SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY)

(Established under Section 3 of the UGC Act 1956)

Re-accredited by NAAC with ‘A’ grade (3.58/4) Awarded Category – I by UGC

Program: Diploma In International Business Law and Corporate Laws in India

Batch: 2020-21
Semester: 1st
Course Name: Indian Financial Market, Company Law and Corporate Taxes.
PRN: 20010167013
Name of the Student: Rochak Singla

INSTRUCTIONS
1. Mention your details only in the space provided above. If any other details
name, contact detail etc. are written anywhere else in the answer script it will
be treated as adoption of unfair means.
2. Use diagrams and sketches wherever required.
3. Examiner will conduct viva voce based on entire question paper set on the
subject.
4. Submission must be done by the student through google form link provided
by the examination department and all submissions must be in the word
format only(.doc/.docx). Submission of any other format will not accepted.
5. Submission will not be accepted beyond the deadline given by the
examination department in each subject. Student will be marked absent in
case of late submission.
6. Formatting guidelines: Font size & name: 12 & Times New Roman; Line
spacing 1.5; Justified; Page size: A4; No borders
7. Write your answer in your own language and do not copy paste from any
source. Read the question carefully and write your answer fulfilling the
requirements of the question.
8. If the students copy from each other’s assignment, it will be considered as
unfair means case and performance will be treated as null and void for the
entire examination.
9. Please read all the instructions given by the faculty in every subject in the
question paper.
QUES 1. EXPLAIN THE DIFFERENCE BETWEEN CAPITAL
MARKET AND MONEY MARKET.

A financial market is a location where financial instruments and shares are bought and sold. It
allocates scarce resources in the country's economy. It functions as an intermediary between
buyers and collectors by mobilizing money between them. The stock exchange in a capital
market helps investors to buy and sell publicly traded company shares. The main stock
exchange is where new stocks are first sold, and the secondary stock market is where stock
shares are traded.

Classification of Financial Market

The financial market can be classified into three different forms.

1. By Nature of Claim

 Debt Market – It is a market where fixed bonds and debentures or bonds are
exchanged between investors.

 Equity Market – It is a place for investors to deal with equity.

2. By Maturity of Claim

 Money Market – It deals with monetary assets and short-term funds such as a
certificate of deposits, treasury bills, and commercial paper, etc. which mature within
twelve months.  

 Capital Market: It trades medium-term and long-term financial assets.

3. By Timing of Delivery

 Cash Market –   It is a market place where trade is completed in real-time.

 Futures Market: Here, the delivery or compensation of products are taken in the future
specified date.

4. By Organizational Structure

 Exchange-Traded Market – It has a centralized system with a patterned procedure.

  Over-the-Counter Market – It has a decentralized organization with customized
procedures

Functions of Financial Market

Some basic functions of the financial market are:

 It mobilizes savings by trading it in the most productive methods.

 It assists in deciding the securities price by interaction with the investors and
depending on the demand and supply in the market.
 It gives liquidity to bartered assets.
 Less time-consuming and cost-effective as parties don’t have to spend extra time and
money to find potential clients to deal with securities. It also decreases cost by giving
valuable information about the securities traded in the financial market.

I. Capital Market

Capital Market is a type of stock market in which business or government shares are issued
with the intent of creating a long-term finance to coincide the capital required. In a nutshell,
the Capital Market is a market that deals in medium and long-term funds. The Capital Market
is a network of instruments and structures that aggregate intermediate and long-term assets
and make them available to businesses, governments, and individuals. A capital market is an
institutional structure that allows for the financing of short and long-term funds as well as the
marketing and selling of securities.

Types of Capital Market

The market where securities are traded known as Securities market. It consists of two
different segments namely primary and secondary market. The primary market deals with
new or fresh issue of securities and is, therefore, also known as new issue market; whereas
the secondary market provides a place for purchase and sale of existing securities and is often
termed as stock market or stock exchange.
 II. Primary Market

The Primary Market consists of arrangements that promote companies' acquisition of long-
term funds by issuing new securities and debentures. As far as we are aware, the companies
issue new shares and/or debentures during their formation stage in order to expand their
business. That is usually achieved through private placement of associates, families, and
financial institutions, or through a public sale. In any case, the firms must adhere to a well-
established regulatory procedure and include a variety of intermediaries such as underwriters,
traders, and others that are an essential part of the primary sector.

III. Secondary Market

The secondary market, also known as the capital market or stock exchange, is equally critical
in mobilizing long-term funds by adding liquidity to securities and debentures. It offers a
position where these securities can be cashed without trouble or hesitation. It is a well-
organized market in which shares and debentures are exchanged on a daily basis with a high
level of confidentiality and stability. In reality, an active secondary market promotes the
growth of the primary market by assuring primary market holders of a continuous market for
liquidity of their holdings. The major players in the primary market are merchant bankers,
mutual funds, financial institutions, and the individual investors; and in the secondary market
you have all these and the stockbrokers who are members of the stock exchange who
facilitate the trading.

II. Money Market

The money market is a market for short-term funds that invests with financial assets with
maturities of up to a year. It is important to understand that the money market does not trade
with currency or money in general, but rather in credit instruments such as bills of exchange,
promissory notes, commercial paper, treasury bills, and so on. These financial instruments are
a near-perfect replacement for money. These instruments assist corporate units, other
organizations, and the government in borrowing funds to fulfil short-term needs.
Types of Money Market

i. Trade Bill: Traders usually purchase products on loan from wholesalers or

manufacturers. When the credit limit ends, the dealers are paid. However, if a seller
does not want to wait or is in urgent need of funds, he or she will draw a bill of
exchange in the buyer's favour. When a bill is accepted by a customer, it becomes a
negotiable instrument known as a bill of exchange or trade bill. Before its expiration,
this exchange bill will now be discounted with a bank. The bank earns money from
the drawee, or the collector of merchandise, as the loan matures. Commercial Bills are
exchange bills that are accepted by commercial banks.
ii. Commercial paper: Commercial paper (CP) is a common tool for funding a
company's working capital needs. The CP is a promissory note that is given as an
unsecured instrument. This product was launched in 1990 to help corporate creditors
collect short-term funds. It may be released for a term of 15 days to one year.
Commercial papers may be transferred by endorsement and distribution. The
commercial paper industry is dominated by well-known firms (Blue Chip companies).
iii. Treasury Bill: A treasury bill is a promissory note issued by the RBI to satisfy the
RBI's short-term funding needs. Treasury bills are extremely liquid instruments,
which ensures that the owners of a treasury bill can pass or have it discounted from
the RBI at any time. These bills are usually sold at a discount from face value and
repaid at face value. Thus, the interest on the investment is represented by the
differential between the issue price and the face value of the treasury bill. These bills
are protected instruments for a length of no more than 364 days. Normally, banks,
financial institutions, and companies play a significant part in the Treasury bill
market.
iv. Other: Call Money, Certificate of deposit Etc.

Major Differences between Money Market and Capital Market

Sr. No. Heading Capital Market Money Market

1. Time Span Deals in long term securities Short term securities varying from a
for more than one year. day, month but not more than a
 year.
2. Instrument Commercial Papers, Bills, Bonds, Shares, Asset Secularisation,
Treasury Certificate of Retained Earnings, Debentures etc
Deposit, Trade Credit, etc
3. Liquidity Liquid in nature as they can Highly liquid in nature compared to
be traded through stock Capital Market due to its nature.
exchange.
4. Return Comparatively High Return Low Return compared to capital
market.
5. Risk Riskier than Money Market. Lower Risk involved.
6. Definition Capital Market is a type of The money market is a market for
stock market in which short-term funds that invests with
business or government financial assets with maturities of up
shares are issued with the to one year.
intent of creating a long-
term finance to coincide the
capital required.
7. Nature Formal in nature compared Informal in nature compared to
to Money Market Capital Market
8. Purpose Long-term trading of debt Short-term borrowing, lending,
and equity-backed securities buying and selling
9. Investor Stockbrokers, Commercial Central bank, chit funds commercial
banks, insurance companies banks, non-financial institutions etc.
etc.
QUES. 2 WHAT IS A COMPANY? HOW IS A COMPANY FORM OF
AN ENTITY DIFFERENT FROM THAT OF A PARTNERSHIP FIRM?

The Companies Act 2013 defines a company as vide Section 2(20) -

A company is a company incorporated under the Companies Act or any other previous law,
being an artificial legal person and having characteristics of an independent legal, entity with
a perpetual succession, a common seal for its signatures, a common capital comprised of
transferable shares and carrying limited liability.

Characteristics of a Company

1. Capacity to Sue and be Sued: A company being a legal person has the capacity to
sue in its own name and similarly be sued in its own name. Any banality faced by the
company for any contravention of provisions or law we’ll have to be borne by the
independent legal company. However, a company can only be fined for contravention
of law and not Imprisoned for criminal offence.
2. Limited Liability: Limited liability is a distinguishing feature of a company
incorporated under law as compare to a partnership firm. Under the Limited liability
all the members of the company have their liability towards the company limited to
the amount of unpaid share capital or amount guaranteed by the members. A
shareholder cannot be, in any circumstances, be called upon to pay anything towards
the company other than the unpaid value of shares or amount guaranteed by the
shareholder.
3. Perpetual Succession: A company incorporated under the law is Juristic person. A
company enjoys perpetual succession and never dies irrelevant of death or change in
its members. This feature connotes that even if all the shareholders die, it shall not
affect the privileges and positions of the incorporated entity.
4. Legal Personality: The independent corporate existence is the outstanding feature of
a company. Legal person or artificial person is a creation devised by human laws.
Company incorporated under the law is an artificial person created by a legal process
and not through natural birth. A company, an artificial person, though invisible and
 abstract, can do all activities like a natural person except a few acts. A company is a
distinct legal person, from its shareholders and members.
5. Right to Property: A company incorporated under law being a legal person distinct
from its member, has the right to dispose, acquire and possessed property in its own
name. The property so acquired will be under the ownership of the company and not
the shareholders. Even if the shareholders continue to invest capital in the company,
the property will only be under the ownership of the company and not under joint
ownership.
6. Common Seal: Just like a natural person can authorize documents with its signatures,
an artificial person, and Inc entity, has common seal as its official signatures. All the
documents are authenticated by the common seal. The company secretary of the
Incorporated company has the possession of the common seal. Any document bearing
the common seal of the company signifies that the document has been approved and
authorized by the company itself.
7. Transferability of Shares: Transfer ability of shares is a primary feature of and Inc
company. Share of a company is a small part of the entire capital of the company. A
share is considered as a movable property and hence like all other movable assets, the
members and the shareholders have the right to transfer the title over to some other
person. Some provisions regulate the transfer of shares in a private company as
compared to that of a public company.

Process of incorporation of company

1. Availability of Name: The first step while incorporating a company is to check the
availability of the name. The name of the company will be mentioned in the
memorandum of association of the company and must bear the words Ltd if it’s a
public company and Private Limited if it’s a private company. The availability of
name can be checked by an application along with a fee of Rs.500.

2. Preparation of MOA and AOA: The memorandum of association of a company is

referred to as the Constitution of the company. The memorandum states the objectives
liabilities and capital of the company. Any action of the company which violates the
memorandum of association is considered as ultravires.
i. Name Clause
 ii. Registered Office Clause
iii. Objects Clause
iv. Liability Clause 
v. Capital Clause 

The memorandum of association regulates the actions of the company with the third
parties whereas articles of association is a document that states the rules and
regulations for internal management of the company. The article creates a prima facie
contract between the members and the company, being binding on both parties.

3. Other Documents to be Filed with the Registrar of Companies:

i. E-Form No.32 – Consent of directors
ii. E-Form No.18 – Notice of Registered Address
iii. E-Form No.32. – Particulars of Directors
4. Statutory Declaration in e-Form No.1: This declaration, furthermore states that ‘All
the requirements of the Companies Act and the rules thereunder have been compiled
with respect of and matters precedent and incidental thereto.’
5. Payment of Registration Fees: A prescribed fee is to be paid to the Registrar of
Companies during the course of incorporation. It depends on the nominal capital of
the companies which also have share capital.

Types of Companies in India:

 Public Limited Company – As per the provisions of Section 2(71) of The

Companies Act 2013, a public limited company is the company which is incorporated
with minimum seven members and five lakh capital, and is not a private company. A
public company defines a company which is owned by the public and in which
general public is interested. A company which is a subsidiary of a public company not
being a private company shall also be considered to be a public company as per the
provisions of the act.
 Private Company- Sec 2(68) – A company incorporated as closely held one with
atleast one lakh capital and two members is referred as private company. Shares of a
private company are not traded freely like that of a public company. It means a
Company restricts the right to transfer it shares and except in one-person Company,
limits the number of members to 200.
  Unlimited Company- Sec 2 (92) of the said Act defines Unlimited Company as a
company not having any limit on the liability of its members.
 Sec 2 (62) – One Person Company: An OPC is a company which has only one
person as the member of the company.
 Section 8 Company: The Companies Act defines a Section 8 company as one whose
objectives is to promote fields of arts, commerce, science, research, education, sports,
charity, social welfare, religion, environment protection, or other similar objectives.
These companies also apply their profits towards the furtherance of their cause and do
not pay any dividend to their members.

Partnership firm:

According to J. L. Hanson, “a partnership is a form of business organization in which two or

more persons up to a maximum of twenty join together to undertake some form of business
activity”. Now, we can define partnership as an association of two or more persons who have
agreed to share the profits of a business which they run together. This business may be
carried on by all or anyone of them acting for all.

S. No Basis of Company Partnership firm

Difference
1. Maximum number 100 partners 200 in case of a private
of persons company and a public
company can have unlimited
number of members.
2. Audit Not Mandatory Mandatory
3. Management of the Partners itself. Directors
concern
4. Liability Unlimited Limited
5. Contractual A partnership firm cannot A company can sue and be
capacity enter into contracts in its sued in its own name.
own name
6. Minimum capital No such requirement 1 lakh in case of private
 company and 5 lakhs in case
of public company.
7. Meaning When two or more persons A company is an association
agree to carry on a of persons who invests money
business and share the towards a common stock, for
profits & losses mutually, carrying on a business and
it is known as a shares the profits & losses of
Partnership firm. the business.
8. Governing Act Indian Partnership Act, Indian Companies Act, 2013
1932
9. How it is created? Partnership firm is created The company is created by
by mutual agreement incorporation under the
between the partners. Companies Act.
10. Registration Voluntary Obligatory
11. Minimum number Two Two in case of private
of persons company and Seven in case of
public company.
12. Use of word No such requirement. Must use the word 'limited' or
limited 'private limited' as the case
may be.
13. Legal formalities in No Yes
dissolution /
winding up
14. Separate legal No Yes
entity

Some points of basic difference between a company and partnership firm are:

 The accounts of company should be maintained as per the provisions of law and
audited by a certified chartered accountant. Whereas accounts of a partnership firm
have to be maintained as per the provisions of partnership deed.
 In a public limited company, the word Ltd should be used after the name of the
company whereas in a private limited company in the world Private Limited should
be used after the name of the company.
 In case of partnership firm, the partners are responsible for the management of the
firm whereas in a company the directors are responsible for the management of the
company.
 The statutory requirement in case a partnership firm is the partnership deed where as
in case of the company is the memorandum of association and articles of association.
 The creation of company is done as per the provisions of law where as a partnership
firm is created as per the contract between two or more persons.
 The members of the partnership firm are referred as partners whereas members of the
company are referred as shareholders.
 As per the provisions of law, a company has to be registered Mandatorily whereas the
Station of partnership firm is not necessary.
 Decree against a firm can be executed against partners whereas decree can't be
executed against shareholders.
QUES. 3 EXPLAIN THE IMPORTANCE OF BOARD OF DIRECTORS
TO A COMPANY BY EMPHASIZING UPON THE POWERS AND
DUTIES OF THE BOARD OF DIRECTORS.

Section 2(34) of the Companies Act, 2013 defines a director as – “director” means a director
appointed to the Board of a company. The Companies Act vide Section 164 provides for the
disqualifications for appointment of director in a company. The analysis of the above section
provides us with the below points:

A person shall not be eligible for appointment as a director of a company, if —

 He has not paid any calls in respect of any shares of the company held by him & 6
months have elapsed from the last day fixed for the payment of the call
 He has been convicted of the offence dealing with related party transactions under
section 188 at any time during the last preceding five years
 He has not obtained DIN
 A person who is director of a company which has not filed financial statements or
annual returns for 5 continuous years, till expiry of 5 years from date of default
 A person who is director of company which has failed to repay deposits, debentures
or distribute dividend for a period of one year, till expiry of 5 years from date of
default
 Private Companies can provide for additional disqualifications in their Articles
 He is of unsound mind and stands so declared by a competent court
 He is an undischarged insolvent
 He has applied to be adjudicated as an insolvent and his application is pending
 He has been convicted and sentenced to imprisonment for atleast 6 months and 5
years from expiry of sentence have not got over
 He has been convicted and sentenced for a period of 7 years or more
 An order disqualifying him for appointment as a director has been passed by a court
or Tribunal and the order is in force
Effects of Disqualification

Once a person attains any disqualification under section 164 of the said act, he becomes in
eligible to be appointed as director of any company. This restriction is imposed for a period
of five years or as the case maybe under the provisions of the said section.

Remedies against Disqualification

The order of disqualification of a director does not take a fact within the next 30 days of
being passed, a director can appeal to the national company law Apple it tribunal within the
said period. As soon as the appeal is accepted by the NCLAT, the disqualification will be
deemed to be not present and the director will continue to hold the post.

Role of Directors in a Company

In Jadhav v. Rampada Gupta AIR 1955 CAL 715 the court held that directors of a
company registered under the companies act or persons duly appointed by the company to
direct and manage the business of the company. Therefore, a director is sometimes described
as agents, trustees, managing partners etc.

 Directors as Agents: A company is an artificial person existing only in contemplation

of law. It has no physical existence. It can only work through human agency. An
agent is a person who always acts on behalf of the principal therefore third party can
hold only the principal liable and not the agent. The directors appointed on the board
act as agents of the company, cannot be held personally liable for any default of the
company.
In Ferguson versus Wilson 1892 2 Ch.D 452 the Court recognized directors as
Agents of the company and held that when the director’s contract in the name and on
behalf of the company, it is a company which is liable for it and not the directors.

 Directors as employees: In Re. Lee Behrens & Co. 1932 2 Co. Cases 588, the court
held that directors are elected representatives of the shareholders. The shareholders
 appoint the directors which are engaged in directing the face of the company on their
behalf. As such they are agents of the company and not its employees. However, law
does not prevent company to appoint director as an employee. When a director is
appointed on the board as a whole-time director of the company then the particular
director shall be considered as an employee of the company.

 Directors as organs of the company: Company is an artificial person without its

physical existence. The directors and managers represent the directing mind and the
well of the company and control what the company does. They are in a state of power
where they can drive the company to do anything as per the provisions of the
memorandum of association. The state of mind of these managers is the state of mind
of the company. Thus, Afford by the directors of the company becomes a fault of the
company. In Bath v. Standard Land Company 1910 2 Ch. D. 408, the court
observed that the board of directors is the brain and only the brain of the company
which is the body, And the company can and does not act only through them.

 Directors as officers: Director treated as officers of a company. They are liable to

certain penalties if the provisions of the Companies Act are not strictly complied with.
Director as “Officer vide Section 2(59)” “officer” includes any director, manager or
key managerial personnel or any person in accordance with whose directions or
instructions the Board of Directors or any one or more of the directors is or are
accustomed to act.

 Director as trustees: As trustee is a person who is vested with the legal ownership of
certain property which he has to administer for the benefit of others. Director is vested
with the company’s money property and powers, acting as a trustee and they have to
use this power is for the benefit of the company only. The provisions of section 197 of
the said act provides for remuneration of directors. In the event that a director has
received any remuneration in excess of the prescribed limit, the director holds the
excessive amount interest for the company.
In Percival v. Wright 1902 2 Ch. D 421 the court held that directors or trustees of
the company and not the shareholders. Because the directors have no duty towards the
 individual shareholders but to words the company. The same view was also upheld in
Peskin v. Anderson 2000 BCLC 1.

Duties of a Director in a Company

The Companies Act, 2013 for the first time has laid down the duties of directors in
unequivocal terms in Section 166. In summary, the general duties of directors are as follows:

 to act in accordance with the articles of the company, in other words, to act within
powers;
 to act in good faith in order to promote the objects of the company for the benefit of
its members as a whole;
 to act in the best interest of the company, its employees, shareholders, community and
for the protection of environment;
 to exercise due and reasonable care, skill and diligence and independent judgment;
 to avoid direct or indirect conflicts of interest;
 to avoid undue gain or advantage either to himself or relatives, partners or associates;
and
 not to assign his office to any other person.
 If a director of the company contravenes the provisions of this section such director
shall be punishable with fine which shall not be less than one Lakh Rupees but which
may extend to five Lac Rupees.

Conclusion

A Director is a member of the Board of Directors, which oversees, manages, and guides the
organization. The duties of the director are largely derived from the rule of agency and trusts
under common law rules and equitable principles (i.e., set of contractual, quasi-contractual
and non-contractual fiduciary relationships with the Company). Organizational regulation
requires directors to behave with experience, care, and diligence. Directors, on the other
hand, are obligated to act in good faith under trust law. As a result, directors serve as
guardians for the company's properties and property, as well as brokers of dealings on the
company's behalf. Directors are liable as trustees for violation of confidence if they
misapplied funds or violated the company's bylaws. A director is required to perform his
duties as a fairly conscientious person with expertise, abilities, and experience with both the
person performing the director's role and that person himself. As a result, a director may
serve as an administrator, an employee (when added to the company's rolls), an executive,
and/or a trustee of the company.
QUES. 4 CALCULATE THE EFFECTIVE MINIMUM ALTERNATE
TAX LIABILITY OF THE FOLLOWING

S. Name of Country of Taxable Income Effective MAT

No the Co. Incorporation. INR Rate
1. Earth Inc USA 5,00,00,000/- 15.912% 79,56,000/-

2. Fire India 30,00,000/- 15.6% 4,68,000/-

Limited
3. Wind India 100,00,00,000/- 17.472% 17,47,20,000/-
Limited
4. Water Pte Singapore 15,00,00,000/- 16.38% 2,45,70,000/-
Limited

Working:

1. In case of Earth limited, a foreign company, since the taxable income is greater than 1
CR, a surcharge of 2% is applicable.
2. In case of Fire limited, a domestic company, since the taxable income is less than 1
CR, a surcharge is not applicable.
3. In case of Wind limited, a domestic company, since the taxable income is greater than
10 CR, a surcharge of 12% is applicable.
4. In case of Water PTE limited, a foreign company, since the taxable income is greater
than 10 CR, a surcharge of 5% is applicable.

S. No Name Basic rate Surcharge, If Education Total

applicable Cess
1. Earth Inc 15% 2% 4% 15.912%
2. Fire Limited 15% - 4% 15.6%
3. Wind Limited 15% 12% 4% 17.472%
 4. Water Pte 15% 5% 4% 16.38%
Limited

QUES. 5 SHORT NOTES

b. ANNUAL GENERAL MEETING:

The Annual General Meeting (AGM) is a meeting held once a year by every Private Limited
Company or Limited Company to enable shareholders to meet and discuss Company-related
matters. The AGM ensures that the rights of the shareholders are protected. Furthermore,
SEBI recently released a notice specifying that the top 100 listed companies by market
capitalization on March 31st of each fiscal year would hold their annual general meetings
within five months of the fiscal year's end. Annual General Meetings are a statutory
requirement for Private Limited Corporations and Limited Companies in India.

Every year, every company, whether public or private, limited by shares or guarantee, with or
without share capital, or unregulated, must hold an annual general meeting (AGM). The
Annual General Meeting is a gathering of the Company's shareholders and directors held
each year. The Company's audited accounts are approved at the Annual General Meeting, and
the appointment of auditors and Directors is concluded. Other problems that can be settled at
an AGM include officer pay, acceptance of proposed dividends, and all other shareholder
concerns. Provisions of Section 96 of the Companies Act, 2013 apply on AGMs.

 First Annual General Meeting:

The first annual general meeting of the company must be held within 18 months from the
date of incorporation of Company. Even a Company that has no activity is required to
conduct a annual general meeting.

 Subsequent AGM

Subsequent AGM should be held on the earliest of the following dates:

i. 15 months from the date of last annual general meeting.

ii. The last day of the calendar year (December 31st).
iii. 6 months from close of the financial year (September 30th).

REQUISITES OF A VALID ANNUAL GENERAL MEETING

 1. Notice for Annual General Meeting: The notice for annual general meeting must be
sent to all the member, auditors and debenture trustees at least 21 days clear days
before the meeting along with the annual report of the Company.
2. Quorum for Annual General Meeting: Quorum means the minimum number of
persons who being entitled to attend a meeting must be present at the meeting so that
the business of the meeting can be transacted validly.
3. Extension of validity period of AGM: If an organization is unable to schedule an
annual general meeting within the specified time frame, the Registrar can, for some
particular reason, extend the time frame for holding any annual general meeting. Such
an extension can be granted for a term of no more than three months. The Registrar
cannot grant such an extension of time for the conducting of the first annual general
meeting.
4. Business to be transacted at annual general meeting: Section 102(2)(a) provides
that all other businesses transacted at an Annual General Meeting except the
following are special business:
i. the consideration of financial statements and the reports of the Board
of Directors and auditors;
ii. the declaration of any dividend;
iii. the appointment of directors in place of those retiring;
iv. the appointment of, and the fixing of the remuneration of, the auditors.

Consequences and Penalty for Default in Holding an AGM

Section 99 of the said Act provides that if any default is made in complying or holding a
meeting of the company.

 The company and each officer of the company who is in default shall be punished
with a fine of up to one lakh rupees, and in the case of continuing default, with a
further fine of up to five thousand rupees for each day that such default continues.
 If a company fails to hold its annual general meeting, any member of the company
can make an application to the Tribunal to call or order the calling of an annual
general meeting of the company, as well as to offer such ancillary or consequential
orders as the Tribunal deems appropriate. Such directives can contain the requirement
that one director of the organization attend in person or by proxy constitute a
conference.
 Under Regulation 30 of the SEBI (LODR) Regulation, 2015, any listed entity is
required to report the proceedings of its annual and extraordinary general meetings to
the Stock Exchange where its shares are listed within 24 hours of the case.
 d. Types of Resolutions

Since an organization is a self-contained entity, all decisions it takes must be recorded in the
form of a Resolution. As a consequence, a resolution may be described as an agreement or
decision made by the directors or representatives of a corporation (or a class of members). A
petition is used to propose a new amendment. An agreement binds an organization before it is
passed. Since the Board is ultimately responsible for running the Company, decisions at
Board meetings could be about almost any subject. The Act normally specifies the topics on
which resolutions must be approved by general meeting delegates.

Ordinary Resolution, Special Resolution, and Unanimous Resolution are the three kinds of
resolutions. In the case of Board Meetings, there is no definition of Unanimous Resolutions,
except in a few cases, unanimous resolutions are required. In the case of general assemblies,
though, all three are covered.

 Ordinary Resolution- Section 114: An ordinary resolution is one that is approved by

a clear majority of shareholders at a general meeting. A show of hands or a poll can
be used to pass the resolution. The conference at which such a resolution is passed
must have been granted 21 days' notice. Unless the Companies Act or the company's
articles state otherwise, the question should be resolved by an ordinary resolution. The
following are some of the issues that can be resolved by an ordinary resolution:
o Approval of statutory report.
o Approval of director’s report.
o Approval of final accounts.
o Declaration of dividend.
o Appointment of directors.
o Election of directors.

 Special Resolution: According to Section 114 of the Act 2013, a resolution is a

Special Resolution when (a) the intention to propose the resolution as a Special
Resolution has been duly specified in the notice calling the general meeting or other
intimation given to the members of the resolution; (b) the notice required under this
 Act has been duly given; and (c) the votes cast in favour of the resolution, whether on
a statewide or local level, have been duly cast.

 Unanimous Resolution: There is no specific definition of The Unanimous Consent in

the said Act 2013, but Section 162(1) states that- At a general meeting of a company,
the motion for the appointment of two or more persons as directors of the company by
a single resolution shall not be moved until a proposal to move such a motion has first
been agreed to at the general meeting without any vote being taken.

PASSING OF RESOLUTION

A constitutional amendment is referred to as a petition until it seeks approval to be passed. It

does not become a resolution until the necessary approval is obtained in compliance with the
provisions of the Companies Act of 2013. When it comes to special resolutions, they must be
included on the council's agenda, which is given when the meeting notice is sent out. Motions
arising from consent are also permissible in cases where the Act does not entail a specific
settlement.

According to Secretarial Standard-2 Paragraph 7.1, each resolution is normally adopted

by one member and then seconded by another. The motion under consideration could be
amended during the debate. The main motion can be changed in a variety of ways. An
provision, on the other hand, can only be repealed once. When a motion includes a large
number of revisions, a new motion incorporating all of the amendments may be passed, and
the old motion may be discarded, after reaching mutual consent. Form MGT – 14 must be
registered with the Registrar of Companies within 30 days of the resolution being passed,
particularly if the resolution is a special resolution.

The Chairman has complete power to consider or deny an amendment for a variety of reasons
such as inconsistency, duplication, irrelevance, and so on. When an amendment is moved,
admitted, and seconded, debate on the main motion ends and debate on the amendment
begins. Anyone may comment on the amendment, even though they have already spoken on
the key motion, but no one may speak on the same amendment twice. The proposal is put to a
referendum after it has been fully debated. If the amendment is approved, it is inserted into
the main motion's body. The changed motion, known as a "substantive motion," is then
introduced to the conference. If the amendment fails, debate on the main motion resumes;
however, if the substantive motion is put to a vote and fails, the initial motion cannot be
resurrected.