COMPANIES ACT 2013

Adv. Padmaja Sukhatme

 OBJECTIVES OF COMPANIES ACT
2013
• To create flexibility and simplicity in formation and maintenance of
companies

• To encourage transparency

• To set high standards of corporate governance

• To set up a mechanism comprising various bodies, panels and

authorities under the act
 WHAT IS A COMPANY?

• Company means a company incorporated under the act of 2013 or

under any previous company law ( existing company )

• An association of persons for some common object or objects which

might be economic or non-economic

• A company to which the companies act applies comes into existence

only when it is registered under the act
 FEATURES OF A COMPANY

• Incorporated Association

• Separate Legal Entity

• Artificial Person

• Perpetual Succession

• Limited Liability

• Free Transferability of Shares

• Common Seal
 INCORPORATED ASSOCIATION

• A Company must be registered or incorporated under this Act.

• A company comes into existence or is born once the certificate of

incorporation is issued in the name of the company.

• Minimum 7 members in case of a Public company and 2 members in

case of a Private company required.
 SEPARATE LEGAL ENTITY

• Upon registration under Companies Act, a company becomes a

separate legal entity .

• Different and distinct from its members who created it. Its assets and
liabilities are separate and distinct from those of its members.

• Identified by its own name. Can enter into contracts and can sue and
be sued.

• Can buy and hold property in its own name.

 Salomon vs Salomon & Co Ltd

• Salomon was a prosperous leather merchant . He converted his

business into a limited company – Salomon & Co Ltd, consisting of
Salomon, his wife and their 5 children as members.

• The company purchased the business of Salomon for Pounds 39,000,

the purchase consideration which was paid in terms of Pounds 10,000
of secured debentures, Pounds 20,000 in fully paid up 1 Pound share
each, and the balance in cash.

• Within a years time the company commenced liquidation proceedings.

• On behalf of the unsecured creditors of the company it was argued that

the company never had an independent existence.
 SALOMON vs SALOMON & CO LTD-
contd
• The House of Lords said that when the memorandum is duly signed
and registered the subscribers are a body corporate capable of
exercising all the functions of an incorporated individual. It is difficult
to understand how a body corporate thus created by statute can lose
its individuality by issuing the bulk of its capital to one person.

• The company is at law a different person altogether from the

subscribers of the memorandum.

• At the same time a company has qualities akin to those of an

individual.
 ARTIFICIAL PERSON

• A company is a juristic person and exists only in the contemplation of

law.

• Natural persons run its business, and they represent the company.

• Their actions bind the company within the scope of the authority
conferred upon them and in the name and on behalf of the company.
 PERPETUAL SUCCESSION

• A company is a creation of law and is distinct from its members. It is born by

the process of incorporation and would come to an end by the process of
winding up only.

• It is unaffected by death, insolvency or retirement of its members. Members

may come and go, shares may change hands but the company can go on
forever. It continues to exist even if all its members are dead.

• CASE- A private company was conducting a meeting . Its members were killed
by a bomb that was dropped on it .
• The company survived as not even a bomb could destroy it.
• The King is dead ,long live the King , aptly describes the company form of
organization.
• The legal heirs of the deceased shareholders will become members.
 LIMITED LIABILITY

• Members are only liable to contribute towards payment of its debts

to a limited extent.

• If the company is limited by shares the shareholder’s liability to

contribute is measured by the nominal value of the shares he holds ,
so that once he or someone who held the shares previously has paid
that nominal value plus any premium agreed upon when the shares
were issued , he is no longer liable to contribute anything further.
 FREE TRANSFERABILITY OF
SHARES
• A Share is moveable property capable of being transferred and
transmitted. Section 44 Act of 2013.

• The procedure for transfer is contained in the Articles of a company.

• In private companies transfers are restricted.

• Maximum 200 members in a private company, Act of 2013.

• This is consistent with the objective of promoting the company as a

closely knit family etc. ( with a share capital ).
 COMMON SEAL

• The official signature of the company. Corporate Seal.

• Name of company , registered address of the company, and date of
incorporation on seal.
• Made of some metal.
• Purpose is to furnish evidence regarding authenticity of documents on which
it is applied.
• Affixed to POAs , Share Certificates, Contracts. Not on debentures or cheques.
• Affixed in the presence of 2 directors of company who sign the instrument.
Procedure to affix is contained in the Articles.
• Seal to be kept in safe custody of an officer of company as specified by the
Board of Directors.
• Any document or instrument to which it is applied shall bind the company
legally.
 LIFTING OF CORPORATE VEIL

• Incorporation renders the company a legal entity separate from its

members

• In law it is distinct from its members

• To pay regard to economic realities behind the legal façade the

corporate veil is lifted or pierced

• To find out the persons who are actually in control of the company
and make them liable
 REASONS FOR LIFTING THE
CORPORATE VEIL
• To determine the character of a company

Evasion of taxes is involved

• Reduction of membership

• Misrepresentation in prospectus

• Failure to deliver share certificates

• Holding company to disclose accounts of its subsidiaries

• For investigation of ownership of company

• Fraudulent conduct when company is being wound up

 TYPES OF COMPANIES

• Private Companies

• Public Companies

• One Person Company ( to be formed as Private Limited )

 NEW CONCEPTS- TYPES OF
COMPANIES
• OPC or One Person Company- Section 2 ( 62 ) Companies Act 2013

• Dormant Company – Section 455 Companies Act 2013

 OPC –ONE PERSON COMPANY

• Has only one person as member. Section 2 ( 62 ) Act of 2013

• Single person economic entity, under private limited structure.
• The member has to mention a nominee while registering the company.
• Only one person required as director.
• No minimum paid up share capital.
• OPCs enjoy several privileges and exemptions under Companies Act .
• No need to hold AGMs.
• Financial statements need not include cash flow statements.
• A Company Secretary is not required to sign annual returns , directors can
also do so.
• Provisions relating to independent directors do not apply to them.
• Several provisions relating to meetings and quorum do not apply to them.
 DORMANT COMPANY

• Section 455 Companies Act 2013. Indian law provides changing status from
active to dormant.
• Dormant means inactive or inoperative.
• Company not carrying on any significant accounting transaction for a period
of 2 years can apply to ROC for getting declared itself a Dormant Company.
• Outstanding tax liabilities have to be paid before company becomes
dormant.
• Formed for the purpose of holding assets, real or IPR or for a future project.
• Such company keeps on complying with laws , even if no actual business is
being transacted or done.
• Dormant company accounts have to be filed as required by ROC.
• ROC to maintain a register of dormant companies.
• 5years is maximum period for dormant status.
 HOLDING & SUBSIDIARY
COMPANIES
• A company shall be deemed to be a subsidiary of another if the other
company controls the composition of its BOD.
• The other company holds more than half in nominal value of its
equity share capital .
• It is a subsidiary of a third company which itself is a subsidiary of the
controlling company.

• Example- Where company B is a subsidiary of company A and C is a

subsidiary of company B, then company C shall be a subsidiary of
company A.
• If company D is a subsidiary of company C then then D is a subsidiary
of company B and consequently company A.
HOLDING & SUBSIDIARY COMPANIES
continued-
• Existence of subsidiary companies in many different situations-
• Acquiring sufficient share capital of a company, sufficient control may
be obtained over company to enable control in the composition of
BOD.

• It is also possible to obtain such control in BOD without investing in

the equity capital.

• Such control would be if one company may agree to advance money

to another and in return gain control to appoint all or majority of
BOD.
 HOLDING & SUBSIDIARY
COMPANIES
• Section 2 ( 46 ) Companies Act 2013 – A company is said to be the holding
company if that particular company holds/owns at least 50% of the other
companies shares, and has the authority to make management decisions ,
influences and controls the company’s board of directors.
• First is a Holding and the second is the subsidiary of the first.
• If the holding company owns 100% of the shares of the subsidiary it is
known as a wholly owned subsidiary.

• TATA Sons Ltd is the holding company of the TATA Group, and holds the bulk
of the shareholding in these companies.
• TATA Sons Ltd is the owner of the TATA name and the TATA trademarks,
which are registered in India and several other countries.
• About 86% of the equity capital of Tata Sons is held by philanthropic trusts
endowed by members of the Tata family .
TATA GROUP Continued-

• The biggest two of these trusts are the Sir Dorabji Tata Trust and Sir
Ratan Tata Trust.

• Subsidiary companies of the TATA Group and joint ventures using ‘

TATA’ in their names include :Tata Steel, Tata Motors, Tata
Consultancy Service, Tata Chemicals, Tata AIG, Tata AutoComp
Systems, Tata Capital, Tata Tea, Tata Capital among several other
companies.
 PROMOTERS AND PROMOTION

• Promotion refers to the entire process through which a company is

brought into existence

• From conceptualization of the birth of the company and determination

of the purpose for which it is formed

• Persons who conceive the company are called Promoters

• Section 69 Act of 2013 - one who has been named in the prospectus or
identified by company in AGM referred to in Section 92, who has control
over the affairs of the company, directly or indirectly whether as a
shareholder director or otherwise or in accordance with whose advice ,
directions or instructions the BOD of the company is accustomed to act.
 PROMOTERS

• Who is a promoter ?

• One who does the preliminary work, including its promotion,

incorporation, and floatation, and solicits people to invest money in
the company, usually when it is being formed.

• May be an individual, a firm, or a company who performs all the

preliminary duties necessary to bring a company into existence.
 PROMOTERS

• Conceive the company

• Do things from initial planning till the commencement of business

• Invest initial funds

• Decide whether the company would be private or public

• Prepare MOA and AOA

• Prepare prospectus in the event it is a public company, and whose name appears on the face of the
prospectus.

• Stand in a fiduciary position towards the company

• Cannot derive or make profit at company expense and not disclose it.
 PROMOTERS--SHAREHOLDERS

• A person can be both a promoter and shareholder for a company at

the same time.
• Promoters are the initial subscribers of the MOA of the company and
the requirement is that they also have to hold shares of the company.
• If promoters decide to retain their shares , they will automatically
come under the definition of shareholders and will be expected to
perform the duties of and enjoy the rights of a shareholder.
• The choice is theirs if they wish to become shareholders or not.
• Shareholders have no pre-condition that the person shall be a
promoter of the company.
• A person can become a shareholder anytime.
• The two positions are not to be confused even if held by the same
person.
INCORPORATION OF A COMPANY-
PROCESS
• A company may be formed for any lawful purpose by -

• Promoters who get together at least 7 persons if it is to be a public

company;

• 2 persons if it is to be a private company; or

• 1 person if it is to be a one person company

• By subscribing their names or his name to a memorandum and

complying with the requirements of this act in respect of registration
 INCORPOATION PROCESS

• After promoters decide on type of company to be floated , they make an

application for name and Corporate identity number to be allotted by ROC.
• Preparation of MOA and AOA and vetting by ROC of the same.
• MOA and AOA then printed.
• Other documents prepared include POA to be executed in favour of an advocate
or a CA or CS for fulfilling various formalities required for incorporation.
• Particulars and consent of Directors.
• Notice of registered address.
• Statutory declaration of compliance by an advocate of SC, or HC, or of a CA or CS.
• Filing of documents for registration .
• Granting of certificate of incorporation.
• Provisional contracts.
• Floatation.
 MEMORANDUM OF
ASSOCIATION
• It is the constitution or charter of a company. It must state the following clauses:-

• Name Clause

• Address Clause

• Objects Clause

• Liability Clause

• Capital Clause

• Association or Subscription Clause

 ARTICLES OF ASSOCIATION

• The Articles shall contain rules, regulations, laws, bye laws for the
internal or day to day management of a company
• Articles are secondary or subsidiary to the Memorandum

• Contents of Articles-
• Share capital-rights of shareholders
• Allotment of shares
• Calls on shares
• Transfer and Transmission of shares
• Forfeiture of shares
• Share Certificates
 ARTICLES OF ASSOCIATION-
continued-
• Alteration of capital
• Meetings- procedure
• Directors
• Manager, Secretary
• Common Seal
• Dividend- Reserves
• Accounts- Audit
• Borrowing Powers
• Winding Up
 DIRECTORS

• Only an individual can be appointed as director

• Every director to have a ( DIN ) and according to Section 155 a director cannot possess
more than one DIN
• Digital Signature of Director for appointment or resignation.
• For signing manual documents and returns filed with ROC.
• Public company to have minimum 3 directors
• Private to have minimum 2 directors
• OPC to have 1 director
• In prescribed class or classes of companies there should be at least one woman director
• Listed companies to have one director elected by such small shareholders. Section. 151-
Act 2013
• Small shareholder means a shareholder holding shares of the nominal value of not more
than Rupees 20,000/ or such other sum as may be prescribed .
• Every company shall have at least one director who has stayed in India for a total of 182
days in the previous calendar year
 WOMAN DIRECTOR- ACT OF 2013

• A public or private company will be required mandatorily to appoint a

woman director, at least one
• If it is a listed company whose securities are listed on the stock
exchange
• If it is a company having paid up capital of Rupees one hundred crore
or more, and a turnover of Rupees three hundred crores or more.
• Must obtain DIN
• Consent to be given to ROC within 30 days of appointment
• Role like any other director
• Position can be held till her next AGM and can also seek
reappointment.
 INDEPENDANT DIRECTORS

• Every public listed company to have at least one third of its total number of directors
as Independent.
• Unlisted public companies must appoint at least 2 independent directors if the paid
up share capital exceeds 10 crores or if turnover exceeds 100 crores, or if the
aggregate of all the outstanding loans debentures and deposits exceeds 50 crores.
• They are chosen from a DATA BANK of Independent directors created and maintained
by IICA, Indian Institute of Corporate Affairs.
• The information in this data bank is available to companies required to appoint
independent directors after paying a reasonable fee to the institute.
• An independent director is one who does not have a material pecuniary relationship
or transactions with the company, its promoters, management or its subsidiaries
• An independent director in relationship to a company, means a director other than a
managing director or a whole time director or a nominee director, and none of his
relatives has or has had a pecuniary relationship with the company
• Must be a person of integrity and possess relevant expertise and experience and
holds office for a term of 5 years on the board.
SECTION 166- DUTIES OF DIRECTORS
New provision

• Shall act in good faith to promote objects of company in the best

interests of company and its members and shareholders

• For the community

• And for the protection of the environment

• Environment Protection Act 1986 passed
• Central Government has wide powers
• EPA 1986 provides maximum permissible levels of emission or
discharge of environmental pollutants from industries
DUTIES OF DIRECTORS continued-

• To act within powers in accordance with articles.

• In good faith to promote the objects of he company

• To exercise skill and care and independent judgement

• Not to assign his office to any other person

• To avoid undue gain to himself or relatives partners or associates

• To avoid direct or indirect conflicts of interest with company

 POWERS OF BOD

• BOD entitled to exercise all powers, and to do all acts and things, as
the company is authorized to exercise and do.

• Subject to restrictions imposed under Act 2013 or in MOA or AOA or

any regulation of the company.

• BOD shall exercise powers on behalf of company by means of

resolutions passed at meetings of the board.
 POWERS OF BOD -SECTION 179 -ACT
2013
• The following powers to be exercised only at board meetings-
• To issue securities whether in India or outside
• To grant loans or give guarantee or provide security in respect of loans
• To invest funds
• To approve financial statement and director’s report
• To authorize buyback
• To diversify business of the company
• To approve amalgamation, merger or reconstruction
• To make calls
• To take over a company or acquire a controlling or substantial stake in
another company
 SECTION 135- ACT 2013- CSR

• CSR provisions requires affected companies to spend at least 2% of their

average net profits made in the preceding 3 years on CSR.
• Companies must set up a CSR committee consisting of three or more
directors including at least one independent director who will be appointed
to the company’s board.
• This committee formulates and recommends to the BOD of the company a
CSR policy and the amount of expenditure to be incurred on the activities.
• BOD approves the policy and has to place the same on company’s website
and disclose the policy in its report.
• BOD to ensure that activities in the policy are undertaken and in case of
failure to do so reasons have to be disclosed in the director’s report.
• Funds earmarked for CSR activities can be used in a manner that gives
preference to the local areas where company operates.
• Schedule 7 lists out activities for CSR.
COMPANIES CSR POLICY AMENDMENT
SOME DRAFT RULES 2020
• Covid 19 Research and Development of new vaccine, drugs, and medical
devices will be allowed as CSR activities to companies.
• CSR redefined or updated to exclude one off events as well as expenses
incurred towards compliance of statutory obligations.
• International Organizations are allowed to help organizations for designing
, monitoring, and evaluation of CSR projects and also for capacity building
of company’s employees for CSR.
• CSR spending can be done through international organizations after
obtaining prior approval of the central government.
• CSR projects can have a timeline of 4 years including the financial year in
which such projects have been initiated.
• Any surplus arising out of CSR projects or activities shall not form part of
business profits of the company and surplus to be transferred to Unspent
CSR Account and spent only on CSR activities.
 WHAT IS A SHARE?

• A Share is the interest of a shareholder in a company, measured by a

sum of money, for the purpose of liability in the first place, and of
interest in the second, but also consisting of a series of mutual
covenants entered into by all the shareholders inter se.

• Moveable property

• Every share is numbered so that it may be distinguished from other

shares

• A share certificate under company seal specifies number of shares held

by a member, and is prima facie evidence of title of the member to
such shares
 SHARES –TYPES OF- PROVISIONS

• Share Capital of a company limited by shares shall be of 2 kinds-

• (a) Equity Share Capital

• (1) With voting Rights
• (2) With differential rights as to dividend, voting or otherwise in accordance
with such rules as may be prescribed; and

• (b) Preference Share Capital carries a preferential right with respect to

payment of dividend and also for repayment of capital at the time of
winding up.
• What is share capital?
• Amount of capital raised by the issue of shares by a company.
• Remains with the company till its liquidation.
 NATURE OF SHARES

• Share shall be moveable property transferable in a manner provided by

AOA of company.

• Every share in a company carries a distinctive number, such share is held

by a person whose name is entered as holder of beneficial interest in
such share .

• A share certificate is issued under common seal by company signed by 2

directors or by one director and a company secretary .
• Certificate prima facie evidence of the title of a person to such shares.

• Where a share is held in depository form, the record of the depository is

prima facie evidence of the interest of the beneficial owner.
NATURE OF SHARES – Continued-

• VOTING RIGHTS-
• Preference Shares carry voting rights on resolutions which directly
affect the rights attached to them.

• Equity Shareholders have a right to participate in the general meeting

held by company and vote on every resolution placed before
company .

• Voting right on a poll shall be in proportion to their share in the paid

up equity share capital of the company
 TYPES OF SHARES

• VOTING RIGHTS-
• Equity shareholder has a right to vote on every resolution, voting
right on a poll shall be in proportion to his share in the paid up equity
share capital of the company.

• Preference shares carry the right to vote only attached to the

preference shares like winding up, or reduction of share capital,
voting right on a poll shall be in proportion to his shares in the paid
up preference share capital of a company .
• Where dividends are payable in respect of a class of preference
shares and are in arrears for a period of 2 years or more.
 DIVIDENDS – SECTION 123 ACT
2013
• Section 123 Act 2013 – Dividend shall be declared by a company for any financial year
at a general meeting out of the profits of that year or any previous year or years
arrived at after providing for depreciation or out of money provided by the Central
Government or a State Government for the payment of dividend and no dividend
shall be declared or paid by company from its reserves other than its free reserves.

• Before declaration of dividend a certain percentage of profits may be transferred to

the reserves of the company.

• In case of inadequacy of profits or absence of profits in any financial year subject to

dividend can be declared out of accumulated profits transferred to reserves such
rules as may be made by the Central Government in this behalf.

• The clause provides that depreciation shall be provided in accordance with Schedule
2 of the Act.
 DIVIDENDS Continued-

• The Board may declare interim dividend out of profits .

• The amount of dividend shall be deposited in in a scheduled bank in

a separate account within 5 days.

• Dividend may be paid by cheque or warrant or in any electronic

mode to the shareholders entitled to the payment of dividend.

• No dividend can be declared in the event of failure to repay deposits

accepted by the company .

• Capitalization of profits for issuing Bonus Shares is not prohibited.

 SECTION 124 –ACT 2013

• UNPAID DIVIDEND ACCOUNT-

• Opened by company in any scheduled bank

• Company shall within 90 days of making transfer to this account prepare a

statement containing names, last known address, and unpaid dividend to be paid
to each person and place it on company website

• If default is made in transferring to Unpaid Dividend Account, company shall from

date of such default pay on such untransferred amounts interest at the rate of
12% per annum and interest accruing on such amount shall enure to the benefit
of members of company in proportion to amount remaining unpaid to them

• Any person may apply to company for payment of money claimed

SECTION 124 – ACT 2013 CONTINUED

• Money transferred in this account that remains unpaid or unclaimed

for 7 years from date of such transfer shall be transferred along with
interest to IEPF or Investor Education and Protection Fund along with
a statement and details

• Claimants to monies in the fund submit documents as proof

• If a company defaults in transferring to IEPF then it is punishable with

a fine of Rupees 5 lakhs, which may extend to Rupees 25 lakhs and
every officer concerned of company fined Rupees 1 lakh but which
can extend upto Rupees 5 lakhs
INVESTOR EDUCATION AND
PROTECTION FUND – SECTION 125 ACT
2013
• Created to protect the interests of investors in securities and to
promote the development of , and to regulate securities market and
for matters connected therewith or incidental thereto, the Central
Government established this Fund.
• Source of Fund- grants by government and donations, transfer of
unpaid dividend account of companies , application moneys, matured
deposits, matured debentures, interest on same,
• Fund shall be utilized for refunds, promotion of investors education,
reimbursement of legal expenses in pursuing class action suits
• Chair person + 7 members . Manner of administering Fund audited
by Comptroller and Auditor General of India .
• Audit Report or Annual Report laid before each House of Parliament
by Central Government
 BONUS ISSUE AND RIGHTS
ISSUE
• Bonus shares are given to the current shareholders free of cost, while rights
shares are offered to the existing shareholders at a discounted price.
• Existing shareholders have a right to subscribe in their existing proportion to
the fresh issue of capital or to reject the offer or sell their rights, and can
authorize the company by passing a special resolution to offer such shares
to the public.
• Bonus shares issued out of free reserves created from genuine profits.
• Rights shares offered to existing shareholders to raise additional capital from
the market as a limited time offer. They are either fully or partly paid up
• Aim of bonus issue is to increase the liquidity by increasing the number of
outstanding shares.
• The objective of a rights issue is to bring in additional capital to the
company. Shareholders may fully or partly renounce their rights
BONUS ISSUE- SCRIP ISSUE-
CAPITALIZATION ISSUE
• Increase the issued share capital of the company
• Company is perceived as being bigger than it really is , making it more attractive
to investors
• More affordable for retail investors
• Bonus shares not taxable, but if sold at a net gain then capital gains tax applicable
• Accumulated earnings of a company sometimes are not distributed as dividend
but are issued as bonus shares.
• AOA should authorize the same
• BOD meeting to pass resolution
• Company to hold EGM
• Once recommended , cannot be withdrawn
• Allotment of bonus shares
• Issue share certificates within 2 months
 RIGHTS ISSUE

• When a company comes out with a fresh issue of equity and offers an
opportunity to the existing shareholders to buy additional shares
directly from the company at a discounted price , rather than from the
secondary market , it is called a rights issue.
• A Rights Issue is a way by which a listed company can raise additional
capital.
• Existing shareholders are given the right to subscribe to newly issued
shares in proportion to their existing holdings.
• For example , 1: 4 rights issue means an existing investor can buy one
extra share for every 4 shares already held by him.
• Usually price of such shares is less than the prevailing market price of
the stock.
• Idea is to raise fresh capital for corporate expansion or a large takeover.
 BOD MEETINGS

• First board meeting within 30 days of incorporation.S.173 sub section (2)

• 7 days notice to be given to call one.
• With respect to every meeting conducted the scheduled venue shall be the
deemed place of meeting.
• Statutory Registers to be placed.
• Convened through video conferencing or other audio visual means.
• Every director to attend at least one board meeting in person in a financial year of
a company.
• Chairperson and CS shall safeguard integrity of meeting (security)
• Provide equipment for video conferencing
• Record and prepare minutes .
• Ensure that participants by audio visual means can hear and see other
participants.
• Roll call taken at start of meeting.
 BOD MEETINGS -CONTINUED

• Section 174 Act of 2013-

• Quorum for a board meeting shall be one third of its total strength, or
two directors whichever is higher and participation of directors by video
conferencing or audio visual means shall also be counted.

• Agenda to be enclosed with the notice.

• Directors come to meeting with necessary preparation for discussion in

the meeting.

• BOD meetings are called for the following business- To issue shares and
debentures, to make calls, to fix rate of dividend, to transfer shares, to
determine policies of the company etc.
 SECTION 96 - ANNUAL GENERAL
MEETING
• Every company other than OPC to hold one and a gap of 15 months
between 2 AGMs.

• First AGM to be held within 9 months of closing of first financial year

and within a period of 6 months of closure of financial years in other
cases.

• Meeting to be held during business hours 9am-6pm, in town or city

where registered office of company is located.

• Section 97- Tribunal may call AGM in case of default on application of

any member of a company .
ANNUAL GENERAL MEETING
Continued-
• BUSINESS TO BE TRANSACTED-
• ORDINARY-
• Consideration of accounts, balance sheet, BOD Reports, reports of
auditors.
• Declaration of dividends
• Appointment of directors in place of retiring directors
• Appointment of auditors and fixing their remuneration
• SPECIAL-
• Any other business
• To increase authorized capital
• To alter AOAs
SECTION 100- EXTRAORDINARY
GENERAL MEETING
• Board can call one whenever it deems fit.

• Held between 2 AGMs to discuss a matter of urgent importance to the company.

• Meeting may also be called to discuss alteration of MOA, changes in AOA ,scheme of
reduction of share capital.

• Convened by shareholders in accordance with AOA.

• Demand of members to convene a meeting is called a requisition.
• Shareholders holding one tenth of paid up share capital can call it.

• EGM can also be called by The National Company Law Tribunal.

• NCLT is a quasi judicial body in India that adjudicates issues relating to Indian Companies.
•
EXTRAORDINARY GENERAL MEETING
contd-
• If the EGM is not convened within 21 days of requisition ,
shareholders may themselves convene within 3 months from date of
their requisition.

• 21 days notice to be given to members indicating nature and

particulars of resolutions to be discussed.

• Special Resolutions passed at EGMs must be filed with the Registrar

within 30 days.