Clause 47 of Table
A (schedule -I) provides that all general meetings other than AGMs shall be
called the EGMs. The legal provisions as regards such meetings are:
1. EGM is convened for transacting some special
or urgent business that may arise in between two AGMs, for instance, change in
the objects or shift of registered office or alteration of capital. All
business transacted at such meetings is called special business. Therefore,
every item on the agenda must be accompanied by an 'Explanatory Statement'.
2. An EGM may be called: (i) by the Directors of
their own accord; (ii) by the
Directors on requisition; (iii) by the requisitionists
themselves; (iv) by the CLB. The
Board of Directors may call a general meeting of the members
at any time by giving
not less than 21 days notice. A shorter notice may, however,
be held valid if consent
is accorded thereto by members of the company holding 95% or
more of the voting rights (s.171). The Board of Directors must convene a
general meeting upon request or requisition if the following conditions are
satisfied (s.169):
(a) The
requisitionists must be such number of members who, at the date of the deposit
of the requisition, are the holders of 1/10 th of total voting power.
Thus, in case of accompany having share-capital they should hold at least 1/10 th of
such of the paid-up capital that carries right to vote in regard to that
matter. Preference shareholders have voting power only as regards matters
Preference shareholders have voting power only as regards matters relating to
the preference shareholders. They have no voting right and therefore, no right
to requisition in respect of other matters. If the company does not have a
share capital, they should at least hold 1/10 th of the total voting
power of the company in regard to that matter. The requisition must state the
objects of the meeting, i.e., it must set out the matters for the consideration
of which the meeting is to be called. Further, requisition must have been
deposited at the registered office of the company. The requisition must be
signed by the requisitionists.In case all the aforesaid conditions are satisfied,
the Board of Directors must within 21 days of the receipt of the requisition
call the meeting giving at least 21 days notice fixing the meeting within 45
days of the receipt of the requisition.
Where the resolution proposed is a special resolution then the requirements of
s.189(2) must be complied with, viz., it should be so described and explanatory statement be annexed.
If the Board of Directors does not or fails to call the meeting as aforesaid (i.e., within 21 days fixing the date of the meeting within 45 days of the deposit of a valid requisition), the meeting may be called: by the requisitionists themselves:(a)In case of a company having share capital, by one or more requisitionists as represent: (i) a majority in value of the paid-up share capital held all the requisitionists; or (ii) at least 1/10 th the paid-up share capital carrying voting rights in respect of that matter, whichever is less; or (b) in case of a company not having share capital, by one or more requisitionists who represent at least 1/10th of the total voting power of the company in regard to the matter of the requisition.
Where the Articles, in accordance with the provisions of s.180, provided that members who had not paid call on their shares would not be entitled to vote, it was held that they could not, therefore, requisition a meeting, nor vote it and if they did so the proceedings would be invalid [Col. Kuldip singh Chillon v. paragaon Utility Financiers put. Ltd. (1986) 60 Comp.Cas. 1075) P&H].
The requisitioned meeting must be held within 3 months of the date of the deposit of the requisition. Further, where two or more persons hold any shares or interest in an 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.
Where the resolution proposed is a special resolution then the requirements of
s.189(2) must be complied with, viz., it should be so described and explanatory statement be annexed.
If the Board of Directors does not or fails to call the meeting as aforesaid (i.e., within 21 days fixing the date of the meeting within 45 days of the deposit of a valid requisition), the meeting may be called: by the requisitionists themselves:(a)In case of a company having share capital, by one or more requisitionists as represent: (i) a majority in value of the paid-up share capital held all the requisitionists; or (ii) at least 1/10 th the paid-up share capital carrying voting rights in respect of that matter, whichever is less; or (b) in case of a company not having share capital, by one or more requisitionists who represent at least 1/10th of the total voting power of the company in regard to the matter of the requisition.
Where the Articles, in accordance with the provisions of s.180, provided that members who had not paid call on their shares would not be entitled to vote, it was held that they could not, therefore, requisition a meeting, nor vote it and if they did so the proceedings would be invalid [Col. Kuldip singh Chillon v. paragaon Utility Financiers put. Ltd. (1986) 60 Comp.Cas. 1075) P&H].
The requisitioned meeting must be held within 3 months of the date of the deposit of the requisition. Further, where two or more persons hold any shares or interest in an 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.
Any reasonable expenses incurred by the requisitionists, as
aforesaid, shall be repaid to them by the company and the same shall be
recouped from directors at fault.
In Life Insurance
Corporation of India v. Escorts Ltd. (1986) 60 Comp. Cas. 548, it was held
that every shareholder of the company has the right, subject to compliance with
the provisions of the Act, to requisition an EGM. He cannot be restrained from calling
the meeting and is not bound to disclose his reasons for resolution proposed. Section 773(2) only casts a duty on the
management to disclose in an explanatory statement all material facts relating
to the resolutions proposed.
Meeting by the requisitionists must be held in the same manner
as nearly as possible, in which the meetings are to be called by the Board.
However, where the registered office is not made available to them for holding
the meeting, they may hold the meeting elsewhere [R. Chettair v. M. Chettair (1951) 21 Comp. Cas. 93].
Certain typical points
1. The right of members to requisition a meeting
is not lost only because a receiver has been appointed in respect of their
shares[Balkrishana Gupta v. Swadeshi Polytex Ltd. (1985) 88 Comp. Cas. 553].
2. Where requisitioned meeting was called only to
interfere with a pending petition u/s 391 and in an attempt to prevent sanction
by the Court of a scheme of amalgamation, the holding of such meeting could be
restrained by the Court [Centron Industrial Alliance Ltd. v. P.K. Vakil
(1985) 57 comp. Cas. 121].
3. An institutional shareholder, say L.LC., has
the same rights as every other shareholder to requisition an EGM for the
purpose of considering removal of a certain number of directors. The
institution cannot be restrained from doing so on the ground that reasons for
the proposed removals have not been stated (Life
Insurance Corporation of India v. Escorts
Ltd. (7986) Tax LR 1826 (SC)].
4. Whether preference shareholders can attend a
meeting in which no business affecting them is to be conducted and what are
their rights in such a meeting. Under s.172(2)(i), notice of every meeting of
the company is required to be given to every member of the company. From this
it maybe inferred that although there is no express provision to that effect
every member of a company is entitled to attend every general meeting. However,
it is clear from s.87(2) (a) that the holders of preference shares do not have
any right to vote on resolutions placed before the company, which do not
directly affect the right attached to the preference shares. Further, in
respect of resolutions in regard to which preference shareholders have no right
to vote they have also no right to take part in the discussion, even though they
have the implied right by virtue of s.172(2) (i) to attend the meeting.
5. Can an EGM be held in a State other than the
State of the company's registered office? In Bharat Commerce & Industries Ltd. v. R.O.C., it was held, that
it may be so held. But the power must be excised bona fide.
Powers of CLB (s.186).If for any reason it is impracticable
to call a meeting of the company, other than an AGM, the CLB may direct the
calling of the meeting: (a) on its own motion; (b) on an application of any
director; (c) on an application of any member entitled to vote at that meeting.
For the aforesaid meeting, the CLB may give directions in
respect of the place, date and the manner in which the meeting be held and
conducted. It may also give such ancilliary or consequential directions as it
thinks expedient, including a direction that one member present in person or
proxy shall be deemed to constitute a meeting.
The main principles that should guide CLB as regards
ordering a meeting to be called were spelt out in the matter of Ruttonjee &
Co. Ltd. - a Calcutta case, as follows:
1. The CLB would not ordinarily interfere with
the domestic management of a
company which should be conducted in accordance with the
articles.
2. The discretion granted under s.186 should be
used sparingly with caution so that the CLB does not become either a
shareholder or director of the company trying to participate in the internal
squabbles of the company. The CLB should ordinarily keep itself aloof from
participating in quarrels of rival groups of directors or shareholders.
3. The word 'impracticable' means impracticable
from a reasonable point of view.
4. The CLB should take a common sense view of the
matter and must act as a prudent man of business.
5. Where doubts and controversy as to who are
directors arise and rival groups convene their own meetings, the situation may
make the meeting impracticable.
6. The power should be exercised upon
consideration of all the facts and circumstances of the case.
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