Legal Aspect of

Business
Tejpal sheth

Companies Act 2013

Meeting & Power of Board
Companies Act 2013
Meeting & Power of Board

• XYZ co, incorporated on 1st January

2013. The AGM should be held on 1st
July 2014. ROC extended that time to 1st
September 2014. Is the AGM valid?
Case analysis
• ROC can extend time limit up to 3 months for the
AGM but not for the purpose of first AGM.
• Extension granted by the ROC is not valid.
• However, it has been held that if company convey
AGM beyond time limit, meeting will be valid but
defaulting director of the company will be liable
for payment of penalty for delay.
• Company can convey first AGM within 9 months
from closing of financial year.
Companies Act 2013
Meeting & Power of Board

• M.M. Ltd Obtained, the certification of

incorporation on January 1, 2014. Which
is the last date for conveying its AGM?
Case analysis
• As per Section 96 – Company shall convey its
first annual general meeting within period of 9
months from end of financial year.
• Assuming that company’s financial year end on
31st March, 2014.
• Accordingly, M.M. Ltd can convey first AGM on or
before 31st December 2014.
Companies Act 2013
Meeting & Power of Board

• Articles of association of ABC Ltd

provides 25 clear days notice for AGM.
Company convey AGM by giving notice
of 21 clear days. Is AGM held by
company valid ?
Case analysis
• Generally notice calling AGM 21 days in advance
is valid and proper. But where the article of
company provides more time limit, then notice
should be issued as per the provisions of article
of association.
Companies Act 2013
Meeting & Power of Board

• XYZ is a company conducting an AGM.

There are three members personally
present and one member present in his
individual capacity and as well as a
representative of a body corporate. State
whether the AGM is valid ?
Case analysis
• Quorum for public company is 5 members
personally present at meeting.
• In the given case three members personally
present. In addition one member personally
present as well as he is acting as authorized
representative of body corporate. Here, in this
situation he is counted as two members
personally present.
• In view of the above provision, five members are
present. AGM is valid.
Companies Act 2013
Meeting & Power of Board

• XYZ Ltd provided in articles that quorum

for the general meeting should be seven
members. Is it valid provision in article of
association ? If articles provide that
quorum for the company should be two
members. Is it as per Companies Act,
2013?
Case analysis
• Quorum for public company is five members
personally present at general meeting. Article of
association of company may provide higher
quorum than companies Act but it can’t provide
lower number of person for quorum than
companies Act.
• In the first case, provision in article that seven
members shall be present at meeting to form
quorum is valid but in the second case quorum
provided as two is not valid as it is less than
number provided under companies Act, 2013.
• Article can’t provide provision which is against
provision of Companies Act, 2013.
Companies Act 2013
Meeting & Power of Board

• ABC Ltd is listed company, passed

resolution for alteration in the object
clause of memorandum by show of
hands. Is it proper ?
Case analysis
• As per Postal ballot rules, any resolution for
altering article of association by listed company
should be passed by postal ballot. Therefore,
alteration of article by listed company by show of
hands is not as per act.
Companies Act 2013
Meeting & Power of Board

• In case of alternation of AOA to deletion

or insertion of provisions defining private
company shall be passed by resolution
through postal ballot. Is it as per the
provisions of Companies Act, 2013 ?
Case analysis
• As per Postal ballot rules, any resolution for
altering article of association by listed company
should be passed by postal ballot.
• In the given case the company in question is
private company. Rule of postal ballot not
applicable to private company. But if private
company wants to pass resolution about altering
article, it can pass resolution by postal ballot.
Nothing wrong in it if private company wants to
follow postal ballot voluntarily.
Companies Act 2013
Meeting & Power of Board

• ABC Ltd, which is listed at Bombay Stock

Exchange pass resolution for buy back of
own shares through postal ballot. Is
action of ABC Ltd proper ?
Case analysis
• As per Postal ballot rules, any resolution for buy
back of shares by listed company should be
passed by postal ballot. Therefore, buyback of
shares by listed company by postal ballot is as
per act.
Companies Act 2013
Meeting & Power of Board

• The Board of Directors of ABC Ltd. met

three times in the year 2014 and the
fourth meeting, though called, could not
be held for want of quorum. Examine with
reference to the relevant provisions of the
Companies Act, 2013, that whether any
provisions of the Companies Act, 2013
have been contravened?
Case analysis
• Company must hold a meeting of its Board of Directors
at least once in every three calendar months and there
should be at least four directors’ meeting every year. -
Section 173.
• Company has held three board meeting but fourth board
meeting could not be held.
• Considering above provision, company has
violated Section 173 of act.
Companies Act 2013
Meeting & Power of Board
• The Board of Directors of M/s Infotech Consultants Limited,
registered in Calcutta, proposes to hold the next board meeting in
the month of May, 2015. They seek, your advice in respect of the
following matters:

(i) Can the board meeting be held in Chennai, when all the directors of
the company reside at Calcutta.
(ii) Whether the board meeting can be called on a public holiday and
that too after business hours as the majority of the directors of the
company have gone to Chennai on vacation.
(iii) Is it necessary that the notice of the board meeting should specify
the nature of business to be transacted?
Advise with reference to the relevant provisions of the Companies Act,
2013.
Case analysis
(i) There is no difficulty at all in holding the board
meeting at Chennai even if all the directors of the company
reside at Calcutta and the registered office is situated at
Calcutta.
(ii) Board meeting can be held even on a public holiday
and out of the business hours.
(iii) If the articles of association of the company are
silent, the notice of board meeting is not required to specify
the nature of business to be transacted thereat.
Companies Act 2013
Meeting & Power of Board

• Accurate Arcs Ltd. maintains the Minutes Book

of the Board Meetings in loose-leaf system and
get them bound once in three months. Can it do
so? Board meetings were held on 24th March,
2014 and 15th April, 2014. Mr. Rameshwar, who
was the Chairman of these two Board Meetings
died on 1.5.2014, without signing the Minutes.
How should be the Minutes be signed and by
whom?
Case analysis
• Ordinarily Minutes cannot be kept in loose-lead system. The Department of
Company Affairs has expressed that it would in order if minutes is in the
loose-leaf form, provided that adequate safeguards are taken against
falsification, and loose-leaves are bound in books at reasonable intervals,
say six months. In this case, since the Minutes Book leaves are bound once
in three months (January to March, 2014), and as such the same is in order.
• The minutes of the Board Meeting are required to be written within a period
of 30 days from the date of the meeting held. It may be signed by the
Chairman of the said meeting or the Chairman of the next succeeding
meeting.
• In this case, Mr. Rameshwar, who was the Chairman of the Board Meeting
held on 24.3.2014 and 15.4.2014 died on 1.5.2014 without signing the
minutes. The Chairman of the Board Meeting held after 15th April, 2014 for
the first time may sign the minutes of Board Meeting, held on 15th April, 2014.
• The minutes of Board Meeting held on 24th March, 2014 should have been
signed by Mr. Rameshwar himself as he was the Chairman of the Board
Meeting held on 24th March, 2014 as well as the Chairman of the next
succeeding meeting. There is no specific provision in the Companies Act,
2013 as to the person who can sign the minutes of Board Meeting held on
24th March, 2014 in this case. Hence a board meeting may be convened and
the Chairman of the said meeting may sign the minutes of Board Meeting
held on 24th March, 2014.