In company law, a meeting is a formal gathering of two or more persons for the purpose of discussing and transacting lawful business pertaining to the company. While the Companies Act does not give a dictionary definition, a meeting is legally valid only when it is duly convened (proper notice), duly constituted (quorum present), and properly conducted (following the agenda).
Under the Companies Act, 2013, meetings are categorized based on who is participating and the purpose of the gathering.
1. Meetings of Members (General Meetings)
These are meetings where the shareholders—the owners of the company—exercise their collective authority.
A. Annual General Meeting (AGM) - Section 96
Every company (except a One Person Company) must hold an AGM every year.
Purpose: To transact "Ordinary Business" such as adopting financial statements, declaring dividends, and appointing directors or auditors.
Timeline: The first AGM must be held within 9 months of the closing of the first financial year. Subsequent AGMs must be held within 6 months of the end of the financial year, with a maximum gap of 15 months between two AGMs.
B. Extraordinary General Meeting (EGM) - Section 100
Any general meeting held between two AGMs is called an Extraordinary General Meeting.
Purpose: To discuss urgent matters that cannot wait until the next AGM, such as altering the Memorandum of Association (MoA) or removing a director.
Who can call it: The Board of Directors (on their own or on the requisition of shareholders) or the NCLT.
C. Class Meetings - Section 48
These are meetings of a particular class of shareholders (e.g., preference shareholders). They are held when the company proposes to alter the rights or privileges attached to that specific class of shares.
2. Meetings of Directors (Board Meetings)
The management of the company is vested in the Board, and they must meet regularly to make executive decisions.
A. Board Meetings - Section 173
Frequency: The first Board Meeting must be held within 30 days of incorporation. Thereafter, at least four meetings must be held every year, with a maximum gap of 120 days between two consecutive meetings.
Quorum: Usually one-third of the total strength or two directors, whichever is higher.
B. Committee Meetings
The Board often forms smaller committees (like the Audit Committee or Stakeholders Relationship Committee) to focus on specific areas. These committees hold their own meetings to discuss and recommend actions to the main Board.
3. Other Meetings
These gatherings involve stakeholders other than the owners or management.
Meetings of Debenture Holders: Held to discuss matters affecting the interests of debenture holders, such as changes in the terms of repayment or security.
Meetings of Creditors: Usually called during the process of winding up or when the company proposes a Scheme of Arrangement or Compromise (under Section 230) to restructure its debts.
Essential Elements of a Valid Meeting
For any of the above meetings to be legally binding, they must satisfy the following:
Notice (Section 101): A clear 21-day notice (for General Meetings) must be sent to all members, directors, and auditors.
Quorum (Section 103): The minimum number of members required to be present to make the proceedings valid.
Chairman (Section 104): A person appointed to lead and manage the conduct of the meeting.
Minutes (Section 118): A formal written record of the proceedings must be maintained and signed within 30 days.
| Type of Meeting | Frequency | Participants | Key Section |
| AGM | Once a year | Shareholders | Sec 96 |
| EGM | As needed | Shareholders | Sec 100 |
| Board Meeting | Min. 4 times/year | Directors | Sec 173 |
| Creditors Meeting | During restructuring | Creditors | Sec 230 |
No comments:
Post a Comment