REFORM LAW WITH ADHERENCE TO GENERAL MEETINGS

Submitted by

B. NIRAJ KUMAR

Register No

BA0180029

Project Submitted to

Mr. Nideesh Kumar

Assistant Professor of Law

TAMIL NADU NATIONAL LAW SCHOOL

(A State University established by Act No. 9 of 2012)

NavalurKuttapattu, Srirangam (TK), Tiruchirappalli – 620009.

MAY 2021
 DECLARATION

I (Student Name) ___B. Niraj Kumar_________________________, Register Number

_____BA0180029________, hereby declare that this Research Paper / Research Project work

entitled REFORM LAW WITH ADHERENCE TO GENERAL MEETINGS

has been originally carried out by me under the guidance and supervision of (Course Faculty

Name) ___________ Mr. Nideesh Kumar________________________, (Designation of the

Course Faculty) ___________________________Assistant Professor

(law)________________, Tamil Nadu National Law University, Tiruchirappalli - 620 027. This

work has not been submitted either in whole or in part of any Degree / Diploma at any

University.

Place : Tiruchirappalli

Date : 01/06/21

(--------------------------)

BACKGROUND OF STUDY
Page | 1
Corporate governance has long been concerned with improving the company's accountability
processes and operations. In today's globalized world, when there is a need to recruit the greatest
human capital from all over the globe, the openness and fairness of a corporation's operations
have become even more vital. According to Constitutional Economics theory, shareholders select
directors to operate the corporation on their behalf since it is inconvenient for them to have to
seek agreement from a large number of people for any action to be made. Regardless, scholarly
arguments on the role of the shareholder at the general meeting are given a lot of weight, since
the shareholders' appointees will be held responsible for their conduct at some time. The
Companies Act was still under assault after four distinct corporate governance resolutions, and
experts tried to characterize it as an increasing obstacle to the conduct of General Meetings.
After attempting to increase company efficiency via external regulatory systems and the
enforcement of codes of behavior, the author advises instead that the rules governing the General
Meeting be examined.

STATEMENT OF PROBLEM

The Annual General Meeting, or AGM, is an annual gathering of the company's shareholders and
directors, whether private limited or limited. This meeting will be used to review the company's
annual results and to update shareholders on any major changes. It’s important for companies to
look for ways to make the general meeting a worthwhile investment for a shareholder, there
needs to be a greater role for the individual shareholder to play than the current passive
existence.

RESEARCH QUESTIONS AND RESEARCH OBJECTIVES

Why is there a need for annual general meetings and how does it affect the shareholders in their
decision making process?

How do annual general meetings help in better governance through its specified resolutions?

The objective of this paper is to look into the benefits of AGMs and their functionality and
importance in the passive shareholder’s company and how it significantly improves the ideals
and crux of a company at every annual stage to reciprocate with the changes that can be carried
out for the betterment of the directors and shareholders of the company.

Page | 2
SCOPE AND LIMITATION

The scope of this paper looks into how AGM reveals which actions contributed to the company's
success and which actions resulted in loss. It aids members and the board in making decisions on
the future course of action. Also it is important that AGM must take place during the working
day. This paper is limited to the provisions of the companies act 1956 and it revolves around
English as well as American cases along with the Indian cases that adhere to the act.

RESEARCH METHODOLOGY

The primary sources used for research purpose in this paper is by means of online sources,
articles and other journals. Secondary sources include case studies.

LITERATURE REVIEW

1. S. Sinha, “Equity Markets with Controlling Shareholders”, Indian Institute of

Management W.P. No.2011-04-02, available at
http://www.iimahd.ernet.in/assets/snippets/workingpaperpdf/8949079892011-04-02.pdf

The author discusses the cross-country research on concentrated share ownership and
household participation in equity markets. He argues that instead of ‘forcing’ controlling
shareholders to dilute their positions the government can achieve its objective more
effectively by enhancing minority investor protection in the short run and creating more
owners by improving the “Ease of doing business” in the long run.

2. “Shareholder Participation in the Modern Listed Company”, Companies and Securities

Advisory Committee (2000) available at
http://www.camac.gov.in/camac/camac.nsf/byHeadline/PDFFinal+Reports+2000/$file/S
hareholder_final_reportJun00.pdf.

This report deals with shareholder engagement in publicly traded firms is an important
feature of corporate governance. Given the expanding number of Australians who possess
quoted shares as a consequence of recent large-scale demutualization’s and
privatizations, this issue is of significant public concern. The Report looks at concerns
resulting from existing shareholder general meeting legislation and practice, as outlined

Page | 3
 in Part 2G.2 of the Corporations Law and backed by different stock exchange regulations
and common law principles. It also addresses the influence that technology advancements
are having and will continue to have on the methods in which shareholders may be able
to vote without physically attending a meeting.

INTRODUCTION

Presumptions have always been at the cornerstone of evolution, as it has driven us forward in
the midst of adversity and ignorance. Indeed, company law and corporate governance seem
to function on the presumption that both are fundamental to the promotion of good
governance and that all shareholders of a company should be entitled to make informed
judgments and enlightened critical comments about the companies in which they invest. 1

1
Jennifer Payne, “Giving Private Shareholders a Right to Participate”, Comp. Law. 1997, 18(3), 90.
Page | 4
Corporate Governance2 has always been concerned with the area of increasing accountability
mechanisms of the company and its functioning. The transparency and fairness of a
corporation’s working has become all the more important in today’s, globalized world where
there is a need to attract the best human capital from all parts of the world. The theory of
Constitutional Economics would suggest that the reason behind shareholders appointing
directors to run the business on their behalf was because of the inconvenience caused to them
when required to gather consensus of many for any action that is to be taken. Regardless,
great importance is given to academic discussions on the role of the shareholder in the
general meeting, since the accountability of the appointees of the shareholders are to be made
accountable for their actions at some point.

BACKGROUND TO SHAREHOLDER PASSIVITY AND REFORMS

A look into the legislative history would show that two concurrent themes would emerge from
the three main committees that were appointed to identify the issues relating to the welfare of the
shareholders; one follows the trail of thought that runs through Cohen and Cash, 3 the outstanding
theme is that which maintains the dual identity of the company and any strong alliance between
the two organs are vehemently opposed, but at the same time, wanting to improve shareholder
control and protection. The second theme, which finds it origins in the Jenkins Committee, 4
2
The principle of corporate governance, as understood widely takes the whole framework within which companies
operate. It is defined as the system by which companies are directed and controlled. Directors are responsible for the
governance of the company. The role of the shareholders is to elect the directors and appoint the auditors, who in
turn are also expected to provide an external check on the directors. The problem is the gap between the theory and
practice which leads to the lack of accountability to the shareholders, which gives rise to concern over the state of
corporate governance. See: Adrian Cadbury, “The Response to the Report of the Committee on the Financial
Aspects of Corporate Governance”, cf. Fiona Macmillan Patfield (Ed.), Perspectives on Company Law, Volume I,
London, Kluwer Law International, 1995.
3
Report of the Committee on Company Law Amendments: Cohen, 1945 and Protection of Shareholders Act:
William Cash 1987. The objective of the Cohen Committee was to look into easier ways for shareholders to exercise
more effective control. The committee concluded that the dispersion of capital had prevented permanently the ability
of a shareholder to practice actual power. the Protection of Shareholders Act catered to the need of the shareholders
by demanding for the creation of shareholder’s committee in each committee which would effectively look into the
problems of the members. However, there was no further action on the Bill.
4
Report of the Company Law Committee: Jenkins, 1962. The Jenkins Committee rejected suggestions that voting
should take place via postal ballots and ultimately held that there is a meeting for purposes of discussion and
therefore put the power right back in the hands of the Directors.
Page | 5
maintained that there needs to be no protection or increased controlling by the shareholders, and
rather that the BOD, entrusted with the management of the company would pull through.5

REFORM OF LEGISLATIVE PROVISIONS

Four separate corporate governance resolutions later,6 the Companies Act was still under heavy
fire and scholars sought to label it as a growing impediment to the conduct of the General
Meetings. Having attempted to garner more corporate efficiency by means of external regulatory
mechanisms and the imposition of codes of conduct, the author suggests that the rules regarding
the General Meeting should be analyzed instead. The applicable provisions relating to general
meetings (166-197) flows in a constructive and chronological manner; starting with calling of the
meetings (165-169), moving on to the more intricate details (170-174) such as the service of
notice and its contents and quorum requirements, further ahead dealing with the provisions
relating to the conduct of the meetings (175-185) i.e. rules relating to proxies and voting, and
finally towards the rules providing for decision making at the meeting (188-192A) i.e. resolution
requirements, types of resolutions and provisions dealing with the ways in which to pass a
resolution.

The bulwark of corporate efficiency, the AGM is protected under section 166 (2) of the CA 1956
which calls for an AGM to be conducted by every company during the working hours, on a day
that is not a public holiday in order to discuss the various matters of management. 7 The section
further states that an AGM can only be held in the city, town or village where the registered
office of the company is situate and not elsewhere.8 It has to be noted that the increasing trends
of dispersed shareholdings in public companies and the economic benefit weighing by minimum

5
D. D. Butcher, “Reform of General Meetings”, C.f. Shakem Sheik and William Rees 224 (2000).
6
Rahul Bajaj (1998), Birla (1999), Narayanana Murthy (2002) and Naresh Chandra (2003).
7
A Ramaiya, Guide to the Companies Act Part I (Nagpur: LexisNexis Butterworths, 17th Edition, 2010) AT 1543.
HEREINAFTER RAMAIYA.
8
A clarification was sought for with reference to the boundaries within which an AGM could be held; whether they
could be held only in the city, town or village where the registered officer of the company is situate and not
elsewhere. Clarification: (Letter Number 1/1/83-CL - V & No. 6/159/PT/64 dated 16th Feb. 1981 Issued by the
Department of Company Affairs)
Page | 6
size share holders9 would make it impractical to consider that members would spring into
collective action for an AGM when the benefits of the same are not apparent.10

The rule governing meetings that are not in the nature of being an AGM or a Statutory Meeting
is section 169, CA 1956 which empowers the directors of a company to call for an Extraordinary
General Meeting on the requisition made by the members who; 1. In the case of a company
having a share capital, hold not less than one-tenth of the paid-up capital of the company and, 2.
In the case of company not having a share capital, exercise not less than one-tenth of the total
voting power of all the members having the right to vote at that said date. 11 Though this
provision entitles the members to another effective control mechanism, to consider it effective all
around would be gruesome, since in the case of large public companies with a dispersed
membership, enlisting the support of other members required to make a valid requisition would
be cumbersome, not to mention expensive.12

A notice with the matters that are to be discussed at the general meetings are drawn up and sent
to all the members entitled to vote and this duty has been placed on the directors; however, the
case may vary in instances of circulation of resolutions.13 Section 172 CA, 1956 mandates that a
9
A shareholder, whose holdings are not substantial, would not see the point in travelling to another city to
participate in a general meeting, where, more often than not, his opinions etc will not have a material effect because
of the high qualifications placed for the introduction of resolutions. Therefore, where a person’s shareholding does
not amount to enough so as to justify his intervention in company policy, he would rather remain a passive investor.
Farrar’s Company Law (eds. John H Farrar et al, London: Butterworths, 4 th edition, 1998) AT 318. HEREINAFTER
FARRAR.
10
The first practical consideration that needs to be considered is with respect to the space required to hold an AGM.
Most of the bigger Corporates in India have shareholders that run into the millions and accommodating them in one
location does not seem feasible from the company’s perspective. Secondly, since AGMs cannot be held on a public
holiday, it becomes highly inconvenient for a shareholder to compromise on his routine to attend one unless his
shareholding in the company justifies the same. Lastly, since AGMs are held in the city of the registered office of
the company only, the wide and varied shareholding patterns across the country would lead to shareholder
disinterest.
11
Section 188, CA 1956; data collected in the year of 1996, showed that on an average, the largest institutional
investor in a company’s register held around 8% of the shares and the largest five held around 25%. This would
indicate that in a typical case, a small group of investors would be in a position to activate the procedure under the
Act. For private investors however the chances seem bleek, as per the data analysed, even persons acting in concert
would bring about a total of only 2.4% of the shares. C.f. K. Parmjit and G. Suveera, Patterns of Corporate
Ownership: Evidence from BSE-200 Index Companies, 13(2) Institute of Management Technology (2009).
12
In the case of small private companies, the provision would relatively well as the shareholding is more
concentrated, in the hands of a fewer number of people. Eiles Ferran, Principles of Corporate Finance Law (Oxford:
Oxford University Press, 2008) AT 569. HEREINAFTER FERRAN.
13
For resolutions, the company has the discretion to decide to send the notice along with the notice for the AGM,
however, the circular accompanying the resolution is normally sent by the company, but the expenses are
undertaken by the requisitionists and not the company. On the requisition made however, the notice must be sent out
to other members and the cost of the same must be borne by the members and not the company. Section 188, CA
1956.
Page | 7
‘clear notice’14 of 21 days is required to be given to all shareholders and other parties. 15 The
notice usually contains information on the kind of matters that are to be discussed; a contentious
problem however, is that explanatory notes are required only in the case of special business 16 and
this differentiation may be utilized by the directors while undertaking to consider special
business under the guise of an ordinary transaction.17

Looking into the provisions that deal with decision making, considered to be the most powerful
tool in the hands of a shareholder, it is important to note that section 188 of the CA, 1956 allows

14
There have arisen disputes as to the interpretation of the 21 day requirement under section 171. The following
three interpretations have been put forth:
1. 21 days clear notice exclusive of the day of service and the day of meeting: RE. HECTOR WHALING LIMITED: (1936)
1 CH D. 208: In this present case, the issue was regarding a notice that was sent, convening an extraordinary general
meeting of the Company on 30th May, 1935 dated and posted on 8th May, 1935. The articles of the company
provided for the service of notice only on the 9th of May, 1935. The Court decided, relying on the ration in Rex v.
Turner (1910) 1 K.B. 346 and Chambers v. Smith (1843) 12 M. & W. 2 : 152 E.R. 1085 that the expression "not less
than twenty-one days ' notice " contained in Sub-section (2) of Section 117 of the Companies Act, meant 21 clear
days exclusive of the day of service and exclusive also of the day on which the meeting was to be held. Thus, the
court further held that it was not open by the Articles of Association to curtail the length of time which the statute
had fixed. Therefore, in the present case, having excluded the date of the meeting, the total period of notice would
only come to 20 days and this was considered to be void and illegal.
2. Interval of 21 days between the date of the meeting and the date of service of notice: NVR NAGAPPA CHETTIAR V.
MADRAS RACE CLUB: (1949) 19 COMPCAS 175 (MAD): The Madras Race Club was a body corporate registered
under the Indian Companies Act of 1913 with the object of carrying on the business of a race club. In April, 1947,
45 members of the Club sent a requisition to the Club for convening an extraordinary general meeting for the
purpose of appoint a committee to consider the revision of the Articles of Association. On the 16th of October,
notice was issued to the Club members of the extraordinary general meeting on the 7th of November, 1947. The
plaintiffs contested that the meeting of the general body of the members of the Club held on the 7th November,
1947, was invalid and void and that all business transacted thereat was invalid null and void. The Court in this case
held that the date of the meeting and the date of service of notice were to be excluded in counting the 21 clear days
period. Thus, the meeting was held to be illegal and void.
3. Two days to be added to 21 days clear notice: BALWANT SINGH SETHI V. SARDAR Z.H. SINGH: (1988) 63
COMPCAS 310 (BOM): The respondent filed a case against the appellant for a declaration that the requisition
contained in the letter dated September 21, 1987was not a valid and lawful requisition for calling an extraordinary
general meeting. The notices for the meeting had been posted on August 31, 1987 and some of them on September
1, 1987, and, therefore, some of the members could not receive notice. The Court held that pursuant to section 53(2)
(b)(i), the notices will have to be deemed to have been received after 48 hours from the day of posting, that is, on
2nd and 3rd. Therefore, since the meeting is to be held on September 21, 1987, the notices posted on August 31,
1987, and September 1, 1987, cannot be held to be 21 days' clear notice to the members.
15
Notice of every meeting of company must be sent to all members entitled to attend and vote at the meeting. Notice
of the AGM must be given to the statutory auditor of the company. Table A also requires notice to be sent to all
persons entitled to a share in consequence of the death or bankruptcy of a member and to the directors.
16
Section 173, CA 1956 specifies the distinction between the two and requires explanatory notes only for the special
business that is to be conducted. Further, as far as ordinary business is concerned, the notice does not require to be
exact, however, in the case of a special business, the specifics of the meeting must be set out clearly. N. Sachdev,
“Significance of Annual General Meeting in Corporate Governance”, 64 SEBI and Corporate Laws 28 (2005) at 31.
17
N. Sachdev, “Significance of Annual General Meeting in Corporate Governance”, 64 SEBI and Corporate Laws
28 (2005) at 34.
Page | 8
for members to circulate their resolutions to the other members of the company. 18 However, in
practice, since the notice requirement period for moving such resolutions is 6 weeks, it becomes
impossible for a member to circulate the said resolution along with the notice of the AGM
circulated by the company.19 Thus, the timing required of such a resolution would make its utility
hard-pressed as there are either significant costs or significant share holding power that is
required before being able to move the same.20

LINKING SHAREHOLDING PATTERN AND CORPORATE GOVERNANCE

While concluding that the working of the Companies Act does not provide for an ideal support
for the exercise of shareholder rights and protection, it is also important to note that the negative
implications of the same would be twofold and further that they affect two separate but equally
important functions of the General Meeting: firstly, as an instrument where a shareholder can
properly exercise his rights relating to the working of the company, and secondly as an
instrument by which to ensure that the proper control over the BOD is maintained.

INCENTIVISING THE PASSIVE SHAREHOLDER

Attempts to rekindle constructive participation at General Meetings have always been an agenda
for the drafting committee on the CA. The Companies Amendment Bill 2003, introduced in the
Rajya Sabha, included a clause to enable holding of general meetings on Sunday and this would
have been a salutary end for improving corporate democracy if it weren’t for the fact that the

18
The resolutions are the instruments via which the general meeting passes on their decision and will over to the
board of directors. All valid resolutions must be obeyed to by the BOD and the same is binding on them. Also, the
power of removal of a director also comes in the form of moving a resolution. Thus, it can be stated that the General
Meeting is the occasion and the resolution is the weapon for the members to exercise their control over the BOD.
Ford’s Principles of Corporate Law (ed. I.A.Ramsay et.al, Australia: Butterworths, 10 th edition, 2001) AT 124.
HEREINAFTER FORD.
19
The moving of a resolution requires the member to give notice to the company of 6 weeks, and while the notice
regarding the general meeting is only 21 clear days in advance, it now becomes virtually impossible for a member to
figure out and strategize his plan in anticipation of the notice of the AGM, since all the documents and matters are
released only then. K. Midgley, “Companies and their Shareholders: the Uneasy Relationship”, 24 Lloyds Bank
Review (1975).
20
The other option available is section 188 (2) under which is required one-twentieth of the voting power, or, one
hundred member who have the right to vote and who have an aggregate share capital of One Lakh Rupees. Since no
record of beneficial owners is maintained, it will be difficult to obtain support and therefore, for individual
shareholders who do not have the requisite amount, moving a resolution would seem quite daunting and impossible.
Page | 9
same has not been incorporated into the Companies Amendment Act 2009. 21 The last measure
that dealt with the amending the procedures of the Act was the addition of section 192A to the
CA, which allowed for the passing of resolution for a public listed company via postal ballot. 22
From the perspective of a member, this would do away with the hurdles that both travel and the
time taken in attending a general meeting. However, statistical data, as previously shown did not
support this ideal and there as the need for something more, and it came in the form of the
introduction of voting through an electronic medium.

It was envisaged that the use of integrated video conferencing and voting though the internet 23
would substantially lower the costs of both conducting and attending a general meeting. 24
However, it must be stated that there are those functions which a member cannot undertake
through a postal ballot system or through the use of the internet, 25 and basic means of
communication- personal presence and active participation in the discussion before the vote
cannot be substituted, and for the same reason the proxy system and the corporate representative
ideal cannot be overlooked completely.

Looking for ways to make the general meeting a worthwhile investment for a shareholder, there
needs to be a greater role for the individual shareholder to play than the current passive
existence, as pronounced in the work of S. Black.26 It is suggested that the General Meetings,
specifically the AGM should deliberate upon two resolutions that would help in better
governance: the Governance resolution and the Remuneration resolution. 27 In addition, the result

21
G. D. Agrawal, “Corporate Democracy needs further improvement”, 54 Company Law Perspective 30 (2003).
22
However, this is subject to the condition that the company is
a. A listed public company
b. To business that the government may, by notification allow
Section 192A, CA 1956.
23
Voting through the corporate home page by the shareholder or the proxy, as the entry to the site would be
available only to registered shareholders. Such an option would lead to equality between shareholders irrespective of
the number of shares, as all would have access to similar information, since there can be the delivery of proxy
material on the internet. R. Balakrishnan, “Constructive use of the AGM”, 79 Company Law 182 (2007).
24
G. P. Kobler, “Shareholder Voting through the Internet: A Proposal for Increased Participation in Corporate
Governance”, 49 Alabama Law Review 673 (1998).
25
Only a proxy can ask for an adjournment of a meeting, furthermore, allowing the proxy to use his discretion
through the course of the meeting is also preferred by a lot of shareholders to the electronic means because of the
interaction that could determine decisions from the meeting itself. The same however is not possible in the case of
electronic voting or voting through a postal ballot.
26
N. Sachdev, “Significance of Annual General Meeting in Corporate Governance”, 64 SEBI and Corporate Laws
28 (2005).
27
Remuneration Resolution: Information regarding the board’s remuneration to be disclosed completely to all
shareholders. A maximum limit of remuneration that is fixed by the members at the General Meeting to serve as a
Page | 10
of the resolution should be made public and making it an indicator of the management of the
company.28 Further, the proxy system has been described by Gower to be deceptive and in
reality, helps with the dictatorship of the Board; for this, an innovative and borrowed suggestion
was made by D. D. Butcher. Citing the working of the election system in the parliament, the
author suggested that proxy cards that are sent to the member shareholders must consist of three
options: ‘for’, ‘against’ and ‘abstain’ and the same was to be sent to an independent body for
counting and not to the BOD.29

THE COMPANIES ACT 2009 AND INSTITUTIONAL INVESTORS: A CIRCULAR

PREMISE?

The resolutions stated above cater to increased and easy involvement of the member shareholder
in the activities of the company. The Companies Amendment Act 2009 does propose for some
promising result as some of the hindrances have been done away with. Clause 85, relating to the
calling of an AGM has dispensed a ‘One Person Company’ from calling an AGM. Clause 85
also changes the time period in which to call the first AGM from 18 months after inception to 9
months from the date of closing of the first financial year of the company.

Clause 85 (2) recognizes the problem of discounting public holidays as an occasion to hold an
AGM and therefore has reduced the burden to excluding only National Holidays. Moreover,
clause 86 gives power to the Tribunal to call the AGM of a company if there is any default; a
power that previously rested only with the Central Government. The role that is to be played by
the electronic media has been given formal recognition as it finds mention in clause 90 which
states that notice of the general meeting may be given in writing or through an electronic
medium. The same is with the case of appointing of proxies under clause 94 and in the case of

ceiling limit.
Governance Resolution: the governance resolution consists of the agreement that the shareholders have the right to
make public all the proceedings of the meeting which, in turn should incentives the directors to stick to corporate
fairness. An example of a measure that is likely to be passed at a governance resolution it that where all votes cast at
meetings are revealed to the shareholder; for, against and abstain.
28
When results are made public, potential shareholders and current shareholders will be likely to be effected by the
grading that is given to the corporation and thereby insist on either leaving or making changes in the governing. This
measure will incentivize the directors to act in accordance with the rules as their actions now directly lead to
investor attraction/repulsion.
29
D. D. Butcher, “Reform of General Meetings”, C.f. Shakem Sheik and William Rees 226 (2000).
Page | 11
procedure relating to voting via clause 97 wherein a member is given the freedom to exercise his
right to vote through an electronic medium, in the manner provided.

Clause 91: explanatory statement and its annexure make the disclosure duty on directors more
stringent as the shareholding qualification has been reduced from 20% to 2% for an interested
director.

Clause 99 and postal ballots sees the qualifications necessary for a company to transact through
postal ballot reduced as the option is now open to all companies, the listed company requirement
being done away with. There are two major highlights to the Amendment Act; the first being the
provision on circulation of member’s resolution which does not have a qualification standard,
and secondly, every listed public company is now required to prepare a report on each AGM and
file the same with the Registrar: clause 109.

With legislative enactments in the said areas, positive results with regard to nullifying
shareholder passivity can be expected. However, the fact still remains that there are still certain
factors over which there is no control and therefore have to be ceded to. One such factor is the
growing investment made by institutional investors. Seen as powerful machinery, more than
sufficiently equipped, the institutional investor has both the credibility and largesse required to
poke its nose effectively into company affairs. 30 Institutional investors do not change the position
of the passive shareholder and therefore does not affect the general meeting in any lasting way.
Considering the situation to be as thus, there arises a more pertinent question: has the concept
and ideal of a shareholder evolved?

30
J. Coffee, “Liquidity versus Control: The Institutional Investor as Corporate Monitor”, 10(2) Bond L. Review 376
(1998): However, consideration ought to be given to the fact that they act outside the corporation and moreover, that
their interest in the company would remain only as long as the company turns over the green. Adding further, there
is also the problem of adding another level of bureaucracy between the shareholder and the company.
Page | 12
 CONCLUSION AND SUGGESTION

Positive effects in terms of nullifying shareholder passivity might be envisaged with legislative
enactments in the aforementioned areas. However, there are still certain elements over which no
control can be exercised and which must thus be accepted. The increased investment by
institutional investors is one such reason. The institutional investor is seen as powerful
machinery that is well-equipped to stick its nose into corporate matters. It has both the credibility
and the financial resources to do so successfully. Institutional investors do not alter the position
of the passive shareholder, and so have no long-term impact on the general meeting. Given the
current circumstances, a more pressing issue arises: has the notion and ideal of a shareholder
evolved?

Page | 13
BIBLIOGRAPHY
Articles
1. A. Belcher, “Regulation by Market: the case of Cadbury Code and Compliance
Statement”, Journal of Business Laws (2003).
2. B. S. Black and J. C. Coffee, “Hail Britannia?: Institutional Investor behavior under
Limited Regulation”, 92(7) Michigan Law Review 1997 (1994).
3. B. S. Black, “Shareholder Passivity Examined”, 89 Michigan Law Review 520 (1990).

4. D. D. Butcher, “Reform of General Meetings”, C.f. Shakem Sheik and William Rees 221
(2000).
5. E. F. Fama and M.C. Jensen, “Separation of Ownership and Control”, 26 Journal of Law
and Economics 301 (1983).
6. G. D. Agrawal, “Corporate Democracy needs further improvement”, 54 Company Law
Perspective 30 (2003).
7. G. P. Kobler, “Shareholder Voting through the Internet: A Proposal for Increased

Page | 14
 Participation in Corporate Governance”, 49 Alabama Law Review 673 (1998).
8. J. Coffee, “Liquidity versus Control: The Institutional Investor as Corporate Monitor”,
10(2) Bond L. Review 376 (1998).
BOOKS

Online resources:

1. “Shareholder Participation in the Modern Listed Company”, Companies and Securities

Advisory Committee (2000) available at
http://www.camac.gov.in/camac/camac.nsf/byHeadline/PDFFinal+Reports+2000/$file/S
hareholder_final_reportJun00.pdf.

2. Combined Code on Corporate Governance (2003), available at

http://www.fsa.gov.uk/pubs/ukla/lr_comcode2003.pdf

3. S. Sinha, “Equity Markets with Controlling Shareholders”, Indian Institute of

Management W.P. No. 2011-04-02, available at
http://www.iimahd.ernet.in/assets/snippets/workingpaperpdf/8949079892011-04-02.pdf .

TABLE OF CASES

ENGLISH CASES

1. PEEL V. LONDON: 1907 1 CH 5, CA

2. PUNT V. SYMONS.1902 2 CH 506

3. IN RE: WHITCHURCH INSURANCE CONSTULTANTS: 1993 B.C.L.C. 1359

4. OLIVER V. DALGLEISH.:1963 1 WLR 1274

5. WILSON V. LONDON MIDLAND AND SCOTTISH RAILWAY COMPANY 1940 2 ALL ER 91 (CH)

AMERICAN CASES:

Page | 15
 1. STEINBERG V. ADAMS: F SUPP 604 1950

2. ROSENFIELD V. FAIRCHILD:309 NY 168 1955

INDIAN CASES

1. RE. HECTOR WHALING LIMITED: (1936) 1 CH D. 208.

2. NVR NAGAPPA CHETTIAR V. MADRAS RACE CLUB: (1949) 19 COMPCAS 175 (MAD)

3. BALWANT SINGH SETHI V. SARDAR Z.H. SINGH: (1988) 63 COMPCAS 310 (BOM)

4. MAHARAJA EXPORTS V. APPAREL EXPORTS PROMOTION COUNCIL: 1986 60 COMPCAS

353 (DEL)

TABLE OF STATUTES

ENGLISH STATUTES

1. Companies Act, 1985.

2. Companies Act, 2006.

INDIAN STATUTES

1. Companies Act, 1956.

Page | 16