This article is written by Soumya Joshi of 2nd Semester of BA LLB of RNB Global University
INTRODUCTION
In the world of corporate governance, company meetings play a pivotal role in decision-making and ensuring the smooth operation of a business. These gatherings bring together the key stakeholders of a company, such as directors and members, to discuss important matters and make crucial decisions. In this article, we will delve into the various types of company meetings, the requirements for a valid meeting, and the key considerations that need to be taken into account.
KEYWORDS: Meetings, Requisites of a valid meeting, Quorum, business, company meetings.
TYPES OF COMPANY MEETINGS
1. Board Meetings
Board meetings, also known as meetings of the directors, are gatherings specifically for the directors of a company. These meetings focus on addressing issues related to the management and organization of the company. Typically, only directors are invited to board meetings, unless a member’s presence is required due to their expertise or specific involvement in the matter at hand. Board meetings can be scheduled at any time and in any location, as long as proper notification is provided to the participants.
2. General Meetings
General meetings are convened to discuss matters that affect the members and the overall management of the company. These meetings are also referred to as meetings of the members and are further categorized into different types:
a. Statutory Meetings
Statutory meetings are specific to public companies and must be held within six months of incorporation. The purpose of these meetings is to discuss matters arising from the company’s statutory report and any issues related to the company’s formation and commencement of business. The directors are responsible for sending the statutory report to every member at least 21 days before the meeting and delivering a copy to the Corporate Affairs Commission for registration.
b. Annual General Meetings (AGMs)
AGMs are held once every year and are mandatory for all companies. The first AGM should take place within 18 months from the date of incorporation. During AGMs, various important matters are addressed, including the declaration of dividends, presentation of financial statements and reports, election of directors, appointment and remuneration of auditors, and disclosure of manager’s remuneration.
c. Extraordinary General Meetings (EGMs)
EGMs are called whenever there is a need to address urgent matters that cannot wait until the next AGM. These meetings can be convened by the board of directors or by any member or member holding at least one-tenth of the company’s paid-up capital or voting rights.
REQUIREMENTS FOR A VALID MEETING
For a meeting to be considered valid, certain requirements must be met. These include:
1. Notice of Meeting
Proper notification of the meeting should be given to all individuals entitled to attend. The length of the notice and its content are crucial aspects of meeting notifications:
- Length of Notice: The law generally requires a notice period of 21 days for general meetings. However, shorter notice may be given if all members agree to it for general meetings, or if members with at least 95% of the total voting rights consent to the shorter notice for statutory and extraordinary general meetings. A waiver letter may be used to secure the consent of members for shorter notice.
- Content of Notice: The notice should include the date, place, and time of the meeting, as well as the agenda. For general meetings, the notice should also state that members have the right to appoint proxies to attend and vote on their behalf. Proxy forms may be used for this purpose.
To ensure the transparency and participation of all relevant parties, a notice of the meeting must be given to various individuals. The notice should be provided to every member of the company, as well as every person entitled to a share in consequence of the death or insolvency of a member. Additionally, the auditor or auditors of the company must also receive the notice. It is crucial to adhere to the length of notice required by law. A proper notice in writing should be given to every member of the company, disclosing the purpose for which the meeting is called. The notice must be issued at least 21 clear days before the date of the meeting. In calculating the 21 days, the date of receipt of the notice and the date of the meeting should be excluded. It is important to note that the articles of the company may provide for a longer notice period, but not a shorter one. A general meeting may be called at a shorter notice under specific circumstances. In the case of an annual general meeting, all members entitled to vote may agree to a shorter notice. For any other meeting, if the company has a share capital, members holding 95% of the paid-up share capital carrying voting rights exercisable at the meeting must agree. If the company does not have a share capital, members holding at least 95% of the total voting power exercisable at the meeting must agree. The consent of the members for a shorter notice may be obtained before, during, or after the meeting, and post-consent can validate the resolution passed without sufficient notice. Typically, shareholders are asked to sign a form of consent to obtain their approval. The company has the option to serve notice on the members personally, by prepaid post, or through advertisement in a newspaper. Regardless of the method chosen, the notice must be properly addressed. When notice is served by advertisement, it is deemed to be complete on the day it appears in the newspaper for both resident and non-resident members. While the explanatory statement need not be advertised, the fact that it has been sent to the members through post should be mentioned in the advertisement. In the case of joint-holding of shares, notice to the first-named shareholder is sufficient. If a meeting is adjourned for 30 days or more and new business is to be transacted, a fresh notice must be given.
2. Place of Meeting
Statutory and annual general meetings must be held in the country where the company is registered. These meetings can take place in any part of the country, not necessarily at the company’s business address. However, private companies may hold their general meetings virtually, as permitted by the new Companies and Allied Matters Act, of 2020.
3. Quorum
A quorum refers to the minimum number of persons required to be present at a meeting to conduct business and make valid decisions. The quorum is determined by the company’s Articles of Association or its rules. For example, if a company’s Articles state that the quorum for a board meeting is three directors, at least three directors must be present for the meeting to be valid. The quorum is the minimum number of members required to be present at a meeting for it to be valid. The quorum varies based on the number of members in the company:
- For companies with less than 1000 members, a minimum of 5 members should be present.
- For companies with more than 1000 members, at least 15 members should be present.
- For companies with more than 5000 members, a minimum of 30 members must be present.
It is essential to note that the presence of the chairman is crucial for the proper functioning of the meeting. The chairman, elected by the members personally present at the meeting, regulates and supervises the conduct of the meeting. The chairman should be present within fifteen minutes after the scheduled time for the meeting.
4. Decision-Making Process
The process of decision-making at meetings is crucial for the validity of resolutions passed. The company’s Articles or rules determine how decisions are made. For example, if a company’s Articles state that decisions at a board meeting may be made by a majority vote, a resolution can only be passed if a majority (51%) of the directors present at the meeting vote in favour. Failure to adhere to the decision-making process as outlined in the Articles or rules can invalidate any resolutions passed at the meeting.
5. Minutes of Meeting
Minutes serve as a record of the proceedings and discussions that take place during a meeting. They include important details such as the agenda, decisions made, tasks or actions to be taken, and must be signed by the chairman and secretary of the company. Keeping accurate minutes is essential for proving that a meeting was duly convened. Companies are required to maintain a minute’s book to record the proceedings and decisions of board meetings, board committee meetings, and general meetings.
KEY CONSIDERATIONS
While meeting the requirements for a valid meeting is essential, there are additional considerations that can contribute to the success and effectiveness of company meetings:
1. Preparation and Agenda Setting
Proper preparation is crucial for a productive meeting. This includes setting a clear agenda that outlines the topics to be discussed and decisions to be made. The agenda should be circulated to all participants in advance to allow them time to prepare and contribute effectively to the meeting.
2. Participation and Engagement
Encouraging active participation and engagement from all attendees can lead to more fruitful discussions and better decision-making. Allowing individuals to express their opinions, ask questions, and contribute their expertise can lead to well-informed decisions that take into account different perspectives.
3. Documentation and Follow-up
Accurate documentation of meeting proceedings is vital for future reference and accountability. Minutes should be comprehensive, capturing the key points discussed and decisions made. Following up on action items and ensuring that tasks are assigned and completed promptly is essential for the effective implementation of decisions taken at the meeting.
4. Technology and Virtual Meetings
With advancements in technology, companies now have the option to conduct virtual meetings. This allows for greater flexibility and accessibility, especially for geographically dispersed participants. Private companies can take advantage of virtual meetings, while public companies need to adhere to the regulations outlined in the Companies and Allied Matters Act, of 2020.
CONCLUSION
Company meetings serve as crucial forums for decision-making and ensuring the smooth operation of a business. Understanding the different types of meetings, meeting requirements, and key considerations can help companies conduct effective and valid meetings. By adhering to the legal requirements, setting clear agendas, encouraging participation, and documenting proceedings, companies can maximize the value of their meetings and drive successful outcomes.
REFERENCES
- https://www.betterup.com/blog/types-of-meetings
- https://www.studocu.com/…/requisites-of-valid-meeting-co-law
- https://www.betterup.com/
- https://www.legalserviceindia.com/
