MANAGEMENT OF A

COMPANY
 Statutory meeting
•  Every public company that has a share capital must, within a
period of 6 months from commencement of business or 9
months from the date of incorporation, whichever is earlier, hold
a general meeting of the members of the company called a
‘statutory meeting’ (s 131)
•  Notice of this meeting is to be sent 21 days in advance along
with the statutory report
•  A statutory report ought to contain:
–  Total number of shares allotted
–  Total amount of cash received in this respect
–  Name, addresses and occupations of directors, chief
executive, secretary etc
–  Brief account of state of affairs of company since
incorporation
–  Must be certified by CEO, 1 director and incase of a listed
company also the CFO
 AGM
•  Every company shall hold, in addition to any
other meeting, a ‘general meeting’ (AGM)
within 16 months from the date of its
incorporation and thereafter atleast once in every
calendar year (section 132)
•  It is to be held in the same town in which the
registered office is located
•  Notice of AGM has to be sent to the Commission,
members and every other person entitled to such
a notice 21 days in advance
•  Default in compliance with this provision leads to
a fine to the any officer of the company who
willfully participated in such default
 EGM
•  All general meetings other than the annual
general meeting shall be called ‘extra-ordinary
general meetings’ (EGM)
•  These may be called by the directors at any
time to discuss any issue that needs approval
•  A requisition for this needs to be made by
members representing at least 1/10th of the
voting powers; such requisition needs to state
the objects of the meeting
•  Default in compliance results in a fine to the
officer of the company that knowingly and
willfully participated in such default
 General Provisions on Meetings
•  Where any special business, other than
consideration of accounts or declaration of
dividends or appointment of directors etc, is to be
transacted, the notice must have annexed with it
all material facts related to such business
•  Members can attend personally or through proxy
•  Chairman of board of directors shall preside over
the meeting
•  *A quorum is the minimum amount of members
needed to be in attendance at a meeting. For
public companies it is not less than 10 members
(unless the articles provide for a greater number)
who represent not less than 25% of the voting
power of the company. See section 135
•  If a resolution needs to be passed at a
meeting, a draft of this must be sent along
with notice of the meeting
•  Every special resolution needs to be filed
with the registrar within 15 days of its passing
•  An ordinary resolution is one passed by a
simple majority while a special resolution is
one passed by a 75% majority i.e. these
resolutions are harder to pass
•  Minutes of the proceedings of all general
meetings and meetings of directors must be
maintained
 DIRECTORS
•  A private company must not have less than 2
and a public listed company not less than 3
directors, appointed and elected in accordance
with the Act
•  Only natural persons to be directors i.e. a
corporation can not be a director of the
company
•  Election (Sec 159):
–  To be elected at a meeting
–  Any person who wants to run for election must file
with the company, 14 days before the meeting, a
notice of his intention to run
•  Term of office is 3 years (Sec 161)
•  A director may be removed if so decided by resolution in
a general meeting at a meeting (Sec 163)
•  Within 14 days of nomination or election, consent to act
as director must be filed with the registrar
•  *No act of a director shall be deemed invalid merely on
ground of any defect with his appointment provided he
doesn‘t exercise the right of his office from the time that
he is notified of this defect
•  *Eligibility criteria s153
–  No person can hold office of a director if he is a minor,
of unsound mind, convicted by law of an offence of
moral turpitude, is insolvent, is not a member, is a loan
defaulter Note: ‘is not a member’ shall not apply in
case of a whole time director who is an employee of
the company; a CEO etc.
•  Section 171 Office of director must be vacated if:
–  a director becomes ineligible to hold office
–  he absents himself from 3 consecutive meetings without a
leave of absence
–  he or any firm of which he is a part
•  *without the sanction of the company in general
meetings accepts any office of profit under this
company, other than that of Chief Executive or legal or
technical advisor (Office of profit means any office that
gives the director anything by way of remuneration that
is over and above the remuneration to which he is
entitled as a director by way of salary fee commission
etc (see s 208 explanation (a))
•  Accepts a loan or guarantee from this company other
than as provided for in s 195 (who can take it and
when, filing particulars with the registrar etc)
•  *Quorum for the meeting of directors of a listed
company shall not be less than 1/3rd of their
number or 4, whichever is greater; if such quorum
is not complied with penalty in the form of a fine
(Sec 176)
•  The directors of a public company must meet at
least once each quarter of a year
•  *Any provision contained in the articles or any
contract with the directors, exempting a director,
chief executive or an officer of the company, or any
person employed as the auditor of the company, or
indemnifying him against any liability which by
virtue of any law would apply to him in respect of
negligence, default, breach of duty or trust in
relation to the company, shall be void
•  Powers of the board of directors (Section 183**)
–  Business of the company shall be managed by the
directors who shall pay all expenses incurred in
promoting and registering the company
–  The directors shall exercise the following powers on
behalf of the company, by way of resolution at a
general meeting:
•  Make calls on shareholders for money unpaid on their shares
•  To issue shares and debentures
•  To invest the funds of a company
•  To make loans
•  To authorize a director of a company to enter into a contract
with this company for sale or services
•  To approve annual or half-yearly accounts
•  To incur capital expenditure or dispose off a fixed asset
•  To declare interim dividends
•  Note:
–  Companies are prohibited from making a
political contribution, to a political party or for
any political purpose or body - see Section
184
•  Company will be liable for a fine and directors
involved will be punishable by fine and
imprisonment
–  Prohibition on gifts to members in company
meeting
 Assignment 2
1.  a) What does it mean when we say that any
provision in an employment contract will be
deemed void if it exempts a director/CEO from
liability and, [2 marks]
b) what kinds of liability fall under this? [2 marks]
2. Mention atleast 3 powers of the BoD. [2 marks]
3. What is a quorum? What would the quorum of the
BoD be for a company that has 24 directors? [4
marks]
 Assignment
1.  What are the different quorums for different
kinds of meetings within a company? (2.5 +
2.5 marks)
2.  Who will not be able to qualify as a director
under the Companies Act, 2017? (2.5
marks)
3.  What do we mean when we say that the
defective appointment of a director does not
effect the decisions he has made? Explain
by way of example. (2.5 marks)