2. Meeting :
Coming together of certain minimum number of
people for transacting the business included in the
agenda.
Meetings of shareholders
a) Statutory meeting
b) Annual general meeting
c) Extraordinary general meeting
d) Class meetings
Meetings of Directors and committees
Meetings of creditors and debenture holders
3. Time of meeting:
First meeting of members of a company after its
incorporation
Company limited by shares, or limited by guarantee
and having a share capital are required to hold a
statutory meeting.
Meeting must be held within a period of 1-6 months
from the date company is entitled to commence
business.
4. Purpose of statutory meeting
Acquaint shareholders about the success of company
including its financial position and prospects.
Legal provisions about statutory meetings
1. Notice and Report
The board of directors is required to send a notice of
statutory meeting along with the statutory report at least
21 days before the meeting.
2. Filing of statutory report with Registrar when notice if
meeting is dispatched.
3. List of members must be kept at meeting for inspection.
4. Statutory Report
5. Procedure at the meeting
5. Consequences of default of statutory meeting
Punishment with fine up to Rs. 5000 for every Director
and officer-in-default.
Annual General Meeting – Section 166
Held every calendar year
Objective is to inform members about the progress of
the company.
6. 1. The first AGM
Must be held once in each calendar year.
First meeting must be held within 18 months of
incorporation of the company.
The first AGM must be held not later than 9
months from the date of close of financial year.
2. Subsequent annual general meeting
Must be held within 6 months of the close of financial
year
Interval between 2 meetings must not exceed 15 months.
Though it may be extended to 18 months by the Registrar.
7. 3. Time and place of the meeting
Held at registered office at the company or at some
other place in the same city, town or village in which
the registered office of the company is located.
Must be held during business hours on a day which is
not a public holiday.
AGM can be held on a public holiday if:
Public holiday is declared after issue of notice of
meeting.
If the meeting is adjourned due to lack of attendance,
it has to be held on the same day in the next week at
the same time irrespective of it being a public holiday.
8. 4. Proper Authority
The board of Directors is the proper authority to convene
an AGM.
5. Notice
A notice of minimum 21 clear days needs to be given in
writing.
6. Business transacted at the AGM
Ordinary Business:
According to Section 173, AGM is held to transact :
a. Consideration of annual accounts, balance sheets and
reports of the board of directors and auditors.
b. Declaration of dividends
c. Appointment of directors in place of those retiring.
d. Appointment and fixation of remuneration of auditors.
9. Special Business:
Any business other than ordinary business
conducted at the AGM is deemed to be special
business.
For any special business to be transacted, the notice
of the meeting shall contain a statement of the facts
including the nature and extent of interest of every
director and manager.
For any meeting other than AGM, all business is
deemed to be special business.
10. Central Government holds power to direct the
holding of AGM
Penalty till Rs. 50,000 & Rs. 2,500 per day after the first
day of continuing default
11. Meetings may be called:
• By the board of directors
• By the directors on Requisition
• By the Requisitionists themselves
• By the tribunal
12. Proper Authority
Proper Notice –
Notice to Whom?
Contents of the notice
Business at the AGM – Ordinary/Special
Length of Notice
Mode of Notice
No Notice of adjourned meeting
Notice of the right of a member to appoint proxy
13. Proper Quorum
Time for the quorum to be present
Cases where a single person shall be the quorum
Chairman of the meeting
Proxies
Voting
By show of hands
By poll
14. Who can demand poll?
In case of public company having a share capital
In the case of private company having a share capital
In the case of any other company
Time for Taking Poll
Manner of Poll
Voting on shares held in trust
15. Resolutions
Ordinary Resolution – Passed by majority of share
holders entitled to vote in person or proxy
Special Resolution – Is necessary in case of important
matters affecting the constitution, administration and
other affairs of the company
Resolution Requiring Special Notice – Type of ordinary
resolution where the proposer has to give 14 days special
notice before the meeting
Resolution by Postal Ballot – To ensure widest
participation of share holders in key decisions of the
company
16. The request can be made by
Members holding not less than 1/20th of total voting
power of all the members entitled to vote
Not less than 100 member and holding paid up capital
of at least 1 lakh rupees
Requisition to be deposited at the registered office
At least 6 weeks before the meeting in case of a
requisition requiring notice of resolution
At least two weeks before the meeting in case of any
other resolution
17. Minutes
Written record of proceedings, business transacted &
decisions taken at company meetings.
Minutes Book
Entries of proceedings to be made here
Separate Minutes Book for shareholders meetings &
Board of Directors meetings.
To be kept open to inspection by members for at least
2 hours daily free of charge.
18. Meetings of Directors
Meetings of creditors otherwise than in winding up in
accordance with the provisions of Section 391 to 393
Meetings of debenture holder
19.
20. Who is a director?
A person who has control over the direction,
governance, policies or superintendence of
affairs of a company
Number of directors
Public company-At least three
Private company- Minimum two
21. Directors as trustee
Manage company assets and property and power vested in
them
Directors as agents
Not liable for contracts made in the name/behalf of company if
within scope of authority
Directors as managing partners
Manage company for themselves as well as benefit for others
22. Directors as employees
Hold office of profit or salaried employment
Can be whole time or part-time employment
Directors as officers
Treated as officers
Liable to certain penalties for failing to comply with
provisions of the company act
23. Appointment by articles
Appointment by the company act
Appointment by the Board
Appointment by third party
Appointment by the central government
Appointment by proportional representation
Appointment by small shareholders
Appointment of special director by the tribunal in case of
sick industrial companies
24. A board set up by every public company with paid up
capital of five crore and above
Consist of at least three directors
Other provisions
Composition shall be disclosed in the annual
report of the company
26. Share qualification
Hold at least one share in the company
Shares may be held as trustee, or jointly, or gifted
Statutory restrictions on the appointment of a director
Sign and filed with registrar his consent in writing
to act as director
Sign the memorandum for his qualification share
27. The following persons are disqualified from the
appointment:
A person of unsound mind
An undischarged insolvent
A person convicted by the court of law
A person who failed to pay calls on his share
A director of a public company who has not filed
annual accounts and returns for three years
28. A director will be liable to vacate his office in the
following circumstances:
If he fails to obtain the qualification share within two
months
Adjudged to be of an unsound mind
Adjudged an insolvent
Convicted by the court of law
Absent for three consecutive board meeting or from all
board meeting for three months
Fail to disclose his interest in a contract
Disqualified by an order of court for fraudulent
conduct
29. No provision in the company act relating to
resignation
May resign any time by giving a reasonable notice
Resignation should be given in writing
Resignation cannot be revoked
Company file necessary return of change in the board
within 30 days
30. General powers of the board:
Entitled to exercise all powers and acts the company is
authorized to do
Powers of the board are co extensive
Limitations
Cannot exercise power to be exercised by the
shareholders in the general meeting
Must exercise power in consonance with the provision of
the Act, Memorandum and Articles
31. Make calls on shareholders
To issue debentures
To borrow money otherwise than on debentures
To invest in the funds
To make loans to authorized to buy back the share
Recommend the rate of dividends
Filling the causal vacancies
Making of political contribution
32. Powers executed only with the consent of the shareholders
To sell, lease or dispose the undertaking of the
company
To remit or repay the debt due to the company by a
director
To invest the amount of compensation received by the
company on compulsory acquisition
To borrow money in excess of aggregated paid up
capital and free reserves
33. Restrictions on political contribution
Restriction on appointment of sole-selling agents
Restriction on contracts in which directors are
interested
Restriction on loans to director
Prohibition of assignment of office
Prohibition of appointment to office of profit
35. Number of board meeting
Notice
Agenda
Quorum
Resolution by circulation
Procedure of conducting the business at board
meeting
36. Disclosure of interest by directors
Effect of non-disclosure
Interested director not to participate or vote in the
board’s proceedings
Register of contracts in which directors are interested
Disclosure of directors in contracts appointing
managers/managing directors
37. General duties
Duties of good faith
Duty of reasonable care
Duty to attend board meeting duty not to delegate
Duty to disclose interest
38. Statutory duties : duties imposed by the company act
To deposit share application money in the scheduled bank
until the receipt of certificate to commence business
To call extraordinary general meeting on requisition of the
members
To lay before the AGM the balance sheet and P&L account
To make a declaration of solvency in the case of members
voluntary wind up
To file return of allotment within 30 days
To authenticate and approve financial statements
To appoint cost auditor of the company
39. A. Civil liability
• Liability to outsider
When the contract in the directors name than the company
When contract is outside scope of his authority
Making irregular allotments of share
Issue of prospectus containing untrue statement
When the director found fraudulent
• Liability to the company
For ultra vires act
For negligence
For breach of trust
For misfeasance
For fraudulent conduct of business
For breach of statutory duties
40. B. Criminal liability of the director
Issue of prospectus containing untrue statement
Failure to application money in a scheduled bank
Failure to complete and deliver certificates of shares
within 3 months
Failure to maintain register of charges
Failure to file annual return within 60 days
Failure to hold annual general meeting
41. The following registers relating to directors shall be
maintained by a company:
Register of contracts and companies in which directors
are interested
Register of directors , managing directors etc
Register of directors’ shareholdings
42. Remuneration payable to
a) Managing director
b) Whole-time director
c) Manager
May take form of
a) Monthly payments
b) Specified percentage of profit
c) Way of sitting fee for each meeting of the board
43. Ceiling on sitting fees: A company cannot pay a sum
exceeding Rs.20000 to a director attending the board
meeting
Remuneration shall not exceed 5% of annual profit for one
such director and 10% percent for all of them
Public or private company which is a subsidiary of a public
company cannot increase the remuneration of its directors
Any director drawing remuneration in excess of the limits
prescribed shall hold the excess amount in trust and refund
the same to the company
44. Items included in the net profit
Bounties and subsidies
Items excluded in net profits
Premium on shares, profit on sale of forfeited shares , profit of
capital
Deductions to be made in net profit
Directors remuneration
Bonus or commission paid
Excess profit tax and business tax
Bad debts written off
45. A director who , by virtue of an agreement with the
company or of a resolution passed by the company in a
general meeting or by its board of directors is
entrusted with substantial powers of management
which would otherwise not be exercised by him and
includes a director occupying the position of a
managing director
46. By the virtue of:
Agreement with the company
Resolution of the general meeting of the company
Board resolution
Memorandum and articles of association
Disqualification for a managing director
A person shall not be appointed, if he:
Adjudged insolvent
Suspended payment to his creditors
Convicted by the court
47. A director who devotes his entire time and attention to
the business of the company
He cannot accept the office of whole time director in
any other company
Appointment requires sanction of shareholders by a
special resolution
A whole time director can be appointment along with
managing director
48. An individual possessing the prescribed qualification
and appointed to perform the duties which may be
performed under the secretary act
Features
Only an individual can be appointed not a firm or body
Should be a member of the institute of company
secretaries of India
Performs ministerial or administrative duties and is not
entrusted with management of affairs of the company
49. Board of directors
Promoters
Qualification
Member of Institute of Company Secretaries of India
Post graduate degree or diploma in management science
granted by any university
Degree in law granted by any university
Post graduate degree in commerce or corporate secretary
ship
50. No person can become a MD in more than two public or
private companies which are subsidiaries of public
company
A person can be the MD for any number of private
companies
Maximum term of appointment cannot exceed 5 years
A change in the provision relating to appointment cannot
take place without the approval of the central government
Remuneration does not exceed 5% of net profit
51. A. Statutory duties
1. Under the companies act
To apply to central government for its approval to
convert public company into private company
To file statement-in-lieu of prospectus
To file return of allotments
To make resolutions and agreements with the
registrar
2. Duties under other act
1. Under income tax act
2. Under stamp act
3. Under other act
52. B. General duties
1. Duties towards directors, managing directors, etc
To do all the acts which director directs him
To assist the chairman to convene Board and general meeting
To advice directors and managing directors in complying with
statutory duties
2. Duties towards shareholders and public
Allotment and issue of certificate
Handle correspondence between the company and shareholders
Inspection of various books and registers
53. Portion of corporate profit which has been set aside and declared
by the company as liable to be distributed among shareholders
Right to dividend
Every trading company should distribute its profit to shareholders
Articles can regulate the manner of payment of dividend
Rights to claim dividend can arise only after the dividend has been
declared
Once declared, the dividend becomes a debt and creates an
enforceable obligation
54. Declaration of dividend at general meeting
Sources of payment of dividend
Meaning of ‘profits’
Charging of ‘depreciation’ and ‘losses’ to profit
Transfer of specified percentage of profits to reserves
Dividend to be paid in proportion to the paid up capital
Redemption of irredeemable
Cash payment of dividend
55. Dividend payment to whom
Interim dividends
Period of payment of dividend
Dividend to reckon as a debt
Once a dividend is declared at a general meeting,the company
cannot declare a further dividend
Transfer of unpaid dividend to unpaid dividend account
Transfer of unpaid dividend to investor education & protection
fund
Payment of unpaid or unclaimed dividend
56. Dividend declared between two annual General
Meeting
Declared by the directors
Should be declared only when the company has made
substantial profit and there are equally good prospects
It becomes legally enforceable debt against the
company from the day it is declared
57. As rule, interest cannot be paid out of capital
Sec 208 constitute an exception under following
condition:
Prior government sanction
Before sanction payment, government enquires the
matter
Payment for a period fixed by the government
The rate of interest shall not exceed 4%
58. Unpaid dividend accounts of companies
Application moneys received by companies for allotment of
any securities and due for refund
Mature deposit with companies
Mature debentures with companies
Grants and donation given to the fund by the cental
government
Interest or other income received out of investment made
from the fund