| Various kind of meetings are conducted in a Company | | | | question the irregularities in a Company including a |
| as required under the provisions of Companies Act, | | | | procedural irregularity by the Company while it |
| 1956 and other corporate regulations, and it is also not | | | | conducts a meeting. We can see the shareholder |
| a difficult issue to deal with the various kinds of | | | | participation and vigil more in a Company if it is a |
| meetings too. A new Company may have to conduct | | | | private limited company or closely held public company |
| a statutory meeting and every company may have | | | | or an unlisted public company. When it comes to |
| conduct Board Meetings, Annual General Body | | | | largely held listed public companies, substantial |
| Meeting and Extraordinary General Body Meeting. | | | | shareholders, institutional investors and creditors will |
| Besides these meetings as specifically referred to in | | | | keep a watch on the company and its business. It is so |
| the Companies Act, 1956, a Company may have to | | | | logical and based on the stakes or capital, or the |
| conduct meetings upon the orders of Company Law | | | | market capitalization of a Company. |
| Board and the Company Court at times. | | | | Besides the directly interested parties as referred to, |
| Companies Act, 1956 and other corporate regulations | | | | at times, even an outsider may question the |
| as applicable, provides for a detailed procedure for | | | | irregularities in a Company in an indirect way and he |
| conduct of meetings. The primary object of conduct | | | | may limit his challenge to a particular board meeting or |
| of meetings is to provide information to the | | | | a transaction at a meeting. For example, there is an |
| shareholders if it is an AGM and transact business by | | | | agreement between the Company and a third party |
| getting the required resolutions passed. As everybody | | | | and when there comes a dispute between the |
| knows, certain decisions in a Company can only be | | | | Company and the third party as referred to, the third |
| taken by the shareholders in their Annual General | | | | party may even question the manner in which the |
| Body Meetings or Extraordinary General Body | | | | decision was taken by the Company etc. It’s a |
| Meetings. Certain other decisions can be taken by | | | | complicated dimension and it happens practically |
| Directors being the agents of the Company and as | | | | though we may not clearly link an outsider as an |
| trustees of shareholders. There may also be a | | | | interested party to question the procedural irregularities |
| requirement of getting further permissions from the | | | | in a Company while it conducts a meeting. |
| authorities like Central Government when a decision is | | | | Thus, in my opinion, it is very clear that shareholders, |
| taken by the Company or by the Board. | | | | creditors, authorities, directors and at times, even a |
| We have detailed regulations governing the issue of | | | | party to a particular transaction, can question the |
| conduct of meetings in a Company and besides the | | | | procedural irregularities in a Company while it conducts |
| regulations, ICSI prescribes Secretarial Standards and | | | | a meeting. |
| SS-1 and SS-2 specifically deal with meetings. There is | | | | Can it be said that a meeting is illegal due to simple |
| no ambiguity when it comes to the procedure to | | | | procedural lapse? |
| conduct meetings in a Company. As I feel, the core | | | | The interesting issue is as to whether it can be said |
| secretarial practice is about assisting the Company or | | | | that a meeting is illegal due to a procedural lapse. |
| the Board in conducting the meetings and ensure | | | | Obviously, if there is a procedural lapse while |
| compliance of all the requirements of Company Law. | | | | conducting a meeting, then, the meeting is illegal and |
| I want to express my opinion on an issue as to what | | | | when the meeting itself is illegal, then, it can not be said |
| happens if there is a procedural irregularity in | | | | that the business transacted in an illegal meeting as |
| conducting a meeting and the implications thereon. | | | | legal. If we think straight and apply the law, then, when |
| The provisions of Companies Act, 1956 and other | | | | there is procedural lapse or irregularity, the meeting and |
| relevant corporate regulations provides for a penalty | | | | the business transacted at the meeting is illegal. |
| or fine for non-compliance of certain provisions while a | | | | But, the practical application of law is complicated and |
| Company conducts a meeting. The issues pertaining to | | | | the issue is not simple. Equity often comes into play. |
| conduct of meetings in a Company may appear | | | | When it is very clear that the intention of the Board |
| simple, but, there are complicated and interesting issues | | | | or the officers who conduct the meeting is good, the |
| like: | | | | meeting can not be said as illegal due to simple |
| As there is a provision for penalty for a procedural | | | | procedural lapse. However, the officers in default may |
| irregularity, does it mean that a Company can conduct | | | | have to pay the fine or face the penalty for not |
| a meeting without following the procedure and escape | | | | complying with the law. But, when there is a serious |
| by paying fine or penalty? | | | | dispute between the majority and minority in a |
| The answer is very clear that it is not so. The issue of | | | | Company, then, the issue of procedural lapse plays a |
| imposing penalty on the ‘officers in default’ while | | | | very crucial role in ascertaining the reason behind the |
| conducting the meetings and the issue of validity of a | | | | procedural lapse. Again, when a party to a |
| meeting or a decision taken at the meeting, are two | | | | contractual transaction with the Company, harps on |
| different things altogether. | | | | the simple procedural lapse on the part of the |
| Who are all interested and who normally questions the | | | | Company, he may not be encouraged. |
| procedural irregularities in a Company while it conducts | | | | Thus, the intention of the Company, Board of Directors |
| a meeting? | | | | and majority shareholders will be looked into while |
| Shareholders and the creditors are the interested | | | | deciding as to whether a procedural lapse leads to |
| parties besides the guards of shareholders’ interest | | | | declaring a meeting in a Company as “illegal” or |
| like Trustees, the Registrar of Companies, Company | | | | not. |
| Law Board, SEBI, Stock Exchanges etc. It is very very | | | | Company Law is very very complicated and in order |
| rare to see an authority in probing into the irregularities | | | | to avoid complications, it is advisable for the |
| in a company and that to an irregularity in conducting a | | | | Companies not to neglect the procedural requirements |
| meeting. When it comes to Company Law Board and | | | | while it conducts a meeting. |
| the Company Court, it may have to probe into all the | | | | Company Secretaries should play and plays a |
| connected issues in a Company when an issue is to | | | | commendable role in ensuring good governance in a |
| be adjudicated upon. Besides the shareholders and the | | | | Company. |
| creditors, it is very difficult to conclude as to who are | | | | Note: I have given a small and simple brief at the |
| all interested in a Company and can question the | | | | issues touching the conduct of meetings in a Company |
| irregularities though we can find lot of academic work | | | | and I am of the opinion and aware that every aspect |
| on that. | | | | of Company Law is very interesting, vast and |
| Practically, a shareholder or a minority group will | | | | complicated. |