Unit 4: Meetings & winding up

Annual General Meeting (Section 96)

• Every company other than an OPC must hold an AGM every year.
• First AGM within 9 months of the close of the first financial year; thereafter within 6 months of the close of the financial year, and gap between two AGMs not more than 15 months.
• ROC may extend by up to 3 months (not for the first AGM).
• Held during business hours (9 a.m.–6 p.m.), not on a national holiday, at the registered office or in the same city.
• Ordinary business (Section 102): adoption of financial statements and reports, declaration of dividend, appointment of directors in place of those retiring, appointment and remuneration of auditors. All else is special business.

Extraordinary General Meeting (Section 100)

• Called by the board for urgent business, or on requisition of members holding at least one-tenth of paid-up voting capital (or one-tenth of voting power in companies without share capital).
• If the board fails to call within 21 days (meeting within 45 days), requisitionists may call it themselves; the Tribunal may also order a meeting (Section 98).

Board meetings (Section 173)

• First board meeting within 30 days of incorporation.
• At least four board meetings a year, with not more than 120 days between two meetings (OPC, small, dormant companies: at least one in each half of the year, gap of at least 90 days).
• Notice of at least 7 days; quorum one-third of total strength or two directors, whichever is higher.

Quorum for public companies (Section 103)

Resolutions

• Resolutions requiring special notice (Section 115): removal of a director or auditor — notice of 14 days by members holding 1% voting power or ₹5 lakh paid-up shares.
• Minutes (Section 118): prepared and signed within 30 days; evidence of proceedings.

Postal ballot (Section 110)

• Voting by post or electronic means without attending the meeting.
• Mandatory items (for companies with more than 200 members, as per rules): alteration of objects, change of registered office to another state, sale of an undertaking, buy-back of shares, variation of class rights, giving loans or guarantees beyond limits, election of small shareholders' director.
• A scrutiniser is appointed; results declared on the notice board and website.

Video conferencing (VC/OAVM)

• Board meetings can be held through video conferencing (Section 173(2)), except a few restricted matters (now largely relaxed).
• During COVID-19, MCA allowed AGMs and EGMs through VC/OAVM; these relaxations have been extended repeatedly.
• Requirements: secure recording, roll call, identification of participants, record kept in safe custody.

E-voting (Section 108)

• Listed companies and companies with 1,000 or more members must provide remote e-voting on all resolutions at general meetings.
• Through NSDL/CDSL platforms; voting window opens at least 3 days before and closes at 5 p.m. the day before the meeting.
• Cut-off date determines eligible members; a scrutiniser reports results.

Winding up is the process by which the life of a company is brought to an end, its assets realised, debts paid and surplus (if any) distributed among members. Dissolution is the final stage when the company's name is struck off and it ceases to exist.

Modes of winding up (after the IBC, 2016)

Grounds for winding up by the Tribunal (Section 271)

• Company has resolved by special resolution to be wound up by the Tribunal.
• Acted against the sovereignty and integrity of India, security of the State, friendly relations with foreign states, public order, decency or morality.
• Affairs conducted in a fraudulent manner, or formed for fraudulent purposes, or persons guilty of fraud or misconduct.
• Default in filing financial statements or annual returns for five consecutive years.
• Tribunal thinks it just and equitable to wind up.
• (Inability to pay debts is now dealt with under the IBC.)

Petition and consequences

• Petition by the company, contributories, Registrar, Central or State Government, or any person authorised.
• Official Liquidator or company liquidator appointed; takes custody of assets.
• Order of payment: workmen's dues and secured creditors (pari passu as per IBC Section 53), employees, unsecured creditors, government dues, preference shareholders, equity shareholders.

National Company Law Tribunal (NCLT) — Section 408

• A quasi-judicial body constituted on 1 June 2016; replaced the Company Law Board and BIFR.
• President and judicial and technical members; benches across India (including Chandigarh, covering Punjab).
• Powers: oppression and mismanagement (Sections 241–246), class action suits (Section 245), compromises, arrangements and amalgamations (Sections 230–232), reduction of capital, winding up, deregistration, refusal of transfer of shares, Adjudicating Authority under IBC for corporate insolvency.

National Company Law Appellate Tribunal (NCLAT) — Section 410

• Hears appeals against NCLT orders within 45 days; also hears appeals from the Competition Commission of India and IBBI orders.
• Chairperson and judicial and technical members; principal bench in New Delhi.
• Appeals against NCLAT go to the Supreme Court within 60 days on a question of law.

Special Courts — Section 435

• Established by the Central Government for speedy trial of offences under the Companies Act punishable with imprisonment of two years or more.
• Presided by a Sessions Judge or Additional Sessions Judge; other offences tried by a Metropolitan Magistrate or Judicial Magistrate.
• Appeals lie to the High Court.