General Meeting

Introduction:  

General meetings are generally found of 2 types. 

1) Annual General Meeting 

2) Extraordinary General Meeting \

Related provisions: Sec. 96-122, 173-175 

Annual General Meeting: 

As per provided under section 96 of the Companies Act, every company other than a one-person  company shall each year hold a General Meeting as Annual General Meeting other than any  other kind of meetings and the company should make sure that there should not be a gap of more  than 15 months between two Annual General meetings. 

First Annual General Meeting: 

In case of the first Annual General Meeting, it shall be held within 9 months from the date of the  closing of the first financial year of the company and in another case, within 6 months from the  date of closing of the financial year. 

If a company holds its first Annual General Meeting as aforesaid, it shall not be necessary for the  company to hold any Annual General Meeting in the year of its incorporation. 

Provided also that 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, within a  period not exceeding three months period.

Every Annual General Meeting shall be called during business hours, between 9:00 a.m. and  6:00 p.m. on any date that is not a national holiday at the registered office of the company or at  some other place within the city, town or village in which the registered office of a company is  situated. In case of TV Mathew v. Nadukara Agro processing company Limitedi, it was held  that there is no provision in the act for deferment for the first AGM, a failure in this respect good  invite consequences under the act. 

Power of tribunal to call Annual General Meeting: 

Section 97 provides if any default is made in holding the Annual General Meeting of the  company, the Tribunal may on the application of any member of the company call an Annual  General Meeting of the company and give such direction as the Tribunal thinks expedient. Such  directions may include a direction that one member of the company present in person or by  proxy shall be deemed to constitute a meeting. Such General Meeting shall be deemed to be an  Annual General Meeting of the company under the act. The same view was held in Anuradha  Mukherjee v. Incab Industries Limited,ii where a meeting was ordered to be held for each of the  gap years. 

Power of the Tribunal to call meetings of the members: 

Where the holding of a meeting other than an Annual General Meeting has for any reason  become impracticable, the proper course for the company to follow is to reply to the Tribunal in  such cases the Tribunal can on its motion, on the application of a director or a member, order a  meeting to be called and held in accordance with its directions.  

The word "impracticable" as constructed in a reasonable way must naturally mean that it is not  possible to hold a peaceful or useful meeting. In the first leading case for the same is, Indian Spg  Mills Limited vs Lt general Madaniii, where this circumstances to hold a meeting was found  impracticable in this situation of a difference between the views of director and members. Under  the other leading case Ruttonjee and Company Limited, re,iv the Calcutta High Court observed  that the power should be used sparingly with caution so that the code does not become either the 

shareholder or a director of the company trying to participate in the internecine squabbles of the  company. 

Punishment for not conducting any AGM: 

If a company fails to hold this meeting two consequences will follow.  

Firstly, any member can apply to the tribunal and the latter order the calling of the meeting under  section 97 of the act. 

Secondly, the failure to call this meeting either generally or in pursuance of the order of the  Tribunal is an offence punishable with the fine which may extend to 1 lakh rupees or in case of  continuing default the further fine which may extend to 5000 rupees for everyday during which  such default continues. Sri Meenakshi Mills Company Limited v. Registrar of joint-stock  companiesv, where the facts of the case were that a meeting of the year of 1934 was adjourned to  1935 and then subsequently was held in the year 1936. The court held that the meeting of 1935  was the adjourned meeting of the 1934 and that “there should be one meeting per year and as  many meetings as there are years.” The company was accordingly convicted. 

Now it is found that the penalty is imposed upon the company as well as every officer “who is in  default”. A leading case to the same is SS Jhunjhunwala vs Statevi, where a managing director  has been pressing his colleagues to call the Annual General Meeting but in vain, he could not, for  the section, be described to be an officer in default. 

Importance of Annual General Meeting: 

1) For the protection of shareholders of a company: The ultimate control and destiny of a  company should be in the hands of shareholders. It is, therefore, desirable that the shareholder  should come together once in a year to review the working of the company. This meeting affords  that opportunity.

2) Business actions are taken upon: Dividends are declared at this meeting. Chairman delivers  speech listing the advances of the company during the year. Directors have to present annual  accounts for the consideration of the shareholders. If they are failed to present the account, is a  punishable offence under section 136, but in case of failure to lay accounts before the meeting  does not invalidate the meeting as per held in Sunil Dev vs Delhi and District Cricket  Association.vii 

Extraordinary General Meeting: 

Clause 42 of table F (Schedule 1) provides that all general meetings other than Annual General  Meeting shall be known as Extraordinary General Meeting. All business transacted at such  meeting is called 'special business'. Therefore, every item on the agenda must be accompanied by  a 'statement' in terms of section 102. 

An EGM may be called by: 

1) By the board of director of its own accord; 

2) by the director on requisition; 

3) by requisitionists themselves; 

4) by the tribunal 

Under section 100(1) of the Companies Act, the board of directors, whenever it deems fit, may  call an extraordinary meeting of the company. 

Section 100(2) provides the procedure for calling an Extraordinary General Meeting in case of  the requisition. In case of a company who has a share, capital should be, by such numbers of  members who on the date of the receipt of the requisition holds not less than one-tenth of a share of the paid-up share capital of the company as on the date carries the right of voting and in case  of the company who does not have a share capital should be voted upon by such numbers of  member who on the date of the receipt of requisition hold not less than one-tenth of the total  voting power of the all members have on the said date have right to vote.

One of the basic features of the call for a meeting by requisition is that in case, board within 21  days of the receipt of requisition fails to proceed to call for meeting for the consideration of that  matter on a day not later than 45 days from the date of the receipt of such requisition than the  meeting can be called by requisitionist themselves within 3 months as per the process in which  board holds the meeting and the cost of the same would be borne by the company and some  expenses shall be deducted from any fee or other remuneration under section 197 payable to  search of the directors who were in defaulting calling the meeting. 

Case Study: In regard to this provision, first leading case is, Cricket Club of India v. Madhav L  Apteviii, where it was held the directors cannot refuse to call a meeting only on the ground that  the resolution that the requisitionist propose to put would be contrary to the Act. 

Another case is LIC v. Escorts Limited, ixwhere the facts of the case were that a meeting is  requisitioned for the purpose of removing a bunch of directors without stating the reasons for  removal. The supreme court held that the requisitionist doesn't need to state the reasons for  removal. 

Essentials for a valid meeting: 

1) meeting should be called by proper authority. 

2) proper notice of the meeting should be given to every member. 

3) presence of Quorum is necessary. 

4) A chairman should be appointed. 

Conclusion: 

Hence, as per the conclusion, it is found that General Meeting places an important role under the  functioning of the company. This is a process to come all together to discuss the business  purpose and other related advances and lacking the company for further betterment.

Payal Agrawal 

S. S. Jain Subodh Law College, Rajasthan University, Jaipur