A meeting may be generally defined as a gathering or assembly or getting together of several persons for transacting any lawful business, for entertainment, or the like. There must be at least two persons to constitute a meeting. However, in certain exceptional cases, even one person may constitute a valid meeting. Company meetings must be convened and held in full compliance with the applicable provisions of the Companies Act, 2013, and the rules framed under it.
Types of Company Meetings
Company meetings may be classified into several types based on their purpose and participants. These include shareholders’ meetings such as statutory meetings, annual general meetings (AGMs), extraordinary general meetings (EGMs), and class meetings. Other types include board meetings, meetings of the committee, meetings of debenture holders, meetings of creditors for purposes other than winding up and for winding up, and meetings of contributories in winding-up proceedings.
Requisites of a Valid Meeting
For any meeting to be valid, it must be duly convened, properly constituted, and conducted by the provisions of the Companies Act and the Articles of Association.
Proper Convening of the Meeting
A meeting is said to be properly convened when it is called by the proper authority and when proper and adequate notice has been given to all those entitled to attend it.
Proper Authority to Convene a Meeting
The proper authorities to convene a meeting include the Board of Directors, shareholders, or the Tribunal. The Articles of Association typically empower the Board of Directors to convene general meetings. Even if not expressly mentioned in the Articles, the Board has the authority under common law. A notice issued by the company secretary without the sanction of the board is considered invalid. In certain circumstances, shareholders may insist on the calling of an extraordinary meeting. Sections 97 and 98 of the Companies Act empower the Tribunal to direct the calling of AGMs and EGMs, respectively. The Tribunal may do so on a petition from any member, director, or even suo motu if it becomes impracticable to call or conduct a meeting. Such a meeting, once held under Tribunal direction, is considered a duly called meeting of the company.
Proper and Adequate Notice
A valid notice of a company meeting must comply with general rules regarding notice and those laid down in the Companies Act and Articles of Association. The notice should convey the date, time, place, and agenda of the meeting and must be served in a prescribed manner.
General Rules for Notices
A notice should enable recipients to attend the meeting and participate in its deliberations. It must specify the date, time, and venue of the meeting along with a full agenda. Notices must be served as per the Articles and the Companies Act. As per SS-2, notices can be sent by hand, ordinary or speed post, registered post, courier, fax, email, or other electronic means. When sent electronically, the documents must go to the member’s registered email address or that provided by the depository. For directors, auditors, secretarial auditors, and others, notices are sent to addresses they have given to the company. In cases where the company offers e-voting or where business is transacted through a postal ballot, notices must not be sent by ordinary post but through registered post, speed post, courier, or email. If a member requests a specific mode of delivery other than the default options, they must pay a fee fixed by the company at its AGM. When requisitionists themselves call the meeting due to board inaction, the notice must be sent by registered post, speed post, or email. Companies with websites are required to host the notice on their sites as well.
Deemed Effectiveness of the Postal Service
Section 20 of the Companies Act deems a notice sent by post to have been served 48 hours after posting. The address used must be correct per the register of members. Courts have held that notices sent to members listed on the register at the time of dispatch are valid, even if the register is later updated retrospectively. However, there is no presumption of delivery if the address is incorrect or if the post office is on strike. The burden of proof lies with the party claiming non-receipt of notice. The timing of posting must be reasonable, not at a distant location intended to delay delivery. The length of notice must meet the requirements of the Companies Act and the Articles. Clear communication, avoiding ambiguity, is essential. While it is mandatory to issue notices, if meetings are held regularly on fixed dates, reminders may suffice o,, or formal notice may be waived.
Requirements Under the Companies Act
Sections 20, 96, 101, and 102 of the Companies Act provide the relevant legal framework regarding the content and timing of notices. For AGMs and EGMs, at least 21 clear days’ notice must be given to members. Notice can be sent by post, courier, or delivered in person or via electronic modes. A general meeting may be convened with shorter notice if written consent is given by not less than 95 percent of the members eligible to vote. In the case of an AGM, this applies to all members. In other general meetings, this applies to members holding the majority in number and 95 percent of the paid-up capital carrying voting rights, or 95 percent of total voting power if there is no share capital. Members entitled to vote on only some resolutions are considered only for those specific items. Consent may be given before the meeting or after resolutions have been passed. Clear days are calculated by excluding the date of issue, 48 hours for postal transit, and the date of the meeting itself. Hence, for meetings where notice is posted, the notice must be sent at least 25 days in advance to satisfy both the 21-day requirement and the postal grace period. Notices posted while knowing that postal services are disrupted are not considered valid.
Newspaper Publication of Notices
Publishing a notice in newspapers is not mandatory. However, companies may do so as a precautionary measure to ensure that shareholders abroad who might not receive postal notices are informed. Such publication does not substitute the obligation to serve notices individually to all members as required under Section 20(2).
Notice to Joint Shareholders
In the case of joint shareholders, notice is considered duly served if sent to the first-named holder in the register of members.
Effect of Shorter Notice
Resolutions passed at meetings called on shorter notice are effective only if proper written consent is obtained from 95 percent of eligible voters. Members who vote at the meeting cannot later challenge the validity of the resolutions on the grounds of notice irregularities.
Persons Entitled to Receive Notice
Under Section 101, notices must be sent to every member of the company, the legal representative of a deceased member, the assignee of an insolvent member, all auditors, and all directors. Secretarial auditors and debenture trustees must also receive the notice, where applicable. Clarification from the Institute of Company Secretaries states that the secretarial auditor of the previous financial year, whose report is annexed to the Board’s report, rt should attend the AGM to respond to queries and observations. It is advisable for the secretarial auditor appointed for the current year to also attend.
Notice to Nominees and Legal Representatives
When a company receives information about a member’s death, SS-2 requires that the notice of the meeting be sent to the nominee in case of single holding, or to the first surviving joint holder in case of joint holdings. If all joint holders have died, the notice should go to the nominee designated by all joint holders, or to the legal representative in the absence of a nominee.
Accidental Omission and Validity
If notice is accidentally omitted or not received by a person entitled to it, the meeting is not rendered invalid. For example, if a petitioner was part of the board meeting that scheduled the general meeting and records show notice was sent to all shareholders via certified post, then such a petitioner cannot later claim non-receipt of notice.
Contents of the Notice
The notice must include the place, day, and time of the meeting. For AGMs, it must be during business hours, between 9 a.m. and 6 p.m., on a non-national holiday, and held at the registered office or another location in the same city or town. However, for unlisted companies, AGMs may be held at any location in India with advance consent from all members. Requisitioned meetings must be held at the registered office or in the same locality. SS-2 requires a route map and a prominent landmark to be included in the notice. The notice should also clearly state the agenda or nature of the business. If special business is to be transacted, an explanatory statement must be annexed, detailing the interest of directors, key managerial personnel, and their relatives. It should also disclose relevant information that will assist members in decision-making. If a resolution affects another company in which any promoter, director, or KMP holds two percent or more of paid-up capital, that interest must also be disclosed.
Permissible Additional Items of Business
SS-2 allows only those items specified in the notice or permitted by law to be taken up at the meeting. These include proposed resolutions from members, resolutions requiring special notice, and candidacy notices for directorship. Special notice resolutions must be properly notified to members in the prescribed format. Any amendments to the notice must be made with at least 21 days’ clear notice before the meeting.
Accompanying Documents
Notices must include an attendance slip and a proxy form with clear instructions. The right to appoint a proxy must be stated, and the proxy need not be a member. A member who has voted electronically can appoint a proxy to attend the meeting,, but not to vote. For AGMs, the notice should be accompanied by the audited financial statement, directors’ and auditors’ reports, and proxy forms. For EGMs, it must include the explanatory statement and proxy form. Where reference is made to documents to be discussed at the meeting, the place and time for inspection must be specified.
Postponement or Cancellation
SS-2 states that a meeting convened with proper notice cannot be postponed or cancelled except for reasons beyond the board’s control. In such cases, the board may reconvene the meeting to transact the same business with at least three days’ notice to members, either individually or through vernacular and English newspapers widely circulated in the district of the registered office.
Types of Company Meetings (Continued)
Annual General Meeting (AGM)
The Annual General Meeting is a statutory requirement for certain types of companies, particularly public companies. Its main purpose is to provide shareholders with an overview of the company’s performance and to approve key matters such as the appointment of directors and auditors. The company must present financial statements and allow shareholders to ask questions and vote on various issues. As per the Companies Act, the first AGM must be held within nine months of the end of the first financial year, and subsequently, an AGM must be held every year with not more than fifteen months between two AGMs.
Private companies are generally not required to hold AGMs unless specified by their articles of association. However, they may choose to conduct them voluntarily.
The key matters discussed in an AGM include:
- Approval of the annual financial statements
- Declaration of dividends
- Appointment or reappointment of directors and auditors
- Review of company performance and policies
- Shareholder queries and suggestions
Failure to conduct an AGM within the prescribed time frame can lead to penalties and legal action against the company and its officers.
Extraordinary General Meeting (EGM)
An Extraordinary General Meeting is any meeting of the shareholders other than the AGM. These meetings are convened to address urgent matters that cannot wait until the next AGM. EGMs are usually called to deal with specific issues such as:
- Amendment of the company’s memorandum or articles of association
- Change in the share capital structure..e
- Removal or appointment of directors
- Approval of mergers or acquisitions
- Other critical decisions requiring shareholder approval
An EGM can be called by:
- The Board of Directors
- Shareholders holding a specified percentage of voting power
- The tribunal or cou,rt under certain circumstances
Notice for an EGM must be given in writing and specify the date, time, place, and agenda of the meeting. Proper procedures must be followed, including quorum requirements and voting mechanisms.
Class Meetings
Class meetings are held when decisions need to be made that affect a particular class of shareholders, such as preference shareholders or debenture holders. These meetings are typically required when:
- Varying the rights attached to a specific class of shares
- Approving schemes of arrangement or compromise
- Making decisions related to class-specific dividends or capital repayment
Only shareholders of the affected class can attend and vote in these meetings. The resolutions passed in a class meeting usually require a special majority.
The procedure for conducting class meetings is governed by the company’s articles and applicable legal provisions. A class resolution typically requires approval by at least three-fourths of the members of that class who are present and voting.
Board Meetings
Board meetings are convened by the company’s Board of Directors to discuss and decide on the company’s strategic and operational matters. These meetings are crucial for effective corporate governance. Key aspects include:
- Frequency: The first board meeting must be held within thirty days of incorporation. Thereafter, a minimum of four board meetings must be held every year, with a gap of no more than 120 days between two meetings.
- Quorum: A quorum is usually one-third of the total number of directors or two directors, whichever is higher.
- Agenda: Matters typically discussed include financial performance, investments, compliance, internal policies, and managerial appointments.
Minutes of the board meetings must be recorded accurately and maintained as legal evidence of the discussions and decisions made.
Committee Meetings
Committees are formed by the Board to focus on specific areas such as audit, risk, nomination, and remuneration. Committee meetings are essential for specialized oversight and detailed examination of relevant issues. Common types of committees include:
- Audit Committee: Oversees financial reporting and audit-related matters.
- Nomination and Remuneration Committee: Manages director appointments and compensation policies.
- Risk Management Committee: Monitors and manages business risks.
Each committee has its terms of reference, and meetings must be conducted by those terms, including quorum and voting requirements.
These meetings often follow rules similar to board meetings, and their recommendations are usually placed before the full board for final approval.
Creditors’ Meetings
These meetings involve the company and its creditors, and are particularly important in cases of insolvency, restructuring, or compromise. A creditors’ meeting is usually convened to:
- Approve a scheme of arrangement or compromise under the Companies Act
- Vote on matters related to insolvency resolution
- Agree on repayment schedules or settlement of claims.
These meetings require the approval of a specified majority of creditors. The resolutions passed are binding if sanctioned by the tribunal. Proper notice and procedural compliance are essential for the validity of these meetings.
Legal Provisions Governing Company Meetings
Notice of Meetings
A company meeting, whether of the shareholders or the board of directors, must be preceded by a notice to inform the participants. The Companies Act prescribes the following legal norms regarding notices:
- Form: The notice must be in writing and can be sent by hand delivery, post, or electronic means.
- Contents: It should mention the date, time, venue, and agenda of the meeting.
- Period:
- For general meetings (AGMs or EGMs), a minimum of 21 clear days’ notice must be given.
- For board meetings, a minimum of 7 days’ notice is required unless a shorter notice is agreed upon in urgent circumstances.
Failure to provide proper notice may render the meeting and its decisions invalid.
Quorum for Meetings
Quorum refers to the minimum number of members required to be present for the meeting to be validly conducted.
- Board Meetings: One-third of the total strength or two directors, whichever is higher.
- General Meetings:
- For private companies: Two members personally present.
- For public companies:
- Five members if the number of members is not more than 1,000.
- Fifteen members if the number is between 1,000 and 5,000.
- Thirty members if the number exceeds 5,000.
If a quorum is not met, the meeting is usually adjourned and reconvened as per the company’s articles or statutory provisions.
Chairman of the Meeting
Every meeting must have a chairman who presides over the proceedings to ensure order and fairness.
- In a general meeting, the company’s articles may specify how the chairman is selected.
- If not, the members present may elect one among themselves.
- In board meetings, the chairman is typically elected by the directors or appointed in advance.
The chairman’s role includes managing discussions, maintaining order, declaring voting results, and signing the minutes.
Agenda of the Meeting
The agenda is a structured list of items to be discussed and acted upon in a meeting. It serves as a guide to ensure orderly conduct and focused discussion.
- It must align with the notice.
- Only items listed in the agenda can be taken up unless the company’s governing law or articles allow otherwise.
- Unscheduled business may require an adjournment or re-issuance of notice.
For board meetings, the agenda is often accompanied by explanatory notes or supporting documents for reference.
Minutes of the Meeting
Minutes are the official written records of the proceedings of a meeting. They serve as legal evidence and must be maintained accurately.
- Preparation: Minutes must be recorded within 30 days of the meeting.
- Signing: They must be signed by the chairman of the meeting or the next meeting.
- Format: Should include date, time, venue, attendees, agenda items, discussions, and resolutions passed.
- Storage: Maintained in a minute book, either physical or electronic.
Failure to maintain proper minutes can result in penalties and questions about the legitimacy of decisions made.
Resolutions and Voting
Resolutions are formal decisions passed by the members or directors. There are two main types:
- Ordinary Resolution: Passed by a simple majority of members present and voting.
- Special Resolution: Requires at least 75% approval and must be specified as such in the notice.
Voting methods include:
- Show of Hands: Used in general meetings unless a poll is demanded.
- Poll: Each member’s vote is weighted according to the number of shares held.
- Postal Ballot: Members cast votes by post or electronic means.
- E-voting: Mandatory for listed companies and certain prescribed companies.
Votes must be recorded and verified properly, and the results declared transparently.
Filing with the Registrar
Certain decisions taken at meetings require filing with the Registrar of Companies (RoC):
- Resolutions: Special resolutions and some board resolutions must be filed in Form MGT-7A or MGT-14.
- Changes: Changes in directors, auditors, share capital, registered office, etc., must be reported within specified timeframes.
Non-compliance can attract fines and penal consequences for the company and its officers.
Role of Company Secretary
The company secretary plays a critical role in organizing and managing meetings:
- Drafts notices, agendas, and resolutions
- Ensures legal compliance
- Maintains records and files statutory documents
- Acts as a liaison between the board and shareholders
In listed and large companies, the company secretary’s involvement is crucial for meeting procedural and regulatory requirements.
Importance and Consequences of Company Meetings
Ensuring Corporate Governance
Company meetings are essential tools for upholding transparency, accountability, and effective corporate governance. They provide a structured platform where decisions are formally discussed, evaluated, and recorded. By allowing directors and shareholders to voice opinions, vote, and question policies, meetings help in aligning the management’s actions with the stakeholders’ interests. This transparency is fundamental in promoting trust within the company and with external parties such as investors, regulators, and partners.
Facilitating Decision-Making
Company meetings support critical decision-making in areas such as capital expansion, mergers, dividend declarations, appointment or removal of directors, and approval of financial statements. Meetings enable collective deliberation, ensuring that multiple viewpoints are considered before decisions are finalized. They also allow documentation of these decisions for future reference and accountability. Decisions taken in formal meetings carry legal weight and are considered binding on the company and its members.
Legal Compliance
Regular and properly conducted company meetings are mandatory under company law. Non-compliance with these statutory provisions may lead to penalties, fines, and invalidation of decisions made in improperly conducted meetings. For instance, failure to hold an Annual General Meeting (AGM) within the prescribed time can result in the imposition of fines on both the company and its officers. Similarly, improper notice or lack of quorum can render the meeting invalid, affecting the legal enforceability of its resolutions.
Building Shareholder Confidence
Company meetings, particularly general meetings, act as an essential channel of communication between the management and shareholders. Shareholders are informed of the company’s performance, strategy, and governance practices. They get an opportunity to ask questions, express concerns, and exercise voting rights. This direct involvement instills confidence in the company’s leadership and strategy and enhances shareholder loyalty and participation.
Risk Mitigation
Conducting meetings as per legal standards reduces the risk of legal disputes, shareholder dissatisfaction, and regulatory scrutiny. Well-documented minutes, proper notices, verified quorums, and valid voting procedures serve as strong evidence in case of future disagreements. This ensures continuity and stability in business operations and protects the company against claims of mismanagement or negligence.
Enhancing Organizational Communication
Regular meetings among board members and shareholders foster open communication and coordination within the organization. They create a platform where directors and executives can exchange strategic inputs, monitor performance, and evaluate risks and opportunities. These discussions help in aligning departmental goals, resolving conflicts, and improving overall operational efficiency.
Strategic Planning and Policy Formation
Meetings enable the company to strategize for long-term goals and devise policies for internal governance and external growth. This includes discussions around business expansion, restructuring, compliance updates, and changes in statutory or operational frameworks. Board meetings, in particular, are critical for shaping the vision, mission, and roadmap of the company.
Adapting to Changing Regulations
With frequent changes in business laws, tax codes, and corporate regulations, company meetings provide an effective way to stay updated and implement necessary adjustments. Directors and officers use board meetings to discuss the implications of new laws and formulate appropriate response strategies. General meetings are also used to obtain shareholder approval for such changes when required.
Role in Crisis Management
During times of crisis—whether financial, operational, or regulatory—company meetings play a key role in quickly bringing together leadership and stakeholders to assess the situation and take corrective measures. Emergency board meetings or specially convened general meetings can facilitate rapid decision-making and resolution of urgent issues, minimizing potential damage to the business.
Digital Transformation of Meetings
With the rise of digital technology, many companies are transitioning to electronic or hybrid formats for conducting meetings. E-meetings and e-voting have become increasingly common, especially after global disruptions like the COVID-19 pandemic. These formats provide greater flexibility, reduce logistical challenges, and improve participation rates. However, companies must ensure compliance with regulatory norms concerning digital meetings, including identity verification, secure voting systems, and proper minute-keeping.
Conclusion
Company meetings are fundamental to the functioning, governance, and legal compliance of a corporate entity. They serve as official forums where vital decisions are discussed and formalized, ensuring transparency, accountability, and collective participation. Whether it is the board managing strategic oversight or shareholders asserting their rights in general meetings, these gatherings form the backbone of sound corporate practices. By adhering to statutory requirements and evolving to meet modern demands such as digital participation and enhanced governance expectations companies can foster stakeholder confidence and ensure long-term success.