence, the delay in giving the notice calling the meeting cannot be condoned.

Question 18.
Om Limited served a notice of General Meeting upon its members. The notice stated that the following resolutions will be considered at such meeting:

(i) Resolution to increase the Authorised share capital of the company.
(ii) Appointment and fixation of the remuneration of Mr. Prateek as the auditor.

A shareholder complained that the amount of the proposed increase and the remuneration was not specified in the notice. Is the notice valid under the provisions of the Companies Act, 2013. (Nov. 19 (4 Marks)]
Answer:
Statement to be annexed to notice:

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items, of every director and the manager, if any or every other KMP and relatives of such persons; and

(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.

As per Sec. 102(2)(b) of the Companies Act, 2013, in the case of any meeting other than an AGM, all business transacted thereat shall be deemed to be special business.
Section 102 also prescribes ordinary businesses for which explanatory statement is not required. Part (i) of the question relating to increase in the Authorized Capital falls under special business and hence in the absence of amount of proposed increase of share capital, the notice will be treated as invalid.
Part (ii) of the question relating to appointment and fixation of remuneration of auditor is an ordinary business and hence explanatory statement is not required.
However, considering the two resolutions mentioned in the question are to be passed in the same meeting, notice of the meeting is invalid.

Conclusion: Objection of the shareholder is valid since the details on the item to be considered are lacking. The information about the amount is a material fact with reference to the proposed increase of authorized share capital. The notice is, therefore, not a valid notice u/s 102 of the Companies Act, 2013.

Question 19.
P Limited had called its Annual General Meeting on 30th August 2022. Mr. Pawan has filed a complaint against the company, that he could not attend the meeting as the company did not serve the notice to him for attending the annual general meeting. The company, in turn, provided the proof that they had sent the notice, by way of an email to Mr. Pawan, inviting him to attend the annual general meeting of the company. Mr. Pawan alleged that he never received the e-mail.

In the light of the provisions of the Companies Act, 2013, advise the whether the company has erred in serving the notice of Annual General Meeting to Mr. Pawan. [MTP- April 21]
Answer:
Mode of serving notice of general meetings:

As per Rule 18 of the Companies (Management & Administration) Rules, 2014, sending of notices through electronic mode has been statutorily recognized.
A notice may be sent through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or Uniform Resource Locator for accessing such notice.

The e-mail shall be addressed to the person entitled to receive such e-mail as per the records of the company as provided by the depository. Also, the company shall provide an advance opportunity at least once in a financial year, to the member to register his e-mail address and the changes therein and such request may be made by only those members who have not got their e-mail ID recorded or to update a fresh e-mail ID and not from the members whose e-mail IDs are already registered.

Based on the above stated provisions, the company’s obligation shall be satisfied when it transmits the e-mail and the company shall not be held responsible for a failure in transmission beyond its control. Also, if the member entitled to receive the notice fails to provide or update relevant e-mail address to the company, or to the depository participant as the case may be, the company shall not be in default for not delivering notice via e-mail.

Conclusion: Company has not erred in serving notice of Annual General Meeting to Mr. Pawan.

Question 20.
Best Limited has decided to conduct its Annual General Meeting on 28th September 2022. They have sent the notice of the meeting on 9th September 2022 (for which they have taken consent from 90% of the members entitled to vote thereat). Comment on the validity of notice of the Annual General Meeting, as per the provisions of the Companies Act, 2013. [MTP-Oct. 21]
Answer:
Provisions related with Notice of Meetings:

As per Sec. 101(1) of the Companies Act, 2013, a general meeting of a company may be called by giving not less than clear 21 days notice either in writing or through electronic mode in such manner as may be prescribed.
Also, it is to be noted that 21 clear days mean that the date on which notice is served and the date of meeting are excluded for sending the notice.
Further, Rule 35(6) of the Companies (Incorporation) Rules, 2014, provides that in case of delivery by post, such service shall be deemed to have been effected in the case of a notice of a meeting, at the expiration of 48 hours after the letter containing the same is posted.
A general meeting may be called after giving shorter notice than that specified in Sec. 101(1) of the Companies Act, 2013, if consent, in writing or by electronic mode, is accorded thereto in the case of an AGM, by not less than 95% of the members entitled to vote thereat.
In the given case, the AGM was called by giving less than 21 clear days notice. Also, consent for calling the meeting at a shorter notice period was given by only 90% members (i.e. less than 95% members).

Conclusion: Meeting cannot be said to be validity called.

Question 21.
New Pharma Ltd. Issued a notice for holding its annual general meeting on 7th Sept 2022. The notice was posted to the members on 16th August 2022. Some members of the company alleged that the company has not complied with the provision of the Companies Act, 2013, with regard to the period of notice and as such the meeting was invalid. Referring to the provision of the Companies Act, 2013, decide;

(i) Whether meeting has been validly called?
(ii) If there is a shortfall in the notice, state and explain by how many days does the notice fall short of the statutory requirements?
(iii) Whether the length of serving of notices be curtailed by Article of Association? (Dec. 21 (5 Marks)]

Answer:

Provisions related with Notice of Meetings:

As per Sec. 101(1) of the Companies Act, 2013, a general meeting of a company may be called by giving not less than clear 21 days notice either in writing or through electronic mode in such manner as may be prescribed.
Also, it is to be noted that 21 clear days mean that the date on which notice is served and the date of meeting are excluded for sending the notice.
Further, Rule 35(6) of the Companies (Incorporation) Rules, 2014, provides that in case of delivery by post, such service shall be deemed to have been effected in the case of a notice of a meeting, at the expiration of 48 hours after the letter containing the same is posted.

Conclusion: Based on the above provisions, following conclusions may be drawn:

In the given question, only 19 clear days notice is served (after excluding 48 hours from the time of its posting and the day of sending and date of meeting). Therefore, the meeting was not validly called.
As explained in (i) above, notice falls short by 2 days. Date on which notice is served (i.e. 16.08.2022) and the date of meeting (i.e. 07.09.2022) are excluded. In addition, service of notice is deemed to have been effected, at the expiration of 48 hours after the letter containing the same is posted.
The length of serving of notices cannot be curtailed by Article of Association. An AGM may be called after giving shorter notice if consent, in writing or by electronic mode, is accorded thereto by not less than 95% of the members entitled to vote thereat.

Question 22.
ABC Limited is an unlisted company, having its registered office at Kolkata. The Annual General Meeting was held at Goa on 1st July 2022 at 3.00 PM and concluded at 8.00 PM. Consent of all the members to conduct AGM at Goa were received by 24th June 2022 by e-mail.

(i) Examine the validity of the meeting as per the provisions of the Companies Act, 2013.
(ii) State, the consequences if a resolution has passed in such meeting, without sufficient disclosure regarding interest of a director. (May 22 (4 Marks)]

Answer:
Place for holding an annual general meeting:

As per Sec. 96(2) of the Companies Act, 2013, annual general meeting shall be held either at the regist ered office of the company or at some other place within the city, town or village in which the registered office of the company is situated:

Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance.

Conclusion: As ABC Limited is an unlisted company and consent of all the members to conduct AGM at Goa were received in advance, meeting stands valid.

Consequences if resolution passed in AGM, without sufficient disclosure regarding interest of a
director:
As per Sec. 102(4) of the Companies Act, 2013, if as a result non-disclosure or insufficient disclosure in explanatory statement, any benefit accrues to a promoter, director, manager, other KMP or their relatives, such person shall hold such benefit in trust for the company, and shall, without prejudice to any other action being taken against him under this Act or under any other law for the time being in force, be liable to compensate the company to the extent of the benefit received by him.

Question 23.
There are 54 members of Dicey Private Limited. The company held its annual general meeting on 1st July 2022 at 2:00 p.m. and 28 members were present till 2:30 p.m. The Chairman of the meeting proceeded to initiate the meeting and passed the resolutions as discussed in the meeting. Comment whether the meeting took place as per the provisions of Companies Act, 2013.
Answer:
Quorum and Proxies:

As per Sec. 103 of the Companies Act, 2013, the quorum for a Private Limited Company shall be 2 members personally present, within half-an-hour from the time appointed for holding a meeting of the company.
In the given case, 28 members were present within half-an-hour from the time appointed for the meeting.

Conclusion: Quorum for the AGM of Dicey Private Limited was complied with and the company is not in contravention with any of the provisions of the Companies Act, 2013.

Question 24.
Abbey Limited has 2,300 members and the annual general meeting of the company is to be held on 23rd February 2023 at 10.30 a.m. On the day of the meeting, 18 members were personally present by 11.00 a.m. and the Chairman proceeded to initiate the chronicles of the meeting.

There were 5 special businesses to be discussed at the said meeting and by 2.30 p.m. Agenda 1 to 3 had been discussed and appropriate resolutions were passed. However, due to some emergency, 4 of the members had to leave around 3 p.m.

The Chairman granted them the permission and proceeded to discuss Agenda 4 & 5 and accordingly passed resolution as per the consent of the remaining members. Comment whether the meeting is a properly convened meeting as per the provisions of section 103 of the Companies Act,
Answer:
Requirement of Quorum:

As per Sec. 103 of the Companies Act, 2013, unless the articles of the company provide for a larger number in case of a public company, 15 members personally present shall be the quorum, if the number of members as on the date of meeting is more than 1,000 but up to 5,000.
In the given case, while the appropriate quorum was present at the time when the meeting started, the quorum was not present at the time of deciding Agenda 4 & 5.
Where at the time of transacting business, the number of members is less than the quorum fixed for the meeting, the business cannot be transacted and shall be a nullity.

Question 25.
The Articles of Association of DJA Ltd. require the personal presence of 7 members to constitute quorum of General Meetings. The company has 965 members as on the date of meeting. The following persons were present in the extraordinary meeting to consider the appointment of Managing

(i) A, the representative of Governor of Uttar Pradesh.
(ii) B and C, shareholders of preference shares.
(iii) D, representing Y Ltd, and Z Ltd.
(iv) E, F, G and H as proxies of shareholders.

Can it be said that the quorum was present in the meeting? [MTP-Aug. 18, RTP-May 29]

Answer:

Quorum and Proxies:

As per Sec. 103 of the Companies Act, 2013, unless the articles of the company provide for a larger number in case of a public company, 5 members personally present if the number of members as on the date of meeting is not more than 1,000, shall be the quorum.
In this case the quorum for holding a general meeting is 7 members to be personally present (higher of 5 or 7).

For the purpose of quorum:

Only those members who are entitled to vote on resolution proposed to be passed in the meeting, are counted.
Only members present in person and not by proxy are to be counted. Hence, proxies whether they are members or not will have to be excluded for the purposes of quorum.
If a company is a member of another company, it may authorize a person by resolution to act as its representative at a meeting of the latter company, then such a person shall be deemed to be a member present in person and counted for the purpose of quorum.
Where two or more companies which are members of another company, appoint a single person as their representative then each such company will be counted as quorum at a meeting of the latter company.

As per Sec. 112 of the Companies Act, 2013, the President of India or Governor of a State, if he is a member of a company, may appoint such a person as he thinks fit, to act as his representative at any meeting of the company. A person so appointed shall be deemed to be a member of such a company and thus considered as member personally present.

In view of the above there are only 3 members personally present. ‘A’ will be included for the purpose of quorum. B & C have to be excluded for the purpose of quorum because they represent the preference shares and since the agenda being the appointment of Managing Director, their rights cannot be said to be directly affected and therefore, they shall not have voting rights. D will have two votes for the purpose of quorum as he represents two companies ‘Y Ltd.’ and ‘Z Ltd.’ E, F, G and H are not to be included as they are not members but representing as proxies for the members.

Conclusion: Requirements of quorum has not been met and it shall not constitute a valid quorum for
the meeting.

Question 26.
KMN Ltd. scheduled Its Annual General Meeting to be held on 11th March, 2023 at 11:00 AJM. The company has 900 members. On 11th March, 2023 following persons were present by 11:30 AJM.

P1, P2 & P3 shareholders.
P4 representing ABC Ltd.
P5 representing DEF Ltd. :
P6 & P7 as proxies of the shareholders.

Based on the above, answer the followings:

(i) Examine with reference to relevant provisions of the Companies Act, 2013, whether quorum was
present in the meeting.
(ii) What will he your answer if P4 representing ABC Ltd., reached in the meeting after 11:30 A.M.?
(iii) In case lack of Quorum, discuss the provisions as applicable for an adjourned meeting in terms of date, time & place.
(iv) What happens if there is no Quorum in the Adjourned meeting? [Nov. 18 (4 Marks), MTP-Nov. 21)

Answer:

Quorum and Proxies:

(i) As per Sec. 103 of the Companies Act, 2013, unless the articles of the company provide for a larger number, the quorum for the meeting of a Public Limited Company shall be 5 members personally present, if number of members is not more than 1,000. In the given situation, quorum will be counted as follows:

(1) P1, P2 and P3 will be counted as three members.

(2) If a company is a member of another company, it may authorize a person by resolution to act as its representative at a meeting of the latter company, then such a person shall be deemed to be a member present in person and counted for the purpose of quorum. Hence, P4 and P5 representing ABC Ltd. and DEF Ltd. respectively will be counted as two members.

(3) Only members present in person and not by proxy are to be counted. Hence, proxies whether they are members or not will have to be excluded for the purposes of quorum. Thus, P6 and P7 shall not be counted in quorum.

Based on the above stated discussion, it can be concluded that the quorum for AGM is 5 members personally present. Total 5 members (PI, P2, P3, P4 and P5) were present. Hence, the requirement of quorum is fulfilled.

(ii) As per Sec. 103 of the Companies Act, 2013, if the required quorum is not present within half an hour, the meeting shall stand adjourned for the next week at the same time and place or such other time and place as decided by the Board of Directors.

Since, P4 is an essential part for meeting the quorum requirement, and he reaches after 11:30 AM (i.e. half an hour after the starting of the meeting), the meeting will be adjourned as provided above.

(iii) In case of lack of quorum, the meeting will be adjourned. In case of the adjourned meeting or change of day, time or place of meeting, the company shall give not less than 3 days notice to the members either individually or by publishing an advertisement in the newspaper.

(iv) Where quorum is not present in the adjourned meeting also within half an hour, then the members present shall form the quorum.

Question 27.
Examine the validity of the following with reference to the relevant provisions of the Companies Act, 2013: The Board of Directors of Shrey Ltd. called an extraordinary general meeting upon the requisition of members. However, the meeting was adjourned on the ground that the quorum was not present at the meeting. Advise the company. [RTP-Nov. 18; MTP-March 19, April 21)
Answer:
Absence of Quorum in EGM:

As per Sec. 100(2) of the Companies Act 2013, the Board of directors must convene a general meeting upon requisition by the stipulated minimum number of members.
As per Section 103(2)(b) of the Companies Act, 2013, if the quorum is not present within half an hour from the appointed time for holding a meeting of the company, the meeting, if called on the requisition of members, shall stand cancelled.
In the given case, Board called an extraordinary general meeting upon the requisition of members. However, the meeting was adjourned on the ground that the quorum was not present at the meeting.

Conclusion: Meeting stands cancelled and the stand taken by the Board of Directors to adjourn it, is not proper.

Question 28.
PQ Limited is a public company having its registered office in Mumbai. It has 3,680 members. The company sent notice to all its members for its Annual general Meeting to be held on 2nd September 2021 at 11:00 a.m. at its registered office. On foe day of meeting there were only 12 members personally present upto 11:30 a.m. The Chairman adjourned the meeting to same day in next week at the same time and place.

On the day of adjourned meeting only 10 members were personally present. The Chairman initiated the meeting after 11:30 am. and passed the resolutions after discussion as per the agenda of the meeting given in the notice. Comment whether the AGM conducted after adjournment is valid or not as per the provisions of section 103 of Companies Act 2013 by explaining the relevant provisions in this regard.

What would be your answer in the above case, if PQ Limited is a Private company? [Nov. 20 (4 Marks)]
Answer:
Requirement of Quorum:

As per Sec. 103 of the Companies Act, 2013, unless the articles of the company provide for a larger number, in case of a public company, 15 members personally present may fulfil the requirement of quorum, if the number of members as on the date of meeting is more than 1,000 but up to 5,000.

If the specified quorum is not present within half-an-hour from the time appointed for holding a 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.

If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.

In the instant case, there were only 12 members personally present on the day of meeting upto 11:30 AM. This was not in compliance with the required quorum as per the law. In the adjourned meeting also, the required quorum was not present but in the adjourned meeting, the members present shall be considered as quorum in line with the provisions of section 103.

Conclusion: Based on the provisions as stated above, following conclusions may be drawn:

(i) AGM conducted by PQ Limited after adjournment is valid.

(ii) As per the provisions of Sec. 103(1)(b), in case of a private company, 2 members personally present, shall be quorum for the meeting of a company. Therefore, in case, PQ Limited is a private company, then only 2 members personally present shall be the quorum for AGM and there was no need for adjournment.

Question 29.
Examine the validity of the following with reference to the relevant provisions of the Companies Act,

(i) The Board of Directors of a company refuse to convene the extraordinary general meeting of the members on the ground that the requisitionists have not given explanatory statement for Die resolution proposed to be passed at the meeting.

(ii) The Board of Directors refuse to convene the extraordinary general meeting on the ground that the requisitions have not been signed by the joint holder of Die shares.

(iii) Adjournment of extraordinary general meeting called upon the requisition of members on the
ground that the quorum was not present in the meeting. [Dec. 21 (.6 Marks)]

Answer:
Provisions relating to EGM:

(i) As per Rule 17 of Companies (Management & Administration) Rules, 2014, no explanatory statement as required u/s 102 need be annexed to the notice of an EGM convened by the requisitionists and the requisitionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

Hence refusal of Board of Directors to convene the EGM on the ground that the requisitionists have not given explanatory statement for the resolution proposed to be passed at the meeting is not valid.

(ii) The notice shall be signed by all the requisitionists or by a requisitionists duly authorised in writing by all other requisitionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.

Hence, it is imperative for joint holders (or by requisitionist duly authorised in writing by joint holder) also to sign the notice to call the meeting. Thus, Board of directors are correct in refusing to convene the extraordinary general meeting on the ground that the requisitions have not been signed by the joint holder of shares.

(iii) As per Section 103 of the Companies Act, 2013, if in a requisitioned meeting, there is no quorum present within half an hour, the meeting stands dissolved. Hence, adjournment of EGM called upon the requisition of members on the ground that the quorum was not present in the meeting is not valid.

Question 30.
Kurt Limited is a company engaged in the business of manufacturing papers. The company has approached you to explain them the following as per the provisions of the Companies Act 2013:
(a) Quorum for the general meeting If the company has 800 members.
(b) Quorum for die general meeting if the company has 6500 members.
(c) Quorum for the general meeting if the company has 5500 members. The articles of association
has prescribed the quorum for the meeting to he 50. [MTP-April 22]
Answer:
Requirement of Quorum:
As per Sec. 103(1) of the Companies Act, 2013, unless the articles of the company provide for a larger number, in case of a public company:

5 members personally present if the number of members as on the date of meeting is not more than 1,003,
15 members personally present if the number of members as on the date of meeting is more than 1,000 but up to 5,000,
30 members personally present if the number of members as on the date of the meeting exceeds 5,000.

The term ‘members personally present’ as mentioned above refers to the members er.tkied to vote in respect of the items of business on the agenda of the meeting.

Conclusion:

(a) If the company has 800 members, quorum shall be 5 members personally present.
(b) If the company has 6500 members, quorum shall be 30 members personally present.
(c) If the company has 5500 members, quorum shall be 30 members personally present. However, since the articles of association has prescribed the quorum for the meeting to be 50, the quorum shall be 50 (higher of 30 and 50).

Question 31.
What do you mean by Proxy? Explain the provisions relating to appointment of proxy under the Companies Act, 2013.
Answer:
Meaning of Proxy:
A proxy is an instrument in writing executed by a shareholder authorising another person to attend a meeting and to vote thereat on his behalf and in his absence. The term also applies to the person so appointed in such case a proxy is a person appointed by a member of a company, to attend a meeting of the company and vote thereat on his behalf.

Provisions relating to appointment of Proxy:

Provisions relating to the appointment of a proxy as contained in Sec. 105 of the Companies Act, 2013 are as under:

Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf.
A proxy shall not have the right to speak at such meeting and shall not be entitled to vote except on a poll. This means that a proxy cannot vote on a resolution by a show of hands.
C.G. may prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy.
The instrument appointing a proxy shall be in writing; and be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it.
The instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company.

Question 32.
A General Meeting was scheduled to be held on 15th April, 2022 at 3.00 P.M. As per the notice the members who are unable to attend a meeting in person can appoint a proxy and the proxy forms duly filled should be sent to the company so as to reach at least 48 hours before the meeting, Mr. X, a member of the company appoints Mr. Y as his proxy and the proxy form dated 10.04.2022 was deposited by Mr. Y with the company at its registered Office on 11.04.2022. Similarly, another member Mr. W also gives two separate proxies to two individuals named Mr. M and Mr. N. In the case of Mr. M, the proxy dated 12.04.2022 was deposited with the company on the same day and the proxy form in favour of Mr. N was deposited on 14.04.2022. All the proxies viz., Y, M and N were present before the meeting.

According to the provisions of the Companies Act, 2013, who would be the persons allowed to represent at proxies for members X and W respectively? [MTP-Oct 18, April 19; RTP-May 21]
Answer:
Proxies:

A Proxy is an instrument in writing executed by a shareholder authorizing another person to attend a meeting and to vote thereat on his behalf and in his absence.
As per Sec. 105 of the Companies Act, 2013, every shareholder who is entitled to attend and vote has a statutory right to appoint another person as his proxy. It is not necessary that the proxy be a member of the company.
Further, any provision in the articles of association of the company requiring instrument of proxy to be lodged with the company more than 48 hours before a meeting shall have effect as if 48 hours had been specified therein. The members have a right to revoke the proxy’s authority by voting himself before the proxy has voted but once the proxy has voted the member cannot retract his authority.
Where two proxy instruments by the same shareholder are lodged of in such a manner that one is lodged before and the other after the expiry of the date fixed for lodging proxies, the former will be counted.

Conclusion: In case of member X, the proxy Y will be permitted to vote on his behalf as Form for
appointing proxy was submitted within the permitted time.

However, in the case of Member W, the proxy M (and not Proxy N) will be permitted to vote as the
proxy authorizing N to vote was deposited in less than 48 hours before the meeting.

Question 33.
Sirhj, a shareholder, gives a notice for inspecting proxies, 5 days before the meeting is scheduled and approaches the company two days before the scheduled meeting for inspecting the same. What is the legal position relating to his actions as per the provisions of the Companies Act, 2013? [MTP-Aug. 18]
Answer:
Inspection of Proxy Forms:

As per Sec. 105(8) of the Companies Act, 2013 every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than 3 days notice in writing of the intention so to inspect is given to the company.

In the given case, Sirhj, a shareholder, gives a notice for inspecting proxies, 5 days before the meeting is scheduled and approaches the company 2 days before the scheduled meeting for inspecting the same.

Conclusion: Sirhj has given proper notice.

However, inspection can be undertaken only during the period beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting. So, Sirhj can undertake the inspection only during the abovementioned period and not 2 days prior to the meeting.

Question 34.
Explain the provisions of the Companies Act, 2013 relating to quorum for general meeting of a public company having total 30 members, of which, two members are bodies corporate and one member is the President of India.

Whether the representatives appointed by body corporate and President of India to participate in the general meeting shall be counted for quorum and can such representatives cast vote at that general meeting?. [May 19 (3 Marks)]
Answer:
Quorum and Proxies:

As per Sec. 103(1) of the Companies Act, 2013, unless the articles of the company provide for a larger number, in case of public company, 5 members personally present shall be the quorum for a meeting of the company, if the number of members as on the date of meeting is not more than 1,000.
In the instant case, the quorum for the public company will be 5 members personally present.
In the said company, 2 members are bodies corporate and one member is the President of India. Only members present in person and not by proxy are to be counted. Hence, proxies whether they are members or not will have to be excluded for the purposes of quorum.
As per Sec. 113 of the Companies Act, 2013, if a company is a member of another company, it may authorize a person by resolution to act as its representative at a meeting of the latter company, then such a person shall be deemed to be a member present in person and counted for the purpose of quorum and shall be entitled to vote.
As per Sec. 112 of the Companies Act, 2013, the President of India, if he is a member of a company, may appoint such a person as he thinks fit, to act as his representative at any meeting of the company. A person so appointed shall be deemed to be a member of such a company and thus considered as member personally present and shall be entitled to vote.

Question 35.
A company received a proxy form 54 hours before the time fixed for the start of the meeting. The company refused to accept the proxy form on the ground that the Articles of the company provided that a proxy form must be filed 60 hours before the start of the meeting. Define proxy and decide under the provisions of Die Companies Act, 2013, whether the proxy holder can compel Die company to admit the proxy in this case? [Jan. 21 (3 Marks)]
Answer:
Meaning of Proxy and provisions related with Proxy:

A Proxy is an instrument in writing executed by a shareholder authorizing another person to attend a meeting and to vote thereat on his behalf and in his absence.
Sec. 105 of the Companies Act, 2013 deals with the provisions of proxy for meetings.
As per Sec. 105(1), any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf.
As per Sec. 105(4), a proxy received 48 hours before the meeting will be valid even if the articles provide for a longer period.
In the given case, the company received a proxy form 54 hours before the time fixed for start of the meeting. The Company refused to accept proxy on the ground that articles of the company provides filing of proxy before 60 hours of the meeting.

Conclusion: In line with requirement of the Sec. 105, a proxy received 48 hours before the meeting
will be valid even if the articles provide for a longer period. Accordingly, the proxy holder can compel
the company to admit the proxy.

Question 36.
What happens In case of voting by joint shareholders? Suppose that Mr. k Mrs. lyer are joint
shareholders of Goal Private Limited and they hold 500 shares of the company. Regarding a particular special business being transacted at the eztraordlnaiy general meeting of the company, Mr. lyer is in the favour of the decision, whereas Mrs. lyer is against the resolution. Decide how should the vote be casted in case of this situation?
Answer:
Voting in case of joint shareholding:

Unless the articles provide to the contrary, joint shareholders must concur in voting.
The voting in case of joint shareholders is done in the order of seniority, which is determined on the
basis of the order in which their names appear in the register of members.
The joint-holders have a right to Instruct the company as to the order in which their names are to
appear in the register.
In the given case, one of the joint shareholder is in the favour of the decision, whereas another is
against the resolution.

Conclusion: The person whose name is first entered in the Register of members, will be entitled to vote.

Question 37.
Can an insolvent shareholder vote at the meeting by show of hands?
Answer:
Voting in case of insolvent Shareholder

An insolvent shareholder so long as he remains in the register of the company as a member, Is entitled to exercise his votes which are attributed to his status as member, notwithstanding that he has no longer any beneficial interest in the shares and the dividends are payable only to his trustee in bankruptcy.

Question 38.
Examine the validity of the following decisions of the Board of Directors with reference of the provisions of the Companies Act 2013.

(i) In an Annual General Meeting of a company having share capital. 80 members present hi person
or by proxy holding more than 1/10th of the total voting power, demanded for poll. The chairman
of the meeting rejected the request on the ground that only the members present In person can
demand for poll.

(ii) In an annual general meeting, during the process of poll, the members who earlier demanded for poll want to withdraw it The chairman of the meeting rejected the request on the ground that once poll started, it cannot be withdrawn. [MTP-March 18, May 20; RTP-Nov. 18]
Answer:
Demand for Poll (Sec. 109):
Order of demand for poll by the chairman of meeting:

As per Sec. 109 of the Companies Act, 2013, before or on the declaration of the result of the voting on any resolution on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion, and shall be ordered to be taken by him on a demand made in that behalf: –

(a) In the case a company having a share capital, by the members present in person or by proxy, where allowed, and having not less than 1/10th of the total voting power or holding shares on which an aggregate sum of not less than ₹ 5 lakh or such higher amount as may be prescribed has been paid- up; and

(b) in the case of any other company, by any member or members present in person or by proxy, where allowed, and having not less than l/10th of the total voting power.
Withdrawal of the demand: The demand for a poll may be withdrawn at any time by the persons who made the demand.

Conclusion: On the basis of the above stated provisions of Sec. 109, following conclusions may be drawn:
(i) Chairman cannot reject the demand for poll as poll can be demanded by the members present in person or by proxy, subject to provision in the articles of company.
(ii) Chairman cannot reject the request of the members for withdrawing the demand of the Poll.

Question 39.
Mr. Pink held 100 partly paid-up shares of Red Limited. The company asked him to pay the final call money on the shares. Due to some unavoidable circumstances, he was unable to pay the amount of call money to the company. At a general meeting of the shareholders, the chairman disallowed him to cast his vote on the ground that the articles do not permit a shareholder to vote if he has not paid the calls on the shares held by him. Mr. Pink contested the decision of the Chairman. Referring to the provisions of the Companies Act, 2013 decide whether the contention of Mr. Pink is valid. (RTP-Nov. 19]
Answer:
Voting Rights in case of unpaid call money:

Sec. 106(1) of the Companies Act, 2013 states that the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien.

In the present case the articles of the company do not permit a shareholder to vote if he has not paid the calls on the shares held by him.

Conclusion: Chairman at the meeting is well within its right to refuse him the right to vote at the
meeting and Mr. Pink’s contention is not valid.

Question 40.
‘X’ a member of LKM Ltd. is holding 250 shares, which are partly paid. The company held its general meeting where voting right was denied to ‘X’ claiming he has not paid the calls on the shares held by him. Examine the validity of company denial to ‘X’ with reference to the relevant provisions of the Companies Act, 2013, assuming that Articles of association of the Company do not restrict the voting right of such members. [Nov. 18 (4 Marks)]
Answer:
Restriction on voting rights:

As per Sec. 106(1) of the Companies Act, 2013, notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums are presently payable by him have not been paid, or in regard to which the company has exercised any right of lien.

A company shall not, except on the grounds specified as above, prohibit any member from exercising his voting right on any other ground.
In the given situation, Mr. X (member) holding 250 shares of LKM Ltd. has not paid certain calls on the shares. The company has denied his voting rights in the general meeting though the Articles of Association of the company does not contain any restriction in the voting rights of such members.

Conclusion: Based on the provisions as stated above, LKM Ltd.’s denial to ‘X’ for exercising his voting rights is not valid.

Question 41.
If a member of a listed company who has casted his vote through electronic voting can attend general meeting of the company and change his vote subsequently and can he appoint a proxy? [May 19 {2 Marks)]
Answer:
E-voting and appointment of proxy:

As per Rule 20 of the Companies (Management and Administration) Rules, 2014, the notice of the meeting shall clearly state that the members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again.

In the instant case, a member of a listed company who has casted his vote through electronic voting can attend general meeting of the company but cannot change his vote subsequently and is not permitted to appoint a proxy.

Question 42.
Explain the provisions of e-voting in an annual general meeting in the following cases as per tike Companies Act, 2013:
(i) ‘A’ and his wife ‘B’ has joint Demat Account in Alfa Investment Ltd. In such a case, who will cast the vote in e-voting system?
(ii) AGM is going to be held on 07.09.2022. Then, what will be the e-voting period and the time of
closing? [Dec. 21 (4 Marks)]
Answer:
Provisions of e-voting in an AGM:

(i) Entitlement of vote: Rule 20 of the Companies (Management and Administration) Rules, 2014 provides that during the period when facility for remote e-voting is provided, the members of the company, holding shares either in physical form or in dematerialized form, as on the cut-off date, may opt for remote e-voting.

As per Rule 21 of the Companies (Management and Administration) Rules, 2014, the Scrutinizers shall arrange for Polling papers and distribute them to the members and proxies present at the meeting; in case of joint shareholders, the polling paper shall be given to the first named holder or in his absence to the joint holder attending the meeting as appearing in the chronological order in the folio.

The voting in case of joint shareholders is done in the order of seniority, which is determined on the basis of the order in which their names appear in the register of members/shareholders.

(ii) E-voting period: Facility for remote e-voting shall remain open for not less than 3 days and shall close at 5.00 p.m. on the date preceding the date of the general meeting.
In the given case, AGM is going to be held on 07.09.2022, hence facility for e-voting shall remain open atleast for 3 days and shall close at 5.00 p.m. on 06.09.2022.

Question 43.
How does the voting happen at the time of postal ballot?
Answer:
Voting in case of Postal Ballot:
A member who is voting by way of postal ballot, has votes in proportion to his share in the paid-up share capital of the company. In this regard, he need not use all his votes in the same way.

Four types of ballots may be received from the shareholders:

Ballots which contain assents;
Ballots which contain dissents;
Ballots wherein the member has voted partially assenting, partially dissenting or using not all his shares in any particular way; and
Invalid ballots (due to absence/mismatch of signature, overwriting, etc.)

Question 44.
Miraj Limited issued a notice with the agenda for nine businesses to be transacted in the Annual General Meeting (two businesses were regarding appointment of Mr. S and Mr. P as directors). The chairman decided to move the resolutions for all the nine businesses together to save the time of the members present. Examine the validity of the resolutions. [May 18 (4 Marks), MTP-Oct. 18]
Answer:
Moving two or more resolutions at same time:

For the sake of avoiding confusion and mixing up, the resolutions are generally moved separately. However, there is nothing illegal if the Chairman of the meeting desires that two or more resolutions should be moved together, unless any member requires that each resolution should be put to vote separately or unless a poll is demanded in respect of any.

Where notice has been given of several resolutions, each resolution must be put separately. However, if the meeting unanimously adopts all the resolutions, this would not be illegal barring a few occasions.

One resolution which should be moved separately is relating to appointment of directors at a general meeting of a public or private company, where two or more directors cannot be appointed as directors by a single resolution.

Conclusion: In the instant case, all the nine businesses cannot be moved together as two businesses were regarding appointment of Mr. Sahu and Mr. Pranav as directors. Besides these two resolutions, other seven resolutions can be moved together if the members unanimously agree.

Question 45.
At a General meeting of a XYZ Limited, a matter was to be passed by a special resolution. Out of 40 members present, 20 voted in favour of the resolution, 5 voted against it and 5 votes were found invalid. The remaining 10 members abstained from voting. The Chairman of the meeting declared the resolution as passed. With reference to the provisions of the Companies Act, 2013, examine the validity of the Chairman’s declaration. [MTP-Oct. 19]
Answer:
Passing of Special Resolution:
As per Sec. 114(2) of the Companies Act, 2013, for a valid special resolution to be passed at a meeting of members of a company, the following conditions need to be satisfied;

(a) The intention to propose the resolution, as a special resolution must have been specified in the notice calling the general meeting or other intimation given to the members;

(b) The notice required under the Companies Act must have been duly given of the general meeting;

(c) The votes cast in favour of the resolution (whether by show of hands or electronically or on a poll, as the case may be] by members present in person or by proxy or by postal ballot are not less than 3 times the number of votes, if any, cast against the resolution by members so entitled and voting. Hence, in terms of the requisite majority, votes cast in favour have to be compared with votes cast against the resolution. Abstentions or invalid votes, if any, are not to be taken into account.

Conclusion: In the given situation, the votes cast in favour (20) being more than 3 times of the votes cast against (5), and presuming other conditions of Sec. 114(2) are satisfied, the decision of the Chairman is in order.

Question 46.
Members of ZA Ltd. holding less than 1% of total voting power want die company to give a special notice to move a resolution for appointment of an auditor other than retiring auditor. Explain whether members have complied with relevant provisions of the Companies Act, 2013 in making their request? [Nov. 18 (3 Marks)]
Answer:
Resolutions requiring special notice:

As per Sec. 115 of the Companies Act, 2013, where any provision of this Act specifically requires or Articles of Association of a company so require that a special notice is required for passing any resolution, then the notice of the intention to move such resolution shall be given to the company by such number of members holding not less than 1% of the total voting power, or holding shares on which such aggregate sum not exceeding ₹ 5,00,000 has been paid-up.

In such a case, the company shall give its members notice of the resolution in the manner as prescribed in Rule 23 of the Companies (Management & Administration) Rules, 2014.
Special notice is required to appoint as auditor a person other than a retiring auditor u/s 140(4) of the Companies Act, 2013.

Conclusion: There is non-compliance of requirement of Sec. 115 as notice of the intention to move such resolution as to appointment of auditor other than retiring auditor was given by members of ZA Ltd. holding less than 1% of the total voting power.

Question 47.
Give the points of distinction between ordinary resolution and special resolution. [May 19 (5 Marks)]
Answer:
Difference between ordinary resolution and special resolution Ordinary Resolution:

Sec. 114(1) of the Companies Act, 2013 states that a resolution shall be ordinary resolution, if the notice required under this Act has been duly given and it is required to be passed by the votes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote of the Chairman, if any, of the Chairman, by members, who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any cast against the resolution by members, so entitled and voting. Simply put, the votes cast in the favour of the resolution, by any mode of voting should exceed the votes cast against it.

Special Resolution:
As per Section 114(2) of the Act, a resolution shall be a special resolution, when:

(a) 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 of the resolution;

(b) The notice required under this Act has been duly given; and

(c) The votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote of the Chairman, if any, of the Chairman, by members, who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, are required to be not less than 3 times the number of the votes, if any, cast against the resolution by members so entitled and voting.

Question 48.
In a General Meeting of Arait Limited, the Chairman directed to exclude certain matters detrimental to the interest of the company from the minutes. Mano), a shareholder contended that the minutes must contain fair and correct summary of the proceedings thereat Decide, whether the contention of Mano) is maintainable under die provisions of the Companies Act, 2013? [RTP-May 18, MTP-Oct 19]
Answer:
Matters not to be included in Minutes:

As per Sec. 118(5) of the Companies Act, 2013, there shall not be included in the Minutes of a meeting, any matter which, in the opinion of the Chairman of the meeting:

is or could reasonably be regarded as defamatory of any person;
is irrelevant or immaterial to the proceeding; or
is detrimental to the interests of the company;

Further, as per Sec. 118(6) of the Companies Act, 2013, the chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the Minutes on the grounds specified in Sec. 118(5).

Conclusion: Based on the provisions of Secs. 118(5) and 118(6) as stated above, contention of Manoj is not valid as the Chairman has absolute discretion on the inclusion or exclusion of any matter in the minutes for aforesaid reasons.

Question 49.
Veena Ltd, held its Annual General Meeting on September 15, 2022. The meeting was presided over by Mr. Mohan Rao, the Chairman of the Company’s Board of Directors. On September 17, 2022, Mr. Mohan Rao, the Chairman, without signing the minutes of the meeting left India to look after his father who fell sick in London, Referring to the provisions of the Companies Act, 2013, state the manner in which the minutes of the above meeting are to he signed in the absence of Mr. Mohan Rao and by whom? [MTP-Oct 18, April 19, March 22; Jan. 21 (5 Marks)]
Answer:
Signing of the Minutes of the Meetings:

As per Sec. 118 of the Companies Act, 2013 every company shall prepare, sign and keep minutes of proceedings of every general meeting, including the meeting called by the requisitionists and all proceedings of meeting of any class of shareholders or creditors or Board of Directors or committee of the Board and also resolution passed by postal ballot within thirty days of the conclusion of every such meeting concerned. Minutes kept shall be evidence of the proceedings recorded in a meeting.

As per Rule 25 of the Companies (Management and Administration) Rules, 2014 read with Sec. 118 of the Companies Act, 2013, each page of every such book shall be initialled 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 by, 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 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.

Conclusion: Minutes of the meeting can be signed in the absence of Mr. Mohan Rao, by any director,
authorized by the Board in this respect.

Question 50.
Mr. Laurel a shareholder In Hardly Limited, a listed company, desires to inspect the minute’s book of
General Meetings and to have copy of some resolutions. In the light of the provisions of the Companies
Act, 2013 answer the following:
(i) Whether he can Inspect the minutes book and to have copies of the minutes at free of cost?
(il) Whether he can authorize his friend to inspect the minutes book on behalf of him by signing a
power authority? [July 21 (5 Marks))
Answer:
Inspection of Minute Books:

As per Sec. 119 of the Companies Act, 2013. the books containing the minutes of the proceedings of any general meeting of a company shall be open for inspection, during business hours, by any member, without charge, subject to such reasonable restrictions as specified in the articles of the company or as imposed in the general meeting.

Any member shall be entitled to be furnished, within 7 working days after he has made a request in that behalf to the company and on payment of such fees as may be prescribed, with a copy of any minutes.

Conclusion: Based on the above, following conclusions may be drawn:

Mr. Laurel can inspect the minutes book and so to have soft copies of the same up to last 3 years.
As provision does not specify anything on authorizing any one else to inspect the minutes book. Therefore, Mr. Laurel cannot authorize his friend to inspect the minutes book on behalf of him.

Question 51.
Mr. Rani, a shareholder of PQR Ltd., has made a request to the company for providing a copy of minutes book of general meeting. Whether, the shareholder of a company Is entitled to receive a copy of minutes hook? Explain, provisions of the Companies Act, 2013. May 22(3 Marks)
Answer:
Issue of copy of minutes to the member:

As per Sec. 119 of the Companies Act. 2013, any member shall be entitled to be furnished, within 7 working days after he has made a request in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of any minutes.
Rule 26 of the Companies (Management and Administration) Rules, 2014 provides the following:

(i) Any member shall be entitled to be furnished, within 7 working days after he has made a request in that behalf to the company, with a copy of any minutes of any general meeting, on payment of such sum as may be specified in the articles of association of the company, but not exceeding a sum of 10 for each page or part of any page:

(ii) A member who has made a request for provision of soft copy in respect of minutes of any previous general meetings held during a period immediately preceding 3 financial years shall be entitled to be furnished, with the same free of cost.

If any copy required is not furnished within the time specified therein, the company shall be liable to a penalty of ₹ 25,000 and every officer of the company who is in default shall be liable to a penalty of ₹ 5,000 for each such refusal or default, as the case may be.

Miscellaneous (Secs. 120 to 122)

Question 52.
Pristine Limited, a listed public company, conducted its Annual General Meeting on 31st August, 2022. However, 10 days have passed since 31st August, 2022, but it has still not tiled report on Annual General Meeting. The accountant of the company has approached you to advise them whether Pristine Limited is required to file report on Annual General Meeting? [RTP-May 21 ]
Answer:
Report on AGM:

As per Sec. 121 of the Companies Act, 2013, every listed public company shall prepare a report on each AGM including the confirmation to the effect that the meeting was convened held and conducted as per the provisions of the Act and the rules made thereunder.
A copy of the report is to be filed with the Registrar in Form No. MGT-15 within 30 days of the conclusion of AGM along with the prescribed fee. If the company does not file such report on AGM within 30 days of the conclusion of the AGM then the company and defaulting officers are liable for prescribed penalties.

Conclusion: Pristine Limited is a listed company, hence it has to file a copy of annual Report with the
Registrar within 30 days from 31st August, 2022.

Others

Question 53.
State with reason whether the following statement is correct or incorrect;
(i) An annual general meeting can he held on a national holiday.
(ii) A company should file its annual return within six months of the closing of the financial year. [MTP-April 21]
Answer:
Correct/Incorrect Statements:
(i) An AGM cannot be held on a national holiday. As per Sec. 96(2) of the Companies Act, 2013 every AGM shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday. A national holiday has been defined in the explanation to section 96 as a day declared as National Holiday by the Central Government. Thus, the statement ‘An annual general meeting can be held on a national holiday’ is incorrect.

(ii) Sec. 92(4) of the Companies Act, 2013 requires that every company shall file with the Registrar a copy of the annual return, within 60 days from the date on which the AGM is held or where no AGM is held in any year within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the AGM, with such fees or additional fees as may be prescribed. Thus, the statement “a company should file its annual return within six months of the closing of the financial year” is incorrect.

Management and Administration – CA Inter Law Study Material

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