Friday, 4 February 2022

Shareholder's Meetings

There are many events and activities in a company such as business proposals, appointments

of directors, removal of directors, alteration in Articles, etc. For such events, it is mandatory

to have general meetings which are commonly known as shareholder meetings.

There are three types of shareholder meetings-

1) Annual General Meetings

2) Extraordinary General Meetings

3) Court Convened Meeting

Annual General Meeting (AGM)-

Section 96 of the Companies Act, 2013 provides for the provision of the Annual General

Meeting. According to it, there is a compulsory requirement to hold Annual General Meeting

annually for every company, listed or unlisted. Though it is not compulsory for One Person

Company (OPC).

Why AGMs is necessary?

AGMs are necessary because every shareholder has a right to know about the financial

performance of the company and regarding future projects. Other than that, for a few

decisions there need the consent of the shareholders which are beyond the discretion of the

board of directors. It sets a good platform for the management and the shareholders to discuss

various issues such as past performance and policies of the company.

How to convene an AGM?

The Board of Directors has the authority to convene an AGM.

Notice to all the members, legal representatives of the deceased members, assignee of the

insolvent member, auditors of the company, and directors of the company must be given prior

to 21 days of AGM. AGM can be conducted with a shorter notice if 95% of the members

having the power to vote approve.

Extra-Ordinary General Meeting-

It is commonly known as EGM. An EGM is a meeting conducted between two Annual

General Meetings. Section 100 of the Indian Companies Act,2013 provides the provision for

Extra-Ordinary General Meeting. EGM is usually conducted when any important or urgent

issue arises and such urgency will not be in the interest of the next AGM.

Who has the power to convene an EGM?

The Board of Directors, Directors on request of members, requisitionists, or the Tribunal can

convene an EGM.

The Board of Directors can call an EGM whenever it deems fit bypassing board resolution in

the board meeting. Notice prior to 21 days must be given to all the members. The meeting

can be held at the shortest if 95% of members who are entitled to vote to agree.

If it is a deadlock in the management of the company then the Tribunal can call a meeting of

the company.

Court Convened Meeting-

Section 230 to 234 of the Companies Act deals with Court Convened Meeting (CCM). CCM

is held as per the directions of the Court. CCM is conducted in the matters of mergers,

acquisitions, amalgamations, winding up proposals. Any resolutions passed in the meeting

shall be approved by the majority in a number representing three-fourth in value held by the

shareholders present in person or by proxies at the time of the meeting.

What are the requisites of a valid meeting?

 The meeting shall be convened by proper authority.

 Proper notice shall be served upon the concerned members.

 A quorum shall be present.

 A chairman shall preside in the meeting.

 The Minutes shall be prepared of the proceedings and must be kept in record.

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