Meetings – Company Law Important Questions

Meetings – Company Law Important Questions

Question 1.
Distinguish between: Motion and Resolution. (December 2009) (June 2011) (June 2012) (4 marks)
Answer:

Basis of Distinction Motion Resolution
Meaning Motion is the proposal submitted for decision making adopted by means of a resolution. A resolution is the formal expression of the decision of the meeting when a motion has been duly voted and passed by the requisite majority.
Official Decision Motion is not the official decision of the Company Resolution once adopted and recorded in the minutes becomes the official decision of the Company.
Significance In Meeting In the case of Company Meetings, only such motions are proposed as are covered by the agenda. However, certain emotions may arise out of the discussion and the standing orders of various bodies allow such motions to be discussed at the meeting without proper notice in writing. The notice of the meeting covers all matters to which resolution relates.

No resolution can be passed in respect of matters which are not covered in the notice of the meeting.

Question 2.
Distinguish between ordinary resolution and special resolution (June 2013) (4 marks)
Answer:
Ordinary and Special resolution [Section 114]:
A resolution shall be an ordinary resolution if the notice has been duly given and it is required to be passed by the votes cast, in favour of the resolution, including the casting vote, if any, of the Chairman, exceed the votes, if any, cast against the resolution.

A resolution is a special resolution when:

  • The notice required under the Act has been duly given
  • 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.
  • The votes cast in favour of the resolution, are required to be not less than three times the number of the votes, if any, cast against the resolution.

Question 3.
Distinguish between: Special Resolution and Resolution requiring special notice. (December 2012) (4 marks)
Answer:

Basis of Distinction Special Resolution Resolutions requiring Special Notice.
Meaning A special resolution is one passed at the general meeting of a company when:

  • notice of the meeting specifying the intention to propose the resolution as a special resolution has been duly given and
  • The votes cast in favour are three times of the vote cast against it
According to Section 115 of the Companies Act, 2013, whereby any provision of the act or in the articles, special notice is required of any resolution notice of the intention to move the resolution shall be given to the company not earlier than 3 months but at least 14 days before the date of the meeting.
Types of Resolution Every special resolution does not require special notice. Resolutions requiring special notice may be passed as an ordinary resolution.
Specified E-forms Every special resolution is required to be filed in Form No. MGT-14 to the Registrar of Companies. Every resolution requiring special notice is also required to be filed with the Registrar of Companies, but no Form No. has been prescribed.
Examples Examples of events/transactions which requires special resolution:

  • shifting of registered office from one city town or village to another city town or village within the same state
  • change of registered office from one state to another state
  • alteration of the name of the company with the approval of the central government.
Examples of events/transactions which require special notice:

  • A reservation at the AGM appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be re-appointed.
  • A resolution to remove a director or to appoint somebody in place of a director so removed, at the meeting at which he is removed.

Question 4.
Distinguish Between: Postponement of Meeting and Adjournment of Meeting. (December 2012) (4 marks)
Answer:

Basis of Distinction Postponement of Meeting Adjournment of Meeting
Meaning of the Term When it is decided by the director to cancel the duly called meeting and take it on some other day it is known as postponement of the meeting. When a meeting is called and started but suspended to resume at a later time on the same date or some other date it is known as an adjournment of the meeting.
Notice Requirement Fresh notice will be required in case the meeting is postponed. For an adjourned meeting fresh notice is not necessary, if the time, date place is decided and declared at the time of adjourning.
The rules may provide for notice to be given for adjourned meeting if the interval exceeds a fixed time; e.g. 30 days. If the meeting is adjourned sine die, a fresh notice of the adjourned meeting is necessary.
Effect The postponement means cancelling the meeting itself and hold a fresh meeting on some other date. Adjourned Meeting is a mere continuance of an original meeting
Power Directors who have issued a notice of general meeting for a particular date have the power to postpone the date for valid, bona fide and proper reasons. The chairman may, with the consent of any meeting at which a quorum is present and shall if so directed by the meeting, adjourn the meeting from time to time and from place to place.

Question 5.
Distinguish between: ‘Annual general meeting’ and ‘extraordinary general meeting’ (December 2016) (4 marks)
Answer:

Basis of Distinction Extraordinary General meeting Annual General Meeting
Meaning All the general meeting of a company with the exception of the AGM are called the Extraordinary General Meeting (EGM). Annual General Meeting is to be convened pursuant to Section 96 and once in a calendar year.
Nature of Business Transacted In the case of Extraordinary Meeting, all business shall be deemed special. In the case of AGM ordinary as well as special business can be transacted.
Venue of the Meeting The extraordinary meeting can be held anywhere in India. Every AGM call should be held at the registered office or at some other place within the city, town or village in which the registered office of the company is situated.
However, the AGM of an unlisted company may be held in a place in India if consent is given in writing by all the members in advance.
Day of Holding Meeting An extraordinary General Meeting can be held on a national holiday.

However, EGM called by requisitionists has to be held on any day except the national holiday.

Every AGM called should be held on a working day, during business hours.

Question 6.
Every Annual general meeting of the company must be held in each calendar year. Comment (June 2014) (5 marks)
Answer:
1. Section 96 provides that every company, other than a one-person company is required to hold an annual general meeting every year. SS-2 provides that the Board shall, every year, convene or authorize convening of a meeting of its members called the Annual General Meeting to transact items of ordinary business specifically required to be transacted at an annual general meeting as well as a special business if any.

2. Following are the key provisions regarding the holding of an Annual General Meeting:

  1. The annual general meeting should be held once in each calendar year.
  2. The first annual general meeting of the company should be held within 9 months from the closing of the first financial year. Hence it shall not be necessary for the company to hold an annual general meeting in the year of its incorporation.
  3. Subsequent annual general meeting of the company should be held within 6 months from the date of closing of the relevant financial year.
  4. The gap between two annual general meetings shall not exceed 15 months.

3. In case, it is not possible for a company to hold an annual general meeting within the prescribed time, the Registrar may, for any special reason, extend the time within which any annual general meeting shall be held. Such extension can be for a period not exceeding 3 months. No such extension of time can be granted by the Registrar for the holding of the first annual general meeting.

Question 7.
The gap between two Annual General Meeting (AGM) can never exceed 15 months. Comment (June 2015) (5 marks)
Answer:
1. According to section 96(1) of the Companies Act, the 2013 gap of not more than 15 months shall elapse between the date of one annual general meeting of the company and that of the next year annual general meeting.

2. According to the third proviso to section 96(1), the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period of not exceeding three months.

3. The company may apply to the Registrar for an extension for holding AGM, justifying it as a special reason. The registrar may, after considering it as a special reason, extend the time within which an AGM shall be held which shall be a period not exceeding three months.

Further, the gap between the two AGMs shall not elapse a period of 15 months unless the Registrar for a special reason has extended the time for holding the AGM. Such extension cannot be more than 3 months.

Question 8:
Articles of association of a company reserved the powers for calling the Annual general meeting. The managing director of the company, without reference to the Board, called an annual general meeting. Is the annual general meeting validly called? If not, what should be done to make it valid? Discuss with reference to case law, if any. (June 2009) (5 marks)
Answer:
1. Section 96 of the Companies Act, 2013, provides that every company, other than a one-person company is required to hold an annual general meeting every year.

2. Secretarial Standard-2 provides that the Board shall, every year, convene or authorize convening of a meeting of its members called the Annual General Meeting to transact items of ordinary business specifically required to be transacted at an annual general meeting as well as a special business if any. If the Board fails to convene its Annual General Meeting in any year, any Member of the company may approach the prescribed authority, which may then direct the calling of the Annual General Meeting of the company.

3. However, it was held that where a secretary or other officer issued a notice calling a general meeting but he had no power to do so under the AOA of the Company, the notices were null & void and meeting held pursuant thereto was also null & void. [Al-Amin Seatrans Ltd. v. Owners and Party Interested in Vessel M.V. ‘Loyal Bird’ (1996) 1 Comp LJ 258 (Cal.)]

But, it was valid if before the meeting is held the Board ratifies the Act. [Hooper v. Kevr Stuart & Co. (1990) 83 Law Tunes 729].

Question 9.
Yogesh, the Company Secretary of Bigleap Ltd. convened a general meeting of the company after discussing the matter with some of the directors even though there was no express approval of the board for convening such a meeting. Discuss the validity of such a meeting. (June 2013) (4 marks)
Answer:
1. Section 96 of the Companies Act, 2013, provides that every company, other than a one-person company is required to hold an annual general meeting every year.

2. Secretarial Standard-2 provides that the Board shall, every year, convene or authorize convening of a meeting of its members called the Annual General Meeting to transact items of ordinary business specifically required to be transacted at an annual general meeting as well as a special business if any. If the Board fails to convene its Annual General Meeting in any year, any Member of the company may approach the prescribed authority, which may then direct the calling of the Annual General Meeting of the company.

3. However, it was held that where a secretary or other officer issued a notice calling a general meeting but he had no power to do so under the AOA of the Company, the notices were null & void and meeting held pursuant thereto was also null & void. [Al-Amin Seatrans Ltd. v. Owners and Party Interested in Vessel M.V. ‘Loyal Bird’ (1996) 1 Comp LJ 258 (Cal.)]

4. But, it was valid if before the meeting is held the Board ratifies the Act. [Hooper v. Kevr Stuart & Co. (1990) 83 Law Tunes 729].

In the given case, Yogesh, the Company Secretary of Bigleap Ltd. convened a general meeting of the company after discussing the matter with some of the directors even though there was no express approval of the board for convening such a meeting.

Thus, the meeting not validly constituted.

Question 10.
Pioneers Ltd. convened the board meeting on 1st September 2013. During the course of the meeting, the date of the next AGM was discussed but no decision was taken. However, the Company Secretary issued the notice for AGM without any specific authorization from the Board of directors. Decide the validity of the notice of AGM. (December 2014) (5 marks)
Answer:
1. Section 96 of the Companies Act, 2013, provides that every company, other than a one-person company is required to hold an annual general meeting every year.

2. Secretarial Standard-2 provides that the Board shall, every year, convene or authorize convening of a meeting of its members called the Annual General Meeting to transact items of ordinary business specifically required to be transacted at an annual general meeting as well as a special business if any. If the Board fails to convene its Annual General Meeting in any year, any Member of the company may approach the prescribed authority, which may then direct the calling of the Annual General Meeting of the company.

3. However, it was held that where a secretary or other officer issued a notice calling a general meeting but he had no power to do so under the AOA of the Company, the notices were null & void and meeting held pursuant thereto was also null & void. [Al-Amin Seatrans Ltd. v. Owners and Party Interested in Vessel M.V. ‘Loyal Bird’ (1996) 1 Comp LJ 258 (Cal.)]

4. But, it was valid if before the meeting is held the Board ratifies the Act. [Hooper v. Kevr Stuart & Co. (1990) 83 Law Tunes 729],

In the given case, Pioneers Ltd. convened the board meeting on 1st September 2013. During the course of the meeting, the date of the next AGM was discussed but no decision was taken. The Company Secretary issued the notice for AGM without any specific authorization from the Board of directors is not valid.

Thus, the notice is not validly served.

Question 11.
There are seven shareholders in a private limited company having a registered office in Chennai. Six shareholders are French nationals and belong to the same family holding an aggregate of 95% voting rights. These shareholders are unable to come down to Chennai and wish to hold the company’s annual general meeting in Paris. Advice whether the meeting can be held in Paris. (December 2016) (4 marks)
Answer:
1. As per Section 96(2) of the Companies Act, 2013, An AGM can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday.

2. An AGM can be held 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 situated.

3. The Central Government is empowered to exempt any Company from these provisions, subject to such condition as it may impose.

Thus, a private company can hold an Annual General Meeting outside India if it applies to the Central Government for relaxation of provisions of Section 96 of the Companies Act, 2013.

Question 12.
Peculiar Ltd. an unlisted company, did not prepare its financial statements for the year ended 31st March 2016 in conformity with some of the mandatory accounting standards. With reference to the provisions of the Companies Act, 2013, state the responsibilities of the directors and statutory auditors of the company in this regard. (December 2016) (4 marks)
Answer:
1. With reference to the provisions of Section 129( 1) of the Companies Act, 2013, the financial statements shall comply with accounting standards notified under Section 133. The items contained in financial statements shall be in accordance with the applicable accounting standards.

2. With reference to the provisions of Section 129(5) of the Companies Act, 2013, where the financial statements of a company do not comply with the accounting standards referred, the company shall disclose in its financial statements, the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any, arising out of such deviation.

3. With reference to the provisions of Section 134(5) of the Companies Act, 2013, the Directors Responsibility Statement referred shall state in Board’s Report that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

4. With reference to the provisions of Section 143(9) of the Companies Act, 2013, every auditor shall comply with the Auditing Standards. The duty to comply with accounting standards in the Company and its directors and not on the auditor of the Company. The Auditor has to comply only with auditing Standards only.

Question 13.
At the annual general meeting of Soya Ltd., a matter was to be transacted by passing 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. Referring to the provisions of the Companies Act, 2013, examine the validity of the Chairman’s Declaration. (December 2016) (4 marks)
Answer:
1. As per Section 114 of the Companies Act, 2013, which passing a special resolution, the votes cast in favour of the resolution should be at least three times of the vote cast against the resolution.

2. Accordingly, in the given problem, 20 voted in favour of the resolution, 5 voted against it being thrice times of the votes cast against, the resolution is validly passed as a special resolution.

Thus, in terms of the requisite majority, votes cast in favour have to be compared with votes cast against the resolution.

Question 14.
Discuss briefly the voting rights of a proxy. (June 2010) (4 marks)
Answer:
1. Any member of a company who is 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.

2. A proxy has the right to attend the meeting. A proxy has the right to vote only on a poll. A proxy, if eligible under section 109, has the right to demand a poll.

3. As per Guidance Note On General Meeting Issue by ICSI:
A member may revoke the proxy’s authority by attending and voting himself before the proxy has voted. However, a shareholder’s mere presence at the meeting will not have the effect of revocation.

3. The instrument appointing the proxy must be deposited with the company, 48 hours before the meeting. Any provision contained in the articles, requiring a longer period than 48 hours shall have effect as if a period of 48 hours had been specified.

4. The revocation should be communicated before the meeting. Revocation will be too late if communicated after the meeting commenced. In such a case the votes cast by the proxy will be valid in a poll.

Question 15.
Yash, a member of Omar Ltd., appoints Jolly to attend a general meeting of the company. At the meeting, voting takes place by show of hands. However, Jolly does not know whether he (as a proxy) can vote by show of hands at the meeting. Advice. (June 2012) (4 marks)
Answer:
1. A proxy shall not have the right to speak at the meeting. A proxy cannot vote on a show of hands except when there are specific provisions in the article of the Company regarding the same. A proxy is not counted for the purpose of quorum.

2. A proxy has the right to attend the meeting. A proxy has the right to vote only on a poll. A proxy, if eligible under section 109, has the right to demand a poll.

In view of the above provisions, Jolly as a proxy can vote by show of hands at the meeting if the article of the Company provides for the same.

Question 16.
A member of a company has a statutory right to appoint a proxy for attending the general meeting of the company. Similarly, a director can also appoint his proxy for attending the meetings of the Board of directors of the company. (December 2016) (5 marks)
Answer:
1. Any member of a company who is 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.

2. A proxy has the right to attend the meeting. A proxy has the right to vote only on a poll. A proxy, if eligible under section 109, has the right to demand a poll.

However, the same provision is not applicable for the director and hence director cannot appoint a proxy for attending the Board Meeting.

Question 17.
Discuss the requirements for keeping the minute’s book of general meetings. (June 2010) (4 marks)
Answer:
1. The minutes refer to a written record of business transacted at a meeting.

2. Minutes kept shall be evidence of the proceedings recorded in a meeting and containing a fair and correct summary of the proceeding thereat.

3. In accordance with the provisions of Section 118 provides that 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 the 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.

4. In case of a meeting of the Board of Directors or of a committee of Board, the minutes shall contain the name of the directors present and also the name of the dissenting director or a director who has not concurred with the resolution.

5. The chairman shall exercise his absolute discretion in respect of inclusion or non-inclusion of the matters which is regarded as defamatory of any person, irrelevant or detrimental to the company’s interest in the minutes.

6. Minutes kept shall be evidence of the proceedings recorded in a meeting and containing a fair and correct summary of the proceeding thereat.

7. Further Rule 25 of the Companies (Administration & Management) Rules, 2014, contains the following provisions with regards to minutes of meetings:

  • A distinct minute book shall be maintained for each type of meeting.
  • The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

Question 18.
Is it not necessary to have the minutes of the meeting confirmed in the next meeting. (December 2010) (5 marks)
Answer:
1. In accordance with the provisions of Section 118 provides that 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 the 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.

2. In case of a meeting of the Board of Directors or of a committee of Board, the minutes shall contain the name of the directors present and also the name of the dissenting director or a director who has not concurred with the resolution.

3. The chairman shall exercise his absolute discretion in respect of inclusion or non-inclusion of the matters which is regarded as defamatory of any person, irrelevant or detrimental to the company’s interest in the minutes.

4. Minutes kept shall be evidence of the proceedings recorded in a meeting and containing a fair and correct summary of the proceeding thereat.

5. Further Rule 25 of the Companies (Administration & Management) Rules, 2014, contains the following provisions with regards to minutes of meetings:
1. A distinct minute book shall be maintained for each type of meeting.

2. The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

3. 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

  • in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting;
  • in the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairman within that period, by a director duly authorised by the Board for the purpose

6. The minute’s books of the Board and committee meetings shall be preserved permanently and kept in the custody of the company secretary of the company or any director duly authorized by the Board for the purpose and shall be kept in the registered office or such place as Board may decide.

Question 19.
Minutes of the company can be maintained in loose-leaf form. (December 2014) (5 marks)
Answer:
Rule 25 of the Companies (Administration & Management) Rules, 2014, a distinct minute book shall be maintained for each type of meeting. The minutes are required to be recorded in the minute book.

The Tribunal may not object if the minutes are maintained in the loose-leaf form provided all other procedural requirements are complied with and all possible safeguards against manipulation or interpolation of the minutes are ensured. The loose leaves can be got bound at a reasonable interval say, 6 months.

Entering the minutes in the bound minute’s books by a mechanical process such that it does not amount to the attachment to any book by pasting or otherwise, is permissible provided on the mechanical impression of the minutes, the original signature of the Chairman are given on each page.

Thus, Minutes of the company can be maintained in loose-leaf form

Question 20.
Write a short note on the Passing of resolution by postal ballot. (June 2010) (4 marks)
Answer:
1. As per Section 110 of the Companies Act, 2013: Each item proposed to be passed through postal ballot shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon.

2. Business to be transacted through postal ballot: [Rule 22 of Companies (Management and Administration) Rules, 2014]

The following items of business shall be transacted only by means of voting through postal ballot:

  • Alteration of the objects clause of the memorandum and in the case of the company in existence immediately before the commencement of the Act, alteration of the main objects of the memorandum;
  • Alteration of articles of association in relation to insertion or removal of provisions defining a private company.
  • Change in place of registered office outside the local limits of any city, town or village.
  • Change in objects for which a company has raised money from the public through prospectus and still has any unutilized amount out of the money so raised.
  • Issue of shares with differential rights as to voting or dividend or otherwise.
  • Variation in the rights attached to a class of shares or debentures or other securities.
  • Buy-back of shares by a company.
  • Election of a ‘small shareholders’ director.
  • Sale of the whole or substantially the whole of an undertaking of a company.
  • Giving loans or extending guarantee or providing security in excess of unit specified under section 186(3).

Question 21.
“A Limited Company will have to get certain resolutions passed only through postal ballot instead of transacting the business in the general meeting of the company.” Discuss. (December 2009) (5 marks)
Answer:
Business to be transacted through postal ballot: [Rule 22 of Companies (Management and Administration) Rules, 2014]

The following items of business shall be transacted only by means of voting through postal ballot:

  1. Alteration of the objects clause of the memorandum and in the case of the company in existence immediately before the commencement of the Act, alteration of the main objects of the memorandum;
  2. Alteration of articles of association in relation to insertion or removal of provisions defining a private company.
  3. Change in place of registered office outside the local limits of any city, town or village.
  4. Change in objects for which a company has raised money from the public through prospectus and still has any unutilized amount out of the money so raised.
  5. Issue of shares with differential rights as to voting or dividend or otherwise.
  6. Variation in the rights attached to a class of shares or debentures or other securities.
  7. Buy-back of shares by a company.
  8. Election of a ‘small shareholders’ director.
  9. Sale of the whole or substantially the whole of an undertaking of a company.
  10. Giving loans or extending guarantee or providing security exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account.
  11. Any other resolution prescribed under any applicable law, rules or regulations

Question 22.
The postal ballot mechanism improves shareholders’ participation in corporate decision-making. (December 2010) (5 marks)
Answer:

  1. As per section 2(65) “postal ballot” means voting by post or through any electronic mode. It includes voting by shareholders by postal or electronic mode instead of voting personally for transacting businesses in a general meeting of the company.
  2. The idea behind the postal ballot is “corporate democracy’. Presently, many listed companies have lakhs of shareholders spread all over India.
  3. It is not possible for most of them to attend general meeting and vote thereat.
  4. Each item proposed to be passed through postal ballot shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon.

Thus, resolutions are passed at a general meeting only by few members who attend the meetings. To remedy this situation, the concept of the postal ballot was brought out. To sum up, through the postal ballot process shareholder who cannot attend the meeting can also vote by sending a postal ballot and a large number of shareholders are involved in decision making which improves shareholders’ participation in corporate decision-making.

Question 23.
Write a short note on: Voting by show of hands. (December 2012) (4 marks)
Answer:
1. As per the provisions of Section 107 of the Companies Act, 2013:
At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands, unless-
(a) A poll is demanded under section 109 of the Companies Act, 2013.
(b) Voting is carried out electronically under Section 108 of the Companies Act, 2013.

2. A declaration by the Chairman of the meeting of the passing of a resolution (that the resolution has been passed or failed, as the case may be) on a show of hands and an entry to that effect in the minute’s book shall be conclusive evidence of the fact of passing of such resolution.

3. No proof of the numbers of votes casts in favour of and against the resolution is required.

Question 24.
QPR Ltd. is an unlisted company and has 400 shareholders in all. The shareholders of the company propose voting by electronic mode. The Chairman of the company rejected the shareholders’ proposal. Explaining the provisions of the Companies Act, 2013, examines the validity of rejection of the shareholders’ proposal by the Chairman. (June 2015) (4 marks)
Answer:
1. As per Rule 20 of the Companies (Management & Administration) Rules, 2014, every listed company or a company having not less than 1,000 members, shall provide to its member’s facility to vote on resolutions by electronic means.

2. In the given cases, QPR Ltd. is an unlisted company and has 400 shareholders in all. The shareholders of the company propose voting by electronic mode. The Chairman of the company rejected the shareholders’ proposal.
Thus, it is not mandatory for QPR Ltd. to conduct voting by the electronic voting system.

Question 25.
Write a short note on Class Meetings. (December 2012) (4 marks)
Answer:
1. Meetings of members of a company fall into two broad divisions, namely, general meetings and class meetings.

2. Class meetings are meeting of shareholders, holding a particular class of share which is held to pass a resolution which will bind only the members of the class concerned.

3. The various class meetings are as follows:
1. Meetings of Board of Directors
Every company shall hold the first meeting of the Board of Directors within 30 days of the date of incorporation.
Every company shall hold a minimum of 4 meetings of the Board of Directors every year. The gap between the two Board Meetings should not be more than 120 days.

2. Meeting of creditors
Meetings of creditors are not company meetings. In the event of winding up or either as a running concern, the company is required to convene the meeting of creditors for certain matters to be discussed with Creditors.

3. Meeting of debenture holders
When a company issues debentures it provides in the trust deed executed for securing the issue for the holding of meetings of debenture holders and also gives power to them to vary the terms of security or to alter their rights in certain circumstance. The decision arrived at such meetings is made by the requisite majority are valid and binding upon the minority.

Question 26.
A new business cannot be dealt with in an adjourned meeting without the permission of the chair. Do you agree with the statement? Give reasons. (June 2011) (4 marks)
Answer:

  1. When a meeting is called and started but suspended to resume at a later time on the same date or some other date it is known as an adjournment of the meeting.
  2. Adjournment of the meeting is a mere continuance of the original meeting.
  3. Regulation 49 of Table F specifically states that no business shall be transacted at any adjourned meeting other than the incomplete business left at the original meeting.

Hence, a new business cannot be dealt with in an adjourned meeting with or without permission of the chair

Question 27.
State whether the board meeting of a company can be held at any place. (June 2010) (4 marks)
Answer:
As per Section 96(2) of the Companies Act, 2013, an annual general meeting can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a national Holiday. No such similar provisions for holding a board meeting.

Hence, The Board meeting may be held at any place convenient to the directors even outside the business hours and even on a national holiday unless the articles of association of the Company provide otherwise.

Question 28.
Enumerate the different types of meetings under the Companies Act, 2013. (June 2013) (4 marks)
Answer:
Following are different types of the Meetings under Companies Act, 2013:
1. Meeting of Board of Directors.
2. Meeting of Board Committees.
3. Meeting of Debenture Holders.
4. Meeting of Creditors & Contributories.
5. Shareholders Meeting:

  • Annual General Meetings [Section 96]
  • Extraordinary General Meetings:
  • Convened by directors
  • Class meetings of Shareholders.
  • Convened by directors on the requisition of the shareholders under Section 100.

Question 29.
The required quorum is not present within 30 minutes of the scheduled time for holding of Annual general meeting. Advice with the help of relevant provisions of the Companies Act, 2013. (June 2013) (4 marks)
Answer:
1. The quorum refers to the minimum number of members required to constitute a valid meeting.

2. Following are the minimum numbers provided in section 103, for various categories of companies. However, the Articles of Association of the company may provide for a higher number.

3. For Public company:

  • 5 members personally present if the number of members as of the date of the meeting is not more than 1000;
  • 15 members personally present if the number of members as of the date of the meeting is more than 1000 but up to 5000;
  • 30 members personally present if the number of members as of the date of the meeting exceeds 5000.

4. For Private company:
2 members personally present, shall be the quorum for a meeting of the company

5. If the Quorum is not present within 30 minutes 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 or
  • The meeting, if called by requisitionists shall stand cancelled.

Question 30.
Innovative Energies Limited has 2,505 members as of the date of the company’s extraordinary general meeting. The Executive Director, Mr Avinash has asked you, the Secretary of the Company, what is required quorum for the meeting. Referring to the provisions of the Companies Act, 2013, inform the Executive Director, Mr Avinash, of the quorum that must be present for holding the Extraordinary General Meeting of the company. State whether the required quorum must be present throughout the meeting. (June 2017) (4 marks)
Answer:
1. The quorum refers to the minimum number of members required to constitute a valid meeting.

2. Following are the minimum numbers provided in section 103, for various categories of companies. However, the Articles of Association of the company may provide for a higher number.

3. For Public company:

  • 5 members personally present if the number of members as of the date of the meeting is not more than 1000;
  • 15 members personally present if the number of members as of the date of the meeting is more than 1000 but up to 5000;
  • 30 members personally present if the number of members as of the date of the meeting exceeds 5000.

4. For Private company:
2 members personally present, shall be the quorum for a meeting of the company

5. In the given case, Innovative Energies Limited has 2,505 members as of the date of the company’s extraordinary general meeting, Hence in its extraordinary general meeting, 15 members must be present personally in order to constitute a valid Quorum.

6. Presence of Quorum throughout the meeting:
The Companies Act, 2013 is silent but in the decide case Hartely Barid In Ref1955) Ch 143, it was held that it is sufficient if the quorum is present at the beginning of the meeting and it is not necessary that quorum should present throughout the meeting.

Question 31.
Shaky Commodities Private Limited could not hold its 10th annual general meeting for the year 2016 by 30th September 2016. The company sought an extension of time for holding the AGM from the Registrar of Companies but failed to hold the meeting within the extended time too. Instead, it held the meeting on 31st March 2017 and passed resolutions thereat. Certain shareholders have challenged the validity of these resolutions. Referring to the provisions of the Companies Act, 2013, examine whether the contention of the shareholders shall be tenable. (June 2017) (4 marks)
Answer:
1. Annual General Meeting [Section 96(1) of the Companies Act, 2013]
Every Company, other than One Person Company is required to hold an Annual general meeting every year.
In case, it is not possible for a company to hold an annual general meeting within the prescribed time, the Registrar may, for any special reason, extend the time within which any annual general meeting shall be held. Such extension can be for a period not exceeding 3 months. [Proviso to Section 96(1)]

No such extension of time can be granted by the Registrar for the holding of the first annual general meeting.

2. Punishment for Not Holding AGM [Section 99 of the Companies Act, 2013]:
If any default is made in complying or holding a meeting of the company, the company and every officer of the company who is in default shall be punishable with a fine which may extend to one lakh rupees and in case of continuing default, with a further fine which may extend to five thousand rupees for each day during which such default continues.

In the given case, the Late date of holding AGM for 30th September 2016 but was held that it’s meeting for the year 2015-2016 in the year 31st March 2017. The AGM held on 31st March 2017 is valid. However, the company can be penalized for holding its AGM beyond the statutory period as per Section 99 of the Companies Act, 2013.

Question 32.
A company has 120 members. It sends notice of a general meeting to all of them. 20 members did not attend the meeting. Out of the remaining 100 members who were present, 20 members abstained from voting. Advise the company, how many members should vote in favour of a resolution, if it has to be passed as a special resolution? (December 2017) (4 marks)
Answer:
1. Under Section 114 of the Companies Act, 2013, a resolution shall be a special resolution when:

  • the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation was given to the members of the resolution;
  • the notice required under this Act has been duly given; and
  • 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, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members
    so entitled and voting

2. As per the facts given in the case, a company has a total of 120 members, 20 members did not attend the meeting. Out of the remaining 100 members, 20 members abstained from voting.

3. The Total number of members voting is 80 members (100-20).
Thus, in order to pass a special resolution company needs 60 members or more votes in favour of the resolution.

Question 33.
The minutes of the 24th Annual General Meeting of Poly Bank Ltd. is to be signed by the chairman. However, the chairman of Poly Bank Ltd. met with an accident 2 days after the AGM was held. Minutes of AGM is, therefore, pending signatures. Advice the company secretary of Poly Bank Ltd. about the procedure for signing of minutes in such a case as if the chairman has become permanently incapable of signing. Will your answer be different if the chairman suffers only a minor injury and gets back to his office in one week? (December 2017) (4 marks)
Answer:
Under Rule 25 of the Companies (Administration & Management) Rules, 2014, contains the following provisions with regards to minutes of meetings:
1. A distinct minute book shall be maintained for each type of meeting.

2. The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

3. 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:

  • in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting;
  • in the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairman within that period, by a director duly authorised by the Board for the purpose

As per the above-discussed provisions, the chairman of the Poly Bank Ltd. met with accident two days after the annual general meeting and become permanently incapable of signing in such case Minutes of AGM will be signed by a director duly authorized by the Board for the purpose. But if the injury is minor and the chairman gets back to the office in one week the minutes of the AGM has to be signed by the Chairman of AGM within 30 days from the date of AGM.

Question 34.
Robert, a member of MLM Ltd. submitted his proxy to the company before the scheduled time of the Annual General Meeting. The Articles of the company provided that proxy can be submitted to the company 70 hours before the scheduled time of the meeting. The chairman of the company rejects the proxy on the ground that it is in violation of the Articles. Referring to the provisions of the Companies Act, examine the validity of the chairman’s decision to reject the proxy. (December 2017) (4 marks)
Answer:

  1. Section 105 of the Companies Act, 2013 provides that a member, who is entitled to attend to vote, can appoint another person as a proxy to attend and vote at the meeting on his behalf.
  2. The term ‘proxy’ is also used to refer to the instrument by which a person is appointed as proxy.
  3. A person who is appointed by a member to attend and vote at a meeting in the absence of the member at the meeting is termed as a proxy. Thus proxy is an agent of the member appointing him.
  4. The instrument appointing the proxy must be deposited with the company, 48 hours before the meeting. Any provision contained in the articles, requiring a longer period than 48 hours shall have effect as if a period of 48 hours had been specified.

As per facts given in the case, the Articles of Association of MLM Ltd. provided that proxy can be submitted to the Company 70 hours before the scheduled time of the meeting. Such provision is valid. Thus, the Chairman’s decision to reject the proxy form on the ground it is not submitted 70 hours before the scheduled time of the meeting is valid.

Question 35.
In the 25th Annual General Meeting of Lazy Ltd., some shareholders demanded that a poll be taken in respect of one of the resolutions proposed in the notice of AGM on which voting was yet to be taken on the show of hands. Prepare the announcement to be made by the Chairman of the meeting in connection with the poll. (June 2018) (8 marks)
Answer:
Announcement by Chairman
As per Section 109 of the Companies Act, 2013, a poll has to be taken before or on the declaration of the result of the voting on any resolution on a show of hands.
As some shareholders holding requisite shares as stated in Section 109 of the Companies Act, 2013 requested to take a poll on Item No: listed in the notice of the meeting and online with best practice, poll voting at the meeting will be conducted at the end of meeting using the electronic system provided by the Company’s Registrar.

I believe that voting on a poll will result in the most accurate reflection of the views of shareholders by ensuring that every vote is recognised, including all votes of proxies.

On a poll, each shareholder has one vote for every share held.

Poll voting will be conducted at the end of the meeting as discussed. I request all the members and proxies to cast their valuable votes and help the company to conduct voting in a fair and transparent manner.

Question 36.
Adoption of accounts is an important business to be transacted only at a general meeting. Comment (December 2012) (5 marks)
Answer:
As per Section 102(2) of the Companies Act, 2013:
All businesses transacted at an Annual General Meeting (AGM) except the following are a special business:

  1. Consideration of Financial Statement & Reports of the Board of Directors and Auditors.
  2. Declaration of any Dividend.
  3. Appointment of Director in place of those retiring.
  4. Appointment and the fixing remuneration of auditors.

Thus, the adoption of accounts is an important business (classified as an ordinary business) to be transacted only at an annual general meeting.

Question 37.
The time gap between the date of approval of financial statements by the Board of directors of the company and the date of notice of the annual general meeting should be 45 days. Comment (June 2016) (5 marks)
Answer:
1. There are no special provisions in the Companies Act, 2013, regarding the time gap between approval of financial statement and sending the notice of meeting.

2. As per Section 101 of the Companies Act, 2013, a notice of every meeting including the Annual General Meeting has to be given 21 clear days before the date of the meeting.

3. As per Section 134(1) of the Companies Act, 2013, the financial statement shall be approved by the Board of Directors before signing.

4. As per Section 136(1) of the Companies Act, 2013, a copy of financial statements, auditor’s report and every other document, which are to be laid before a company in its general meeting shall be sent to:

  • Every member of the Company
  • Every trustee for the debenture-holder
  • All persons who are entitled to notice of the Meeting ie. Auditor, directors, legal representative of any deceased member and the assignee of an insolvent member).

5. The notice along with financial statements is required to be sent at least 21 clear days.

Thus, the Board of director should approve the financial statement at least before sending the notice of the Annual General meeting.

Question 38.
AGILE Ltd. called its AGM on 28 September 2013. The notice of the meeting was posted on 6th September 2013. With reference to the provisions of the Companies Act, 2013, examine whether the notice given by the company was valid. (December 2014) (4 marks)
Answer:
1. As per Section 101 of the Companies Act, 2013, a general meeting of a company may be called by giving not less than 21 clear days notice either in writing or through electronic mode.

2. As per the given facts of the case, the notice of the meeting was posted on 6th September 2013. AGILE Ltd. called its AGM on 28 September 2013, only 19 clear days notice is served. The notice falls short by 2 clear days.
Thus, the meeting is, therefore not properly convened in terms of the provisions of the Companies Act, 2013.

Question 39.
Prudent General Insurance Company Ltd. is engaged In the general insurance business. The company is not listed in any stock exchange in India but is a subsidiary of Reliable General Insurance Company Ltd., listed on the Bombay Stock Exchange. The turnover of Prudent General Insurance Company Ltd. is INR 330 crore. Examining the provisions of the Companies Act, 2013, state whether the company is required to file XBRL enabled balance sheet. (June 2016) (4 marks)
Answer:
1. The following class of companies shall file their financial statements and other documents under section 137 of the Act with the Registrar in e-form AOC-4 XBRL as per Annexure-I:

  1. companies listed with stock exchanges in India and their Indian subsidiaries;
  2. companies having paid-up capital of five crore rupees or above;
  3. companies having turnover of one hundred crore rupees or above;
  4. all companies which are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015

2. However, companies preparing their financial statements under the Companies (Accounting Standards) Rules, 2006 shall file the statements using the Taxonomy provided in Annexure-II and companies preparing their financial statements under Companies (Indian Accounting Standards) Rules, 2015, shall file the statements using the Taxonomy provided in Annexure-II

3. However, non-banking financial companies, housing finance companies and companies engaged in the business of the banking and insurance sector are exempted from filing financial statements in XBRL Mode.

Thus, Prudent General Insurance Company Ltd. being an insurance company is not required to file their Balance Sheet and Profit and Loss A/c in XBRL Mode.

Question 40.
DEF Ltd., a company listed at Bombay Stock Exchange, failed to file its report on the AGM for the financial year ended 31st March 2013 with the ROC, Mumbai. The company further abstained from filing the said report for another two years, viz. financial years ended 31st March 2014 and 2015 respectively.
Examining the provisions of the Companies Act, 2013, state whether the default committed by the company amounts to an offence. If so, to what extent it is possible to get the offences compounded. (June 2015) (4 marks)
Answer:
1. As per Section 121 oftheCompaniesAct,2013, if the company fails to file the Report on Annual General Meeting before the expiry of the period specified:

  • The company shall be liable to a penalty of INR 1,00,000 and in case of continuing failure, a further penalty of INR 500 for each day after the first during which such file or continuous, subject to a maximum of INR 5,00,000 and
  • Every officer of the company who is in default shall be liable to a penalty which shall not be less than INR 25,000 and in case of continuing failure, with further penalty of INR 500 for each day after the first during which such failure continues, subject to a maximum of INR 1 lakh

2. Section 441 of the Companies Act, 2013, deals with the “compounding of offences”. As per this section offence punishable with a fine can be com-pounded.

3. If an offence is compounded in favour of a person and if that person commits the same offence once again within 3 years from the previous compounding and the subsequent offence shall not be eligible for compounding.

Thus, if the offence of non-filing of a report on the Annual general meeting is compounded for the year ended 31st March 2013, the same offence for the year ending 31st March 2014 and 2015 cannot be compounded.

Question 41.
Does Kirti Ltd. have total paid-up share capital? 23 crore and its annual general meeting are scheduled on 27th December 2018. Ritik is holding paid-up share capital having a nominal value of INR 3 crore and Sonu is holding paid-up share capital having a nominal value of INR 2.4 crore. On 24th December 2018 both Ritik and Sonu wanted to issue a proxy in favour of Rohit to attend the meeting on their behalf. Rohit is not a member of any company. Decide under the provisions of the Companies Act, 2013 whether both Ritik and Sonu can appoint Rohit as their proxy. (December 2018) (4 marks)
Answer:
1. As per Section 105 of the Companies Act, 2013:
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.

2. A person appointed as proxy shall not act as proxy on behalf of more than 50 members and members holding in the aggregate more than 10% of the total share capital of the company carrying voting rights.

3. However, a member holding more than 10%, of the total share capital of the company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder.

4. As per facts given in the case, the total paid-up capital of Kirti Ltd. is INR 23 crore and Ritik and Sonu are holding INR 3 crore & 2.4 crore capital which is 23.48% of total capital.

Thus, Ritik and Sonu cannot appoint the same person as a proxy as their combined holding is more than 10% of the total share capital of the company carrying voting rights.

Question 42.
In Pallavi Chemicals Ltd. resolution for the issue of bonus shares in the general meeting was put to remote e-voting and the requisite majority has approved but a quorum is not present at the general meeting. What would be the implications? (December 2018) (4 marks)
Answer:
1. As per “Secretarial Standard-2: General Meetings”:
The facility of remote e-voting does not dispense with the requirement of holding a General Meeting by the company.

2. Members need to be personally present at a meeting to constitute the Quorum.

3. As per the facts given in the case, Pallavi Chemicals Limited resolution for the issue of Bonus shares in the general meeting was put to remote e-voting and requisite in the general meeting has approved but the quorum was not present at the General Meeting.

Thus, as per provisions of the Secretarial Standard- 2: General Meetings resolution for issue of Bonus Shares is not properly passed.

Question 43.
Assume yourself as Company Secretary in practice and secretarial auditor of Rama Ltd. which is having its annual general meeting scheduled on 17th August 2018 at its registered office in Mumbai. On 16th August 2018, you have a business meeting fixed at Kochi and a return flight to Mumbai on the evening of 16th August 2018. But due to bad weather conditions, all flights departing from Kochi have declared cancelled. Discuss the alternatives available to you with regard to the annual general meeting of Rama Ltd. (December 2018) (4 marks)
Answer:
1. In accordance with the provisions of the Secretarial Standard 2: “General Meetings
The secretarial auditor, unless exempted by the company shall either by himself or through his authorized representative, attend the Annual General Meeting and shall have the right to be heard at such meeting on that part of the business which concerns him as a secretarial auditor.

2. In the given case, the Secretarial auditor of Rama Ltd. is having its annual general meeting scheduled on 17th August 2018 at its registered office in Mumbai. On 16th August 2018, you have a business meeting fixed at Kochi and a return flight to Mumbai on the evening of 16th August 2018. But due to bad weather conditions, all flights departing from Kochi have declared cancelled.

Thus, the secretarial auditor of Rama Limited can authorize his representative to attend the AGM if he is not able to attend the AGM personally.

Question 44.
Fashion Ltd. holds a general meeting for passing a special resolution regarding the appointment of Shyamal aged 72 years as Managing Director of the company. Out of the 50 members present in the meeting, 25 voted in favour, 15 against and 10 members did not cast their vote. Can the company appoint Shyamal as Managing Director of the company? Discuss. (December 2018) (4 marks)
Answer:
1. As per the provisions of Section 196(3) of the Companies Act, 2013, the appointment of a person as a managing director who has attended the age of 70 years may be made only by passing a special resolution at the general meeting.

2. As per the provisions of Section 114 of the Companies Act, 2013, states that 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 the act has been duly given and
(c) The votes cast in favour of the resolution, are required to be not less than 3 times the number of the votes, if any, cast against the resolution.

3. As per facts given in the case, out of 50 members present in the meeting 25 voted in favour and 15 against.

Hence, the votes cast in favour are not three times of votes cast against and then it is concluded that special resolution is not passed for the above-discussed purpose.

Question 45.
What are the requirements as to the maintenance of the Register of Postal Ballot? (June 2019) (3 marks)
Answer:
1. Postal ballot means voting by post or through any electronic mode. A company has to pass certain resolution notified by the Central Government by way of postal ballot.

2. As per the provisions of Section 110 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014:

The scrutinizer shall maintain a register either manually or electronically to record their assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the Shareholder, number of shares held by them, the nominal value of such shares, whether the shares have differential voting rights if any, details of postal ballots which are received in defaced or mutilated form and postal ballot forms which are invalid.

Question 46.
As a company secretary referring to the provisions of Companies Act, 2013 examine the validity of the following propositions:
(a) A company wishes to call its annual general meeting on a working day at 6.30 p.m.
(b) Due to the availability of the chairman, the AGM of the company can be held only on 15th August 2018. All members are ready to give consent in writing in advance for the same.
(c) Due to technical problem, the company wants to hold its AGM in a city other than a city in which the registered office of the company is situated. (June 2019) (1 + 2 + 1 = 4 marks)
Answer:
1. As per Section 96(2) of the Companies Act, 2013, an annual general meeting can be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday.

2. National Holiday” for this purpose means and includes a day declared as National Holiday by the Central Government. According to SS-2, National Holiday means Republic Day Le. 26th January, Independence Day Le. 15th August, Gandhi Jayanti Le. 2nd October and such other day as may be declared as National Holiday by the Central Government.

3. Annual General Meeting should 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 situated.

4. 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.

5. In the case of Government Company, the Central Government may approve such other place for holding AGM, if the place is other than the registered office

In light of the above-mentioned provisions regarding the Annual General Meeting:
(a) The company cannot call its meeting at 6:30 p.m. It can call its meeting during business hours, that is, between 9 am and 6 pm.
(b) The company cannot call its meeting on 15th August as it is a national holiday.
(c) The company can hold AGM at the registered office or at some other place within the city, town or village in which the registered office of the Company is situated.

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

CS Executive Company Law Questions and Answers

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