The
provisions relating to notice of General meetings as per New Companies Act :
Ø Every company except
one Person Company shall hold Annual General meeting in each year in addition
to any other meetings and notice calling the meeting shall mention the same.
Ø The gap between
two Annual General Meetings should not be more than 15 months.
Ø In the case of
first Annual General meeting, it should be held within 9 months from the close
of the financial year and in all other cases within 6 months from the close of
the financial year.
Ø Every AGM shall
be called during business hours (between 9am to 6Pm) on any day which shall not
be a National holiday
Ø Every AGM shall
be held at the registered office or at such other place but within the
registered office location.
Purpose
and importance of the Proper Notice
Ø The purpose of
the Notice with specified length is to enable a member of the company to read,
understand the financial statements, performance and to raise any questions on
the state of affairs and to enable members to issue special notice to the
company for certain resolutions as per provisions of Section 115
Ø Any improper
notice invalidates proceedings of General meetings and puts the approvals at
the General meetings to nullity for want of proper notice.
Ø However any
accidental omission to give notice or non receipt by any member or any other
person entitled to receive notice shall not invalidate the proceedings – Sec.101
(4) or Section 111 for circulation of members’ resolutions.
Persons
entitled to receive Notice
As per Section 101(3) provides
that Notice of every meeting shall be given to:
Ø Every member of
the company
Ø Legal
representative of decease member & Assignee of insolvent member
Ø Auditor of the
company
Ø Every director
of the company.
The
Length of notice and Shorter Notice
A notice calling a General meeting has to be
in writing and to be given at least 21 Clear Days before the meeting date. The
new Act has added the expression “clear days”. It means day of giving of notice
and day of the meeting are to be excluded.
The new Act permits issuance of
notice by electronic mode. Sec.101 (1)
A shorter notice of less than 21 Clear
Days is valid for calling a General Meeting if consent is given by not
less than 95% of the members entitled to vote at such meeting and such consent
can be either in writing or by electronic mode. Sec.101(1)
Contents
of the notice and Statements to be annexed to the Notice:
Section 101(2) provides that every
valid notice calling the meeting shall specify the place, date, day and time
and it should contain a statement of the business to be transacted at such
meeting.
Section 102 provides that a
statement setting out material facts for each item of special business to be
transacted at the General meeting shall be annexed and contain the following particular
details:
Ø Nature of
concern or interest whether financial or other wise of every director, Manager,
Key Managerial personnel(KMP) and their relatives
Ø Any other
information which facilitates better understanding of the businesses to be
transacted
Ø In the case of
special business to be transacted relates to or affects any other company, then
the extent of shareholding in that other company of the promoters, directors,
Manager, KMP of the company, if the extent of such shareholding is not less
than 2% (earlier it was 20% ).
In
the case of AGM any business other than the Ordinary Business shall be Special Business
Section 102(2). Ordinary Business is:-
Ø Considering the
financial statements with Auditors’ report & Directors’ report
Ø Declaration of
dividend
Ø Appointment of
directors retiring by rotation
Ø Appointment of
Auditors and fixation of their remuneration
Consequences
of non disclosure of material facts in Notice
Any benefits which accrued as a
result of such non disclosure/insufficient disclosure to
Promoter, Director, Manager or
any other KMP who are in fiduciary position will not only be liable to
compensate the company for the loss but also be liable for the consequences
under other acts.
A criminal/civil action can be
launched for breach of trust/misappropriation/cheating etc.
Section 102(5) provides a fine up
to Rs. 50,000/- or 5 times of the profit accruing to promoter, director,
manager or an KMP whichever is more can be levied on the defaulting officer in
case of failure to comply with the provisions of section 102(1),
Conclusion
& Precaution:
Penal provisions in the New Companies
Act 2013 provide for strict abeyance of provisions and ensure transparency from
the promoters/directors/Mangers/ Key Managerial Personnel in drafting of notice and
disclosure of material facts of any item of special business to be transacted.
