Page 213 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes is held or after the resolutions are passed. A copy of directors’ report on the company’s
position for the year together with copy of the audited accounts and auditors’ report must
accompany the notice. Also a proxy form must be attached with the notice, on which it

shall be specifically mentioned that a member entitled to vote is entitled to appoint Proxy,
and Proxy need not be a member of the company.
The notice must specify the place and the day and hour of the meeting and shall contain a
statement of the business to be transacted thereat [s.172(1)].
If the time of holding the meeting and other essential particulars required by the section
are not specified in the notice, the meeting will be invalid and all resolutions passed thereat

will be of no effect.
The notice must be given to every member, legal representative of a deceased member or
assignee of an insolvent member and to auditor or auditors [s.172(2)].
(8) If default is made in holding the meeting, the Central Government may, on the application
of any member of the company, call or direct the calling of the meeting. If the company fails
to hold the meeting either originally or when directed to do so by the Central Government,

then the company and every officer of the company who is default shall be punishable with
fi ne upto ` 50,000; and in the case of a continuing default, with a further fi ne of ` 2500 per
day during the continuance of default (s.168).

Certain Typical Issues in Respect of AGM

1. Whether AGM can be called on a public holiday. Section 166(2), inter alia, provides
that every AGM shall be called on a day that is not a public holiday. The Department of
Company Affairs has opined that it is a mandatory provision.
However, Bank holidays (for purposes of closing) though declared as public holidays
under the Negotiable Instruments Act, 1881 shall not be treated as public holidays for
the aforesaid purpose. Thus, 31st March and 30th Sept. shall not be considered as public
holidays.
In the following cases, however, AGM may be held on a public holiday: (i) Section 2(38)
provides that if any day is declared by the Central Government to be a public holiday
after the issue of the notice convening such a meeting, it shall not be deemed to be a public
holiday in relation to the meeting. (ii) Where a public company or its subsidiary has by

its articles fixed the time of its AGM and the day turns out to be a public holiday [Proviso
(a) to s.166(2)]. (iii) Where a public company or its subsidiary has, by a resolution passed

in one AGM fixed the time for its subsequent AGM and the day turns out to be a public
holiday [Proviso (a) to s.166(2)]. (iv) A private company which is not a subsidiary of a
public company may also [like a public company or its subsidiary under (ii) and (iii) above]

by a resolution agreed to all the members thereof fix the time as well as the place of its
AGM and the same shall be valid if the day happens to be a public holiday [Proviso (b)
to s.166(2)]. (v) A company to whom a licence is granted under s.25 is exempted from the
provisions of s.166(2). (vi) Where the AGM is adjourned because of lack of quorum, it is to
be held on the same day in the next week at the same time and place (s.174). In case the day
comes to be accidentally a public holiday, it shall not amount to contravention of s.166(2).

2. It is not obligatory to advertise notice of meetings in the newspapers. However, as an
abundant precaution, the company may advertise in the newspapers to avoid objection
from such of the shareholders as reside outside India and who incidentally may not receive
the notices served through post.
3. Voting rights of members shall be determined as at the date of the meeting and not as they
would/have been if the meeting had been held within the prescribed time.

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