India: Venue Of The Extra Ordinary General Meeting Of A Company

A general meeting of the Company is the meeting of the shareholders held to discuss and accord the prior or subsequent approval of the shareholders/members of the Company. As per Indian Companies Act, 1956, a general meeting of the Company can be of two forms

i.e. Annual General Meeting and Extra Ordinary General Meeting. Sections165-197 as contained under the Part VI of the Companies Act, 1956 (the 'Act') provides the provisions for the meetings and proceedings.

Section 169 of the Companies deals with the provisions of 'Calling the extraordinary general meeting on requisition' which gives the right to the members of the Company to call the extra ordinary general meeting of the Company. Section 169 reads as under:

169. Calling of extraordinary general meeting on requisition.

(1) The Board of directors of a company shall, on the requisition of such number of members of the company as is specified in sub- section (4), forthwith proceed duly to call an extraordinary general meeting of the company.

(2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company.

(3) The requisition may consist of several documents in like form, each signed by one or more requisitionists.

(4) The number of members entitled to requisition a meeting in regard to any matter shall be

(a) in the case of a company having a share capital, such number of them as hold at the date of the deposit of the requisition, not less than one- tenth of such of the paid- up capital of the company as at that date carries the right of voting in regard to that matter;

(b) in the case of a company not having a share capital, such number of them as have at the date of deposit of the requisition not less than one- tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter.

(5) Where two or more distinct matters are specified in the requisition, the provisions of sub- section (4) shall apply separately in regard to each such matter; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that sub- section is fulfilled.

(6) If the Board does not, within twenty- one days from the date of the deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consideration of those matters on a day not later than forty- five days from the date of the deposit of the requisition, the meeting may be called

(a) by the requisitionists themselves,

(b) in the case of a company having a share capital, by such of the requisionists as represent either a majority in value of the paid- up share capital held by all of them or

not less than one- tenth of such of the paid- up share capital of the company as is referred to in clause (a) of sub- section (4), whichever is less; or

(c) in the case of a company not having a share capital, by such of the requisitionists as represent not less than one- tenth of the total voting power of all the members of the company referred to in clause (b) of sub-section (4). Explanation.- For the purposes of this sub- section, the Board shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice thereof as is required by sub- section (2) of section 189.

7) A meeting called under sub- section (6) by the requisitionists or any of them

(a) shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by the Board; but

(b) shall not be held after the expiration of three months from the date of the deposit of the requisition. Explanation.- Nothing in clause (b) shall be deemed to prevent a meeting duly commenced before the expiry of the period of three months, aforesaid, from adjourning to some day after the expiry of that period.

(8) Where two or more persons hold any shares or interest in a company jointly, a requisition, or a notice calling a meeting, signed by one or some only of them shall, for the purposes of this section, have the same force and effect as if it had been signed by all of them.

(9) Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the company; and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default.

According to the provisions of the above stated section, the members so empowered under subsection (4) of the Section 169 shall request the board of the company to call the extraordinary general meeting of the company and in case the company fails to do so, empowers such members to hold the extraordinary general meeting of the company.

Further according to section 166 of the Act dealing with the provisions as to the Annual General meeting, every annual general meeting of the Company shall be called for a time during the business hours, on the day that is not a public holiday, and shall be held at the registered office of the Company or at some other place within the same city, town or village in which the registered office of the Company is situated.

There is no restriction as regards other general meetings which may be held at such place and at a time of any day as may be considered convenient to the company. But such meeting should not be held at a place which will be more expensive or inconvenient to the shareholders than if they were held at the registered office of the company. It has been held by the courts that in fixing the time and place the board of directors should act in bonafide manner and not with a view to deter shareholders from attending. However, the same is not in the case of extraordinary general meeting of the company. The act dos not require that a general meeting other than annual general meeting must be held only at the registered office or in the city, town or village where the registered office of the company is situated.

In the views of various judicial pronouncements, the purpose of Section 169 is to empower the shareholders who wish to call a meeting of members to resolve a specific issue. In a case before the Hon'ble Company Law Board it was held that where the place at the registered office of the Company is not available to the requisitionists, such extraordinary general meeting of the company can be held elsewhere. Also, in yet another case it was observed that a company may have a registered office at a particular place at the time of incorporation but with passage of time and expansion, the shareholders may grow into large number and reside outside the place of the registered office of the company. In such a case, the bonafide of the matter is looked into as whether there were the circumstances that the need was felt to hold the meeting at some other place as that of the registered office of the company and such an action if taken by any person was bona fide.

Conclusion

Referring to the strict mandate of the provisions of the Act, it is seen that the general meeting of the company cannot be held at the place except as provided under the provisions of section 166 i.e. the city, town or village where the registered office of the company is situated. However, if it is possible then the approval of all the shareholders of the Company is accorded for holding such extra ordinary general meeting at the place other than the city town or village where the registered office of the company is situated, such extraordinary general meeting may be valid. Moreover, one has to look into the bona fide of the person who are calling the general meeting other annual general meeting at a place which is not reachable by the other shareholders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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