A company is an association of several persons.

Decisions are made according to the

view of the majority. Various matters have to be discussed and decided upon. These
discussions take place at the various meetings which take place between members
and between the directors. Needless to say, the importance of meetings cannot be
under-emphasised in case of companies. The Companies Act, 1956 contains several
provisions regarding meetings. These provisions have to be understood and followed.
For a meeting, there must be at least 2 persons attending the meeting. One member
cannot constitute a company meeting even if he holds proxies for other members.
Kinds of Company Meetings :Broadly, meetings in a company are of the following
types :I. Meetings of Members :
These are meetings where the members / shareholders of the company meet and
discuss various matters. Members meetings are of the following types :A. Statutory Meeting :
A public company limited by shares or a guarantee company having
share capital is required to hold a statutory meeting. Such a statutory
meeting is held only once in the lifetime of the company. Such a
meeting must be held within a period of not less than one month or
within a period not more than six months from the date on which it is
entitled to commence business i.e. it obtains certificate of
commencement of business. In a statutory meeting, the following
matters only can be discussed :-

a. Floatation of shares / debentures by the company

b. Modification to contracts mentioned in the prospectus
The purpose of the meeting is to enable members to know all
important matters pertaining to the formation of the company and its
initial life history. The matters discussed include which shares have
been taken up, what money has been received, what contracts have
been entered into, what sums have been spent on preliminary
expenses, etc. The members of the company present at the meeting
may discuss any other matter relating to the formation of the Company
or arising out of the statutory report also, even if no prior notice has
been given for such other discussions but no resolution can be passed
of which notice have not been given in accordance with the provisions
of the Act.
A notice of at least 21 days before the meeting must be given to
members unless consent is accorded to a shorter notice by members,
holding not less than 95% of voting rights in the company.
A statutory meeting may be adjourned from time to time by the
members present at the meeting.
The Board of Directors must prepare and send to every member a
report called the "Statutory Report" at least 21 days before the day on
which the meeting is to be held. But if all the members entitled to
attend and vote at the meeting agree, the report could be forwarded

later also. The report should be certified as correct by at least two

directors, one of whom must be the managing director, where there is
one, and must also be certified as correct by the auditors of the
company with respect to the shares allotted by the company, the cash
received in respect of such shares and the receipts and payments of
the company. A certified copy of the report must be sent to the
Registrar for registration immediately after copies have been sent to
the members of the company.
A list of members showing their names, addresses and occupations
together with the number shares held by each member must be kept in
readiness and produced at the commencement of the meeting and
kept open for inspection during the meeting.
If default is made in complying with the above provisions, every
director or other officer of the company who is in default shall be
punishable with fine upto Rs. 500. The Registrar or a contributory may
file a petition for the winding up of the company if default is made in
delivering the statutory report to the Registrar or in holding the
statutory meeting on or after 14 days after the last date on which the
statutory meeting ought to have been held.
Contents of Statutory Report must provide the following particulars:(a)The total number of shares allotted, distinguishing those fully or
partly paid-up, otherwise than in cash, the extent to which partly paid
shares are paid-up, and in both cases the consideration for which they
were allotted.(b) The total amount of cash received by the company in
respect of all shares allotted, distinguishing as aforesaid.(c) An abstract
of the receipts and payments upto a date within 7 days of the date of
the report and the balance of cash and bank accounts in hand, and an
account of preliminary expenses.(d) Any commission or discount paid
or to be paid on the issue or sale of shares or debentures must be
separately shown in the aforesaid abstract.(e) The names, addresses
and occupations of directors, auditors, manager and secretary, if any,
of the company and the changes which have taken place in the names,
addresses and occupations of the above since the date of
incorporation.(f) Particulars of any contracts to be submitted to the
meeting for approval and modifications done or proposed.(g) If the
company has entered into any underwriting contracts, the extent, if
any, to which they have not been carried out and the reasons for the
failure.(h) The arrears, if any, due on calls from every director and from
the manager.(i) The particulars of any commission or brokerage paid or
to be paid, in connection with the issue or sale of shares or debentures
to any director or to the manager.
The auditors have to certify that all information regarding calls and
allotment of shares are correct.
B. Annual General Meeting
Must be held by every type of company, public or private, limited by
shares or by guarantee, with or without share capital or unlimited
company, once a year. Every company must in each year hold an
annual general meeting. Not more than 15 months must elapse
between two annual general meetings. However, a company may hold

its first annual general meeting within 18 months from the date of its
incorporation. In such a case, it need not hold any annual general
meeting in the year of its incorporation as well as in the following year
only.
In the case there is any difficulty in holding any annual general
meeting (except the first annual meeting), the Registrar may, for any
special reasons shown, grant an extension of time for holding the
meeting by a period not exceeding 3 months provided the application
for the purpose is made before the due date of the annual general
meeting. However, generally delay in the completion of the audit of the
annual accounts of the company is not treated as "special reason" for
granting extension of time for holding its annual general meeting.
Generally, in such circumstances, an AGM is convened and held at the
proper time . all matters other than the accounts are discussed. All
other resolutions are passed and the meeting is adjourned to a later
date for discussing the final accounts of the company. However, the
adjourned meeting must be held before the last day of holding the
AGM.
A notice of at least 21 days before the meeting must be given to
members unless consent is accorded to a shorter notice by members,
holding not less than 95% of voting rights in the company. The notice
must state that the meeting is an annual general meeting. The time,
date and place of the meeting must be mentioned in the notice. The
notice of the meeting must be accompanied by a copy of the annual
accounts of the company, directors report on the position of the
company for the year and auditors report on the accounts. Companies
having share capital should also state in the notice that a member is
entitled to attend and vote at the meeting and is also entitled to
appoint proxies in his absence. A proxy need not be a member of that
company. A proxy form should be enclosed with the notice. The proxy
forms are required to be submitted to the company at least 48 hours
before the meeting.
The AGM must be held on a working day during business hours at the
registered office of the company or at some other place within the city,
town or village in which the registered office of the company is
situated. The Central Government may, however, exempt any class of
companies from the above provisions. If any day is declared by the
Central government to be a public holiday after the issue of the notice
convening such meeting, such a day will be traeted as a working day.
A company may, by appropriate provisions in its its articles, fix the
time for its annual general meeting and may also by a resolution
passed in one annual general meeting fix the time for its subsequent
annual general meetings.
Companies licensed under Section 25 are exempt from the above
provisions provided that the time, date and place of each annual
general meeting are decided upon beforehand by the Board of
Directors having regard to the directions, if any, given in this regard by
the company in general meeting.

In case of default in holding an annual general meeting, the following

are the consequences :-

1. Any member of the company may apply to the Company Law

2.

Board. The Company Law Board may call, or direct the calling of
the meeting, and give such ancillary or consequential directions
as it may consider expedient in relation to the calling, holding
and conducting of the meeting. The Company Law Board may
direct that one member present in person or by proxy shall be
deemed to constitute the meeting. A meeting held in pursuance
of this order will be deemed to be an annual general meeting of
the company. An application by a member of the company for
this purpose must be made to the concerned Regional Bench of
the Company Law Board by way of petition in Form No. 1 in
Annexure II to the CLB Regulations with a fee of rupees fifty
accompanied by (i) affidavit verifying the petition, (ii) bank draft
for payment of application fee.
Fine which may extend to Rs. 5,000 on the company and every
officer of the company who is in default may be levied and for
continuing default, a further fine of Rs. 250 per day during
which the default continues may be levied.

Business to be Transacted at Annual General Meeting :

At every AGM, the following matters must be discussed and decided.
Since such matters are discussed at every AGM, they are known as
ordinary business. All other matters and business to be discussed at
the AGM are specila business.
The following matters constitute ordinary business at an AGM :a. Consideration of annual accounts, directors report and the
auditors report
b. Declaration of dividend
c. Appointment of directors in the place of those retiring
d. Appointment of and the fixing of the remuneration of the
statutory auditors.
In case any other business ( special business ) has to be discussed and
decided upon, an explanatory statement of the special business must
also accompany the notice calling the meeting. The notice must should
also give the nature and extent of the interest of the directors or
manager in the special business, as also the extent of the shareholding
interest in the company of every such person. In case approval of any
document has to be done by the members at the meeting, the notice
must also state that the document would be available for inspection at
the Registered Office of the company during the specified dates and
timings.
C. Extraordinary General Meeting
Every general meeting (i.e. meeting of members of the company) other
than the statutory meeting and the annual general meeting or any

adjournment thereof, is an extraordinary general meeting. Such

meeting is usually called by the Board of Directors for some urgent
business which cannot wait to be decided till the next AGM. Every
business transacted at such a meeting is special business. An
explanatory statement of the special business must also accompany
the notice calling the meeting. The notice must should also give the
nature and extent of the interest of the directors or manager in the
special business, as also the extent of the shareholding interest in the
company of every such person. In case approval of any document has
to be done by the members at the meeting, the notice mus also state
that the document would be available for inspection at the Registered
Office of the company during the specified dates and timings.
The Articles of Association of a Company may contain provisions for
convening an extraordinary general meeting. Eg. It may provide that
"the board may, whenever it thinks fit, call an extraordinary general
meeting" or it may provide that "if at any time there are not within
India, directors capable of acting who are sufficient in number to form
a quorum, any director or any two members of the company may call
an extraordinary general meeting".
Extraordinary General Meeting on Requisition :
The members of a company have the right to require the calling of an
extraordinary general meeting by the directors. The board of directors
of a company must call an extraordinary general meeting if required to
do so by the following number of members :a. members of the company holding at the date of making the
demand for an EGM not less than one-tenth
a. of such of the voting rights in regard to the matter to be
discussed at the meeting ; or
b. if the company has no share capital, the members representing
not less than one-tenth of the total voting rights at that date in
regard to the said matter.
The requisition must state the objects of the meetings and must be
signed by the requisitioning members. The requisition must be
deposited at the company's registered office. When the requisition is
deposited at the registered office of the company, the directors should
within 21 days, move to call a meeting and the meeting should be
actually be held within 45 days from the date of the lodgement of the
requisition. If the directors fail to call and hold the meeting as
aforesaid, the requisitionists or any of them meeting the requirements
at (a) or (b) above, as the case may be, may themselves proceed to
call meeting within 3 months from the date of the requisition, and
claim the necessary expenses from the company. The company can
make good this sum from the directors in default. At such an EGM, any
business which is not covered by the agenda mentioned in the notice
of the meeting cannot be voted upon.
Power of Company Law Board to Order Calling of Extraordinary
General Meeting :

If for any reason, it is impracticable to call a meeting of a company,

other than an annual general meeting, or to hold or conduct the
meeting of the company, the Company Law Board may, either i) on its
own motion, or ii) on the application of any director of the company, or
of any member of the company, who would be entitled to vote at the
meeting, order a meeting to be called and conducted as the Company
Law Board thinks fit, and may also give such other ancillary and
consequential directions as it thinks fit expedient. A meeting so called
and conducted shall be deemed to be a meeting of the company duly
called and conducted.
Procedure for Application under Section 186 :
An application by a director or a member of a company for this purpose
is required to be made to the Regional Bench of the Company Law
Board before whom the petition is to be made in Form No 1 specified in
Annexure II to the CLB Regulations with a fee of Rs200. The petition
must be accompanied with the following documents a. Evidence in proof of status of the applicant.
b. Affidavit verifying the petition.
c. Bank draft evidencing payment of application fee.
d. Memorandum of appearance with copy of the Board's resolution
or executed vakalat nama, as the case may be.
D. Class Meeting
Class meetings are meetings which are held by holders of a particular
class of shares, e.g., preference shareholders. Such meetings are
normally called when it is proposed to vary the rights of that particular
class of shares. At such meetings, these members dicuss the pros and
cons of the proposal and vote accordingly. (See provisions on variations
of shareholders rights). Class meetings are held to pass resolution
which will bind only the members of the class concerned, and only
members of that class can attend and vote.
Unless the articles of the company or a contract binding on the persons
concerned otherwise provides, all provisions pertaining to calling of a
general meeting and its conduct apply to class meetings in like manner
as they apply with respect to general meetings of the company.
II. Meetings of the Board of Directors
- Meeting of the Board of Directors
- Meeting of a Committee of the Board
III. Other Meetings
A. Meeting of debenture holders
A company issuing debentures may provide for the holding of meetings of the
debentureholders. At such meetings, generally nmmatters pertaining to the variation
in terms of security or to alteration of their rights are discussed. All matters
connected with the holding, conduct and proceedings of the meetings of the

debentureholders are normally specified in the Debenture Trust Deed. The decisions
at the meeting made by the prescribed majority are valid and lawful and binding
upon the minority.
B. Meeting of creditors
Sometimes, a company, either as a running concern or in the event of winding up,
has to make certain arrangements with its creditors. Meetings of creditors may be
called for this purpose. Eg U/s 393, a company may enter into arrangements with
creditors with the sanction of the Court for reconstruction or any arrangement with its
creditors. The court, on application, may order the holding of a creditors' s meeting. If
the scheme of arrangement is agreed to by majority in number of holding debts to
value of the three-fourth of the total value of the debts, the court may sanction the
scheme. A certified copy of the court's order is then filed with the Registrar and it is
binding on all the creditors and the company only after it is filed with Registrar.
Similarly, in case of winding up of a company, a meeting of creditors and of
contributories is held to ascertain the total amount due by the company and also to
appoint a liquidator to wind up the affairs of the company.
Requisites of a Valid Meetings The following conditions must be satisfied for a
meeting to be called a valid meeting :1. It must be properly convened. The persons calling the meeting must be
authorised to do so.
2. Proper and adequate notice must have been given to all those entitled to
attend.
3. The meeting must be legally constituted. There maust be a chairperson. The
rules of quorum must be maintained and the provisions of the Companies Act,
1956 and the articles must be complied with.
4. The business at the meeting must be validly transacted.. The meeting must
be conducted in accordance with the regulations governing the meetings.
Notice of General Meeting
A meeting cannot be held unless a proper notice has been given to all persons
entitled to attend the meeting at the proper time, containing the necessary
information. A notice convening a general meeting must be given at least 21 clear
days prior to the date of meeting. However, an annual general meeting may be called
and held with a shorter notice, if it is consented to by all the members entitled to
vote at the meeting. In respect of any other meeting, it may be called and held with a
shorter notice, if at least members holding 95 percent of the total voting power of the
Company consent to a shorter notice.
Notice of every meeting of company must be sent to all members entitled to attend
and vote at the meeting. Notice of the AGM must be given to the statutory auditor of
the company.
Accidental omission to give notice to, or the non-receipt of notice by, any member or
any other person on whom it should be given will not invalidate the proceedings of
the meeting. The notice may be given to any member either personally or by sending
it by post to him at his registered address, or if there is none in India, to any address

within India supplied by him for the purpose. Where notice is sent by post, service is
effected by properly addressing, pre-paying and posting the notice. A notice may be
given to joint holders by giving it to the jointholder first named in the register of
members. A notice of meeting may also be given by advertising the same in a
newspaper circulating in the neighbourhood of the registered office of the company
and it shall be deemed to be served on every member who has to registered address
in India for the giving of notices to him.
A notice calling a meeting must state the place, day and hour of the meeting and
must contain the agenda of the meeting. If the meeting is a statutory or annual
general meeting, notice must describe it as such. Where any items of special
business are to be transacted at the meeting, an explanatory statement setting out
all materials facts concerning each item of the special business including the concern
or interest, if any, therein of every director and manager, is any, must be annexed to
the notice. If it is intended to propose any resolution as a special resolution, such
intention should be specified.
A notice convening an AGM must be accompanied by the annual accounts of the
company, the directors report and the auditors report. The copies of these
documents could, however, be sent less than 21 days before of the date of the
meeting if agreed to by all members entitled to vote at the meeting.
Proxy
In case of a company having a share capital and in the case of any other company, if
the articles so authorise, any member of a company entitled to attend and vote at a
meeting of the company shall be entitled to appoint another person (whether a
member or not) as his proxy to attend and vote instead of himself. Every notice
calling a meeting of the company must contain a statement that a member entitled
to attend and vote is entitled to appoint one proxy in the case of a private company
and one or more proxies in the case of a public company and that the proxy need not
be member of the company.
A member may appoint another person to attend and vote at a meeting on his behalf.
Such other person is known as "Proxy". A member may appoint one or more proxies
to vote in respect of the different shares held by him, or he may appoint one or more
proxies in the alternative, so that if the first named proxy fails to vote, the second
one may do so, and so on.
The member appointing a proxy must deposit with the company a proxy form at the
time of the meeting or prior to it giving details of the proxy appointed. However, any
provision in the articles which requires a period longer than forty eight hours before
the meeting for depositing with the company any proxy form appointing a proxy,
shall have the effect as if a period of 48 hours had been specified in such provision.
A company cannot issue an invitation at its expense asking any member to appoint a
particular person as proxy. If the company does so, every officer in default shall be
liable to fine up to Rs1,000. But if a proxy form is sent at the request of a member,
the officer shall not be liable. Every member entitled to vote at a meeting of the
company, during the period beginning 24 hours before the date fixed for the meeting
and ending with the conclusion of the meeting may inspect proxy forms at any time
during business hours by giving 3 days notice to the company of his intention to do
so.

The proxy form must be in writing and be signed by the member or his authorised
attorney duly authorised in writing or if the appointer is a company, the proxy form
must be under its seal or be signed by an officer or an attorney duly authorised by it.
The proxy can be revoked by the member at any time, and is automatically revoked
by the death or insolvency of the member. The member may revoke the proxy by
voting himself before the proxy has voted, but once the proxy has exercised the vote,
the member cannot retract his vote. Where two proxy forms by the same shareholder
are lodged in respect of the same votes, the last proxy form will be treated as the
correct proxy form.
A proxy is not entitled to vote except on a poll. Therefore, a proxy cannot vote on
show of hands.
Quorum
Quorum refers to the minimum number of members who must be present at a
meeting in order to constitute a valid meeting. A meeting without the minimum
quorum is invalid and decisions taken at such a meeting are not binding. The articles
of a company may provide for a quorum without which a meeting will be construed to
be invalid. Unless the articles of a company provide for larger quorum, 5 members
personally present (not by proxy) in the case of a public company and 2 members
personally present (not by proxy) in the case of a private company shall be the
quorum for a general meeting of a company.
It has been held by Courts that unless the articles otherwise provide, a quorum need
to be present only when the meeting commenced, and it was immaterial that there
was no quorum at the time when the vote was taken. Further, unless the articles
otherwise provide, if within half an hour from the time appointed for holding a
meeting of the company, a quorum is not present in the person, the meeting :a. if called upon the requisition of members, shall stand dissolved;
b. in any other case, it shall stand adjourned to the same day in the next week,
at the same time and place, or to such other day and time as the Board of
Directors may determine.
If at the adjourned meeting also, the quorum is not present within half an hour from
the time appointed for holding the meeting, the members present shall a quorum.
In case the Company Law Board calls or directs the calling of a meeting of the
company, when default is made in holding an annual general meeting, the
government may give directions regarding the quorum including a direction that even
one member of the company present in person, or by proxy shall be deemed to
constitute a meeting. Similarly the Company Law Board may, direct a meeting of the
company (other than an annual general meeting) to be called and held where for any
reason it is impracticable to call a meeting and direct that even one member present
in person or by proxy shall be deemed to constitute a meeting.
Chairman
The chairman is the head of the meeting. Generally, the chairman of the Board of
Directors is the Chairman of the meeting. Unless the articles otherwise provide, the
members present in person at the meeting elect one of themselves to be the
chairman thereof on a show of the hands. If there is no Chairman or he is not present

within 15 minutes after the appointed time of the meeting or is unwilling to act as
chairman of the meeting, the directors present may elect one among themselves to
be the chairman of the meeting. If, however no director is willing to act as chairman
or if no director is present within 15 minutes after the appointed time of the meeting,
the members present should choose one among themselves to be chairman of the
meeting. If, after the election of a chairman on a show of hands, poll is demanded
and taken and a different person is elected as chairman, then that person will be the
chairman for the rest of the meeting.
Duties of the chairman
Without a chairman, a meeting is incomplete. The chairman is the regulator of the
meeting. His duties include the following :1. He must ensure that the meeting is properly convened and constituted i.e.
that proper notice has been given, that the required quorum is present, etc.
2. He must ensure that the provisions of the act and the articles in regard to the
meeting and its procedures are observed.
3. He must ensure that business is taken in the order set out in agenda and no
business which is not mentioned in the agenda is taken up unless agreed to
by the members.
4. He must impartially regulate the proceedings of the meeting and maintain
discipline at the meeting.
5. He may exercise his powers of adjournment of the meeting, should he in good
faith feel that such a step is necessary. The chairman has the power to
adjourn the meeting in case of indiscipline at the meeting. A chairman
however does not have the power to stop or adjourn the meeting at his own
will and pleasure. If he adjourns the meeting prematurely, the members
present may decide to continue the meeting and elect another chairman and
proceed with the business for which it was convened.
6. He must exercise his power to order a poll correctly and must order it to be
taken when demanded properly.
7. He must exercise his casting vote bonafide in the interest of the company.
Voting and Demand for Poll
Generally, initially matters are decided at a general meeting by a show of hands. If
the majority of the hands raise their hands in favour of a particular resolution, then
unless a poll is demanded, it is taken as passed. Voting by a show of hands operates
on the principle of "One Member-One Vote". However, since the fundamental voting
principle in a company is "One Share-One Vote", if a poll is demanded, voting takes
place by a poll. Before or on declaration of the result of the voting on any resolution
on a show of hands, the chairman may order suo motu (of his own motion) that a poll
be taken. However, when a demand for poll is made, he must order the poll be taken.
The chairman may order a poll when a resolution proposed by the Board is lost on the
show of hands or if he is of the opinion that the decision taken on the show of hands
is likely to be reversed by poll. When a poll is taken, The decision arrived by poll is
final and the decision on the show of hands has no effect.

A poll is allowed only if the prescribed number of members demand a poll. A poll
must be ordered by the chairman if it is demanded:a. in the case of a public company having a share capital, by any
member or members present in

a. person or by proxy and holding shares in the companyi.

which confer a power to vote on the resolution

not being less than one-tenth of the total voting
power in respect of the resolution, or

ii.

on which an aggregate sum of not less than fifty

thousand rupees has been paid up.

b. in the case of a private company having a share capital, by one

member having the right to vote on the resolution and present
in person or by proxy if not more than seven such members are
personally present, and by two such members present in person
or by proxy, if more than seven such members are personally
present.
c. in the case of any other, by any member or members present in
person or by proxy and having not less than one-tenth of the
total voting power in respect of the resolution.
Motion
Motion means a proposal to be discussed at a meeting by the members. A resolution
may be passed accepting the motion, with or without modifications or a motion may
be entirely rejected. A motion, on being passed as a resolution becomes a decision. A
motion must be in writing and signed by the mover and put to the vote of the
meeting by the chairman. Only those motions which are mentioned in the agenda to
the meeting can be discussed at the meeting. However, motions incidental or
ancillary to the matter under discussion may be moved and passed. Generally, a
motion is proposed by one member and seconded by another member.
Amendment
Amendment means any modification to a motion before it is put to vote for adoption.
Amendment may be proposed by any member who has not already spoken on the
main motion or has not previously moved an amendment thereto. There can be an
amendment to an amendment motion also. A motion must be in writing and signed
by the mover and put to the vote of the meeting by the chairman. An amendment
must not raise any question already decided upon at the same meeting and must be
relevant to the main motion which it seeks to amend. The chairman has the
discretion to accept or reject an amendment on various grounds such as
inconsistency, redundancy, irrelevance, etc. If the amendment is adopted on a vote
by the members, it is incorporated in the body of the main motion. The altered
motion is then discussed and put to vote and if passed, becomes a resolution.
Kinds of Resolutions
Resolutions mean decisions taken at a meeting. A motion, with or without
amendments is put to vote at a meeting. Once the motion is passed, it becomes a

resolution. A valid resolution can be passed at a properly convened meeting with the
required quorum. There are broadly three types of resolutions :1. Ordinary Resolution :
An ordinary resolution is one which can be passed by a simple majority.
I.e. if the votes (including the casting vote, if any, of the chairman), at
a general meeting cast by members entitled to vote in its favour are
more than votes cast against it. Voting may be by way of a show of
hands or by a poll provided 21 days notice has been given for the
meeting.
2. Special Resolution :
A special resolution is one in regard to which is passed by a 75 %
majority only i.e. the number of votes cast in favour of the resolution is
at least three times the number of votes cast against it, either by a
show of hands or on a poll in person or by proxy. The intention to
propose a resolution as a special resolution must be specifically
mentioned in the notice of the general meeting. Special resolutions are
needed to decide on important matters of the company. Examples
where special resolutions are required are :a. To alter the domicile clause of the memorandum from one State
to another or to alter the objects clause of the memorandum.
b. To alter / change the name of the company with the approval of
the central government
c. To alter the articles of association
d. To change the name of the company by omitting "Limited" or
"Private Limited". The Central Government may allow a
company with charitable objects to do so by special resolution
under section 25 of the Companies Act, 1956.
3. Resolution requiring Special Notice :
There are certain matters specified in the Companies Act, 1956 which
may be discussed at a general meeting only if a special notice is given
regarding the proposal to discuss these matters at a meeting. A special
notice enables the members to be prepared on the matter to be
discussed and gives them time to indicate their views on the
resolution. In case special notice of resolution is required by the
Companies Act, 1956 or by the articles of a company, the intention to
propose such a resolution must be notified to the company at least 14
days before the meeting. The company must within 7 days before the
meeting give the notice of the proposed resolution to its members.
Notice of the resolution is required to be given in the same way in
which notice of a meeting is given, or if that is not practicable, the
company may give notice by advertisement in a newspaper having an
appropriate circulation or in any other manner allowed by the articles,
not less 7 days before the meeting.
The following matters requiring Special Notice before they are
discussed before tha meeting :-

a. To appoint at an annual general meeting appointing an auditor

a person other than a retiring auditor.
b. To resolve at an annual general meeting that a retiring auditor
shall not be reappointed.
c. To remove a director before the expiry of his period of office.
d. To appoint another director in place of removed director.
e. Where the articles of a company provide for the giving of a
special notice for a resolution, in respect of any specified matter
or matters.
Please note that a resolution requiring special notice may be passed
either as an ordinary resolution (Simple majority) or as a special
resolution (75 % majority).
Circulation of Member's Resolution
Generally, the Board of Directors prepare the agenda of the meeting to be sent to all
members of the meeting. A member, by himself has very little say in deciding the
agenda. However, there are provisions in the Companies Act which enable members
to introduce motions at a meeting and give prior notice of their intention to do so to
all other members of the company. If members having one twentieth of the total
voting rights of all members having the right to vote on a resolution or if 100
members having the right to vote and holding paid-up capital of Rs1,00,000 or more,
require the company to do so, the company must :1. Give to the members entitled to receive notice of the next annual general
meeting, notice of any resolution which may be properly moved and is
intended to be moved at that meeting; and
2. Circulate to members entitled to have notice of any general meeting sent to
them, any statement of not more than 1,000 words with respect to the matter
referred to in any proposed resolution, or any business to be dealt with at that
meeting.
The expenses for this purpose must be borne by the requisitionists and must be
tendered to the company. The requisition, signed by all the requisitionists, must be
deposited at the registered office of the company at least 6 weeks before the
meeting in the case of resolution and not less than 2 weeks before the meeting in
case of any other requisition together with a reasonable sum to meet the expenses.
However, where a copy of the requisition requiring notice of resolution has been
deposited at the registered office of the company and an annual general meeting is
called for a date six weeks or less after the requisition is deposited, the copy though
not deposited within the prescribed time is deemed to have been properly deposited.
The company is required to serve the notice of resolution and/or the statement to the
members as far as possible in the manner and so far as practicable at the same time
as the notice of the meeting ; otherwise as soon as practicable thereafter.
However, a company need not circulate a statement if the Court, on the application
either of the company or any other aggrieved person, is satisfied that the rights so
conferred are being abused to secure needless publicity or for defamatory purposes.

Secondly a banking company need not circulate such statement, if in the opinion of
its Board of directors, the circulation will injure the interest of the company.
Registration of Resolutions and Agreements
A copy of each of the following resolutions along with the explantory statement in
case of a special business and agreements must, within 30 days after the passing or
making thereof, be printed or typewritten and duly certified under the signature of an
officer of the company and filed with the Registrar of Companies who shall record the
same :1. All special resolutions
2. All resolutions which have been unanimously agreed to by all the members
but which, if not so agreed, would not have been effective unless passed as
special resolutions
3. All resolutions of the board of directors of a company or agreement executed
by a company, relating to the appointment, re-appointment or renewal of the
appointment, or variation of the terms of appointment, of a managing director
4. All resolutions or agreements which have been agreed to by all members of
any class of members but which, if not so agreed, would not have been
effective unless passed by a particular majority or in a particular manner and
all resolutions or agreements which effectively bind all members of any class
of shareholders though not agreed to by all of those members
5. All resolutions passed by a company conferring power upon its directors to sell
or dispose of the whole or any part of the company's undertaking; or to
borrow money beyond the limit of the paid-up share capital and free reserves
of the company; or to contribute to charities beyond Rs50000 or 5 per cent of
the average net profits
6. All resolutions approving the appointment of sole selling agents of the
company
7. All copies of the terms and conditions of appointment of a sole selling agent or
sole buying or purchasing agent
8. Resolutions for voluntary winding up of a company
Adjournment
Adjournment means suspending the proceedings of a meeting for the time being so
that the meeting may be continued at a later date and time fixed in that meeting
itself at the time of such adjournment or to decided later on. Only the business not
finished at the original meeting can be transacted at the adjourned meeting.
The majority of members at a meeting may move an adjournment motion at a
meeting. If the chairman adjourns the meeting, ignoring the views of the majority,
the remaining members can continue the meeting. The chairman cannot adjourn the
meeting at his own discretion without there being a good cause for such an
adjournment. Where the chairman, acting bona fide within his powers, adjourns the
meeting as per the view of the majority, the minority members cannot to continue
with such meeting and, if they do the proceedings there will be null and void.

An adjourned meeting is merely the continuation of the original meeting and

therefore, a fresh notice is not necessary, if the time, date and place for holding the
adjourned meeting are decided and declared at the time of adjourning it. If a meeting
is adjourned without stipulation as to when it will be continued, fresh notice of the
adjourned meeting must be given.
Postponement
Postponement of a meeting means defering the holding of the meeting itself at a
later date. Postponement is done by the Board of Directors or by the person
convening the meeting. In case of adjournment, it is the decision of the majority of
the members present at the meeting itself.
Dissolution
Dissolution of a meeting means termination of a meeting. The meeting no longer
exists once it has been dissolved. If within half an hour after the time appointed for
holding a general meeting; the quorum is not present, the meeting shall stand
dissolved if it was called on requisition by members.
Minutes of Proceedings of Meetings
Every company must keep minutes of the proceedings of general meetings and of the
meetings of board of directors and its committees. The minutes are a record of the
discussions made at the meeting and the final decisions taken thereat.
Every company must keep minutes containing details of all proceedings at the
meetings. The pages of the minute books must be consecutively numbered and the
minutes must be recorded therein within 30 days of the meeting. They have to be
written directly on the numbered pages. Pasting or attaching of papers is not allowed.
Each page of every such minutes books must be initialed or signed and last page of
the record of proceedings of each meeting in such books must be dated and signed
by :a. in the case of the meeting of the Board of directors or committee thereof, by
the chairman of that meeting or that of the succeeding meeting, and
b. in the case of a general meeting, by the chairman of the same meeting within
the aforesaid 30 days or in the event of the death or inability of that chairman
within the period, by a director duly authorised by the Board of directors for
the purpose.
The Company Law Board, however, may not object if minutes are maintained in loose
leaf form provided all other procedural requirements are complied with and all
possible safeguards against manipulation or interpolation of the minutes are ensured.
The loose leaves must be bound at reasonable intervals. Entering the minutes in a
bound minute book by a chemical process, which does not amount to attachment to
any book by pasting or otherwise is permissible provided on the mechanical
impression of the minutes, the original signatures of the Chairman are given on each
page. All appointments of officers made at any of the meetings must be included in
the minutes of the meeting. In the case of a meeting of the Board of directors or its
Committee, the minutes must also state the names of directors present at the
meeting and the names of directors, if any, dissenting from, or not concurring with a
resolution passed at the meeting.
The chairman may exclude from the minutes any matters which are defamatory,
irrelevant or immaterial or which are detrimental to the interests of the company. The

discretion of the Chairman with regard to the inclusion or exclusion of any matter is
absolute and unfettered.
Where minutes of the proceedings of any meeting have been kept properly, they are,
unless the contrary is proved, presumed to be correct, and are valid evidence that
the meeting was duly called and held, and all proceedings thereat have actually
taken place, and in particular, all appointments of directors or liquidators made at the
meeting shall be deemed to be valid.
The minute books of the proceedings of general meetings must be kept the
registered office of the company. Any member has a right to inspect, free of cost
during business hours at the registered office of the company, the minutes books
containing the proceedings of the general meetings of the company. Further, any
member shall be entitled to be furnished, within 7 days after he has made a request
to the company, with a copy of any minutes on payment of Rupee One for every
hundred words or fraction thereof. If any inspection is refused or copy not furnished
within the time specified, every officer in default shall be punishable with fine up to
Rs. 500 for each offence. The Company Law Board may also by order compel an
immediate inspection or furnishing of a copy forthwith. But the minutes books of the
board meetings are not open for inspection of members
Minimum number of directors
Every public company ( other than a deemed public company ) must have at least
three directors. Every other company must have at least two directors.
The directors of a company collectively are referred to as the "Board of directors" or
"Board". Only individuals can be appointed as directors. No body corporate,
association or firm can be appointed director of a Company.
In case the first directors are not appointed by the promoters of a company,
subscribers of the memorandum who are individuals, shall be deemed to be the
directors of the company, until the directors are duly appointed.
Appointment of directors and proportion of those who are to be retire by
rotation
Unless that articles provide for the retirement of all directors at every annual general
meeting, at least two-thirds of the total number of directors of a public company, or
of a private company which is subsidiary of a public company, must :(a) retire by rotation
(b) be appointed by the company in general meeting, except where otherwise
provided by the Companies Act.
The remaining directors in the case of any such company, and the directors generally
in the case of a private company which is not a subsidiary of a public company, must
also be appointed by the company in general meeting, unless otherwise provided in
any regulations in the articles of the company.
Ascertainment of directors retiring by rotation and filling of vacancies
At every annual general meeting of a public company, or a private company which is
a subsidiary of a public company, one-third of the directors liable to retirement by

rotation or if their number is not three or a multiple of three, then, the number
nearest to one-third, shall retire from office.
The directors to retire by rotation at every annual general meeting shall be those who
have been longest in office since their last appointment, but as between persons who
became directors on the same day, those who will have to retire is to be determined
by lot, unless otherwise agreed to among themselves.
At the annual general meeting at which a director retires as aforesaid the company
may fill up the vacancy by appointing the retiring director or some other person
thereto. In other words, a retiring director is eligible for re-appointment at the same
meeting.
If the place of the retiring director is not so filled up and the meeting has not
expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the
same day in the next week, at the same time and place, or if that day is a public
holiday, till the next succeeding day which is not a public holiday, at the same time
and place.
If at the adjourned meeting also, the place of the retiring director is not filled up and
that meeting also has not expressly resolved not to fill the vacancy the retiring
director shall be deemed to have been re-appointed at the adjourned meeting, unless

i.
ii.

a resolution for the re-appointment of such director has been put to the
meeting and lost
the retiring director, has by a notice in writing addressed to the company or
its Board of directors, expressed his unwillingness to be so re-appointed

iii.

he is not qualified or is disqualified for appointment

iv.

a resolution, whether special or ordinary, is required for his appointment or reappointment in virtue of any provisions of this Act.

Right of persons other than retiring directors to stand for directorship

A person who is not a retiring director shall, subject to the provisions of this Act, be
eligible for appointment to the office of director at any general meeting, if he or some
member intending to propose him has, given notice in writing to the company at its
registered office of at least 14 days before the meeting, signifying his candidature for
the office of director or the intention of such member to propose him as a candidate
for that office along with a deposit of rupees five hundred ( refundable on successful
election ).
The company must inform its members of such candidature by giving at least 7 days
prior notice. Such notice may not be required if the company advertises such
candidature at least 7 days before the meeting in at least 2 newspapers circulating in
the place where the registered office of the company is situated, one of which must
be in English and the other in the regional language.
This provision shall not apply to a private company, unless it is a subsidiary of a
public company.

Right of company to increase or reduce the number of directors

A company, at a general meeting may, by ordinary resolution, increase or reduce the
number of its directors within the limits fixed in that behalf by its articles.
Increase in number of directors to require Government sanction
In the case of a public company, or a private company which is a subsidiary of a
public company, any increase in the number of its directors, beyond the maximum
number of directors permitted by the Articles of the Company as first registered, shall
not have any effect unless approved by the Central Government and shall become
void if, and in so far as, it is disapproved by that Government.
However, where such permissible maximum is 12 or less, no approval of the Central
Government is required provided the increase does not increase the number of
directors beyond 12.
Additional directors
The Board of directors may appoint additional directors if such power is conferred on
it by the articles of the company. Such additional directors shall hold office only up to
the date of the next annual general meeting of the company.
Provided further that the number of the directors and additional directors together
shall not exceed the maximum strength fixed for the Board by the articles.
Filling of casual vacancies among directors
In the case of a public company or a private company which is a subsidiary of a
public company, if the office of any director appointed by the company in general
meeting is vacated before his term of office will expire in the normal course, the
resulting casual vacancy may, in default of and subject to any regulations in the
articles of the company, be filled by the Board of directors at a meeting of the Board.
Any person so appointed shall hold office only up to the date up to which the director
in whose place he is appointed would have held office if it had not been vacated as
aforesaid.
Appointment and term of office of alternate director
The Board of directors of a company may, if so authorised by its articles or by a
resolution passed by the company in general meeting, appoint an alternate director
to act for a director during his absence for a period of not less than three months
from the State in which meetings of the Board are ordinarily held.
An alternate director so appointed shall not hold office for a period longer than the
period for which the original director hold office and vacate office if and when the
original director returns to the State in which meetings of the Board are ordinarily
held.
Appointment of directors to be voted on individually
At a general meeting of public company or of a private company which is a subsidiary
of a public company, each director has to be appointed separately by a separate
resolution. However, appointment of more than one director through the same
resolution will be valid if it has been passed unanimously. A resolution moved in
contravention of the aforesaid provision shall be void, whether or not objection was
taken at the time to its being so moved:

Consent of candidate for directorship to be filled with Registrar

A person shall not act as director of a company unless he has, by himself or by his
agent authorised in writing, signed and filed with the Registrar, a consent in writing
to act as such director within 30 days of his appointment. This provision shall not
apply to a private company unless it is a subsidiary of a public company.
Option to company to adopt proportional representation for the
appointment of directors
If the articles of a company provide for the appointment of not less than two-thirds of
the total number of the directors of a public company or of a private company which
is a subsidiary of a public company, according to the principle of proportional,
representation, whether by the single transferable vote or by a system of cumulative
voting or otherwise. Such appointments may be made once in every three years and
interim casual vacancies being filled by the Board of Directors as Casual Vacancies.
This may enable minority shareholders to have a proportional representation on the
Board of Directors of the company.
Restrictions on appointment or advertisement of director
A person shall not be capable of being appointed director of a company by the
articles, unless before the registration of the articles, the publication of the
prospectus, or the filing of the statement in lieu of prospectus, as the case may be ,
he has, by himself or by his agent authorised in writing
(a) signed and filed with the Registrar a consent in writing to act as such director; and
(b) either ;-

i.
ii.

signed the memorandum for shares not being less in number or value
than that of his qualification shares, if any, or
taken his qualification shares, if any, from the company and paid or
agreed to pay for them; or

iii.

signed and filed with the Registrar and undertaking in writing to take
from the company his qualification shares, if any, and pay for them; or

iv.

made and filed with the Registrar an affidavit to the effect that shares,
not being less in number or value than that of his qualification shares,
if any, are registered in his name.

Qualification shares are the minimum number of shares a person must own, as
provided in the articles of the company, in order to qualify to become a director of
the company. Qualification shares must be acquired by a director within 2 months of
his appointment. The articles cannot require a director to acquire qualification shares
within a shorter period. The face value of the qualification shares cannot exceed five
thousand rupees, or if the face value of one share is more than five thousand rupees,
then the qualification share will be one qualification share.
Every director, not being a technical director of a director appointed, by the Central
or a State Government, shall within two months after his appointment file with the
company a declaration specifying the qualification shares held by him. If, after the
expiry of the said period of two months, any person acts as a director of the company

when he does not hold the qualification shares, he shall be punishable with the fine
which may extend to fifty rupees for every day between such expiry and the last day
on which he acted as a director.
The above provisions do not apply to-

a. a company not having a share capital;

b. a private company;
c. a company which was a private company before becoming a public company;
or

d. a prospectus issued by or on behalf of a company after the expiry of one year

from the date on which the company was entitled to commence business.
Managing Directors
Managing Director means a person who, by virtue of an agreement with the company
or of a resolution passed by the company in a general meeting or by its Board of
directors or by virtue of its memorandum or articles of association, is entrusted with
substantial powers of management which could not otherwise be exercisable by him
and includes a director occupying the position of a managing director, by whatever
name called. The power merely to do administrative acts of a routine nature, when so
authorised by the Board such as the power to affix the common seal of the company
on any document or to draw and endorse any cheque on the account of the company
in any bank or to draw and endorse any negotiable instrument or to sign any share
certificate or to direct registration of share transfers will not be deemed to be
included within substantial powers of management. The managing director must
exercise his powers subject to the superintendence, control and direction of the
Board.
Certain persons not to be appointed managing directors
No company can, appoint or employ, or continue the appointment or employment of,
any person as its managing or whole time director who-

a. is an undischarged insolvent, or has at any time been adjudged an insolvent

b. suspends, or has at any time suspended, payment to his creditors or makes,
or has at any time made, a composition with them

c. is, or has at any time been, convicted by a Court in India of an offence

involving moral turpitude.
Every public company or a private company which is a subsidiary of a public
company, having a paid up share capital of Rs. 5 crores or more must have a
managing director or wholetime director or manager.
Appointment of managing director or wholetime director or manager of a public
company or a private company which is a subsidiary of a public company requires the
approval of the Central Government unless the appointment is in accordance with the
conditions specified in Schedule XIII of the Companies Act, 1956 and a returm in Form
25 C is filed within 30 days of appointment.

Application for approval must be made to the Central Government if Form 25 A within
90 days of appointment. The Central Government shall grant its approval if it is
satisfied that :-

a. the managing director or wholetime director or manager is in its opinion, a fit

and proper person

b. such appointment is not against public interest

c. the terms and conditions of the appointment are fair and reasonable.
The Central Government may grant approval for a period less that the period for
which approval is sought.
In case the approval of the Central Government is refused, the appointed person shall
vacate his office on the date of communication of the decision of the Central
Government to the company and if he omits to do so, he shall be liable to a fine of
Rs. 500/- for each day of default.
The Central Government, on information received by it or suo moto, is of the opinion
that such appointment made without approval of the Central Government
contravenes the conditions given in Schedule XIII, it may refer the matter to the
Company Law Board for decision.
On receipt of the order of the Company Law Board against the company,:-

a. The company shall be liable to fine of upto Rs. 5000/b. Every officer of the company in default shall be liable to a fine of Rs. 10000/c. The appointment shall be deemed to have come to an end and the appointed
person shall in addition to being liable to pay a fine of Rs. 10000/-, refund to
the company the entire amount of remuneration received by him from such
appointment.
Number of companies of which one person may be appointed managing
director
No public company or private company which is a subsidiary of a public company
can, appoint or employ any person as managing director, of he is either the
managing director or the manager of any other company, except as provided below.
A public company or a private company which is the subsidiary of a public company
may appoint or employ a person as its managing director, if he is the managing
director or manager of one, and of not more than one, other company provided that
such appointment or employment is made or approved by a unanimous resolution
passed at a meeting of the Board and of which meeting, and of the resolution to be
moved thereat, specific notice has been given to all the directors then in India.
In addition to the above provision, the Central Government may, by order, permit any
person to be appointed as a managing direct of more than two companies if the
Central Government is satisfied that it is necessary that the companies should, for
their proper working, function as a single unit and have a common managing director.

Managing director not to be appointed for more than five years at a time
No company can, appoint or employ any individual as its managing director for a
term exceeding five years at a time.
However, a person may be re-appointed, re-employed, or his term of office extended
by further periods not exceeding five years on each occasion. Such re-appointment,
re-employment or extension cannot be sanctioned earlier than two years from the
date on which it is to come into force.
This provision does not apply to a private company unless it is a subsidiary of a public
company.
Disqualifications of directors
A person shall not be capable of being appointed director of a company, if,

a. he has been found to be of unsound mind by a Court of competent jurisdiction

b.

and the finding is in force

he is an undischarged insolvent

c. he has applied to be adjudicated as an insolvent and his application is pending

d. he has been convicted by a Court of any offence involving moral turpitude and
sentenced in respect thereof to imprisonment for not less than six months,
and a period of five years has not elapsed from the date of expiry of the
sentence

e. he has not paid any call in respect of shares of the company held by him,
whether alone or jointly with others, and six months have elapsed from the
last day fixed for the payment of the call

f. an order disqualifying him for appointment as director has been passed by a

court and is in force unless the leave of the court has been obtained for his
appointment in pursuance of that section.
The Central Government may, by notification in the Official Gazette, remove :-

i.
ii.

the disqualification incurred by any person in virtue of clause (d) either

generally or in relation to any company or companies specified in the
notification; or
the disqualification incurred by any person in virtue of clause (e)

A private company which is not a subsidiary of a public company may, by its articles,
provide that a person shall be disqualified for appointment as a director on any
grounds in addition to those specified above.
No person to be a director of more than twenty companies
No person shall, hold office at the same time as director in more than twenty
companies.
Where a person already holding the office of director in twenty companies is
appointed, as a director of any other company, the appointment :-

a. shall not take effect unless such person has, within fifteen days thereof,
b.

effectively vacated his office as director in any of the companies in which he

was already a director; and
shall become void immediately on the expiry of the fifteen days if he has not,
before such expiry effectively vacated his office as director in any of the other
companies aforesaid.

Where a person already holding the office of director in nineteen companies or less is
appointed, as a director of other companies, making the total number of his
directorships more than twenty, he shall choose the directorships which he wishes to
continue to hold or to accept so however that the total number of the directorships,
old and new, held by him shall not exceed twenty.
None of the new appointments of director shall take effect until such choice, is made;
and all the new appointments shall become void if the choice is not made within
fifteen days of the day on which the last of them was made.
In calculating the number of companies of which a person may be a director, the
following companies shall be excluded :-

a. a private company which is neither a subsidiary nor a holding company of a

public company

b. an unlimited company
c. an association not carrying on business for profit or which prohibits the
payment of dividend

d. a company in which such person is only an alternate director, that is to say, a

director who is only qualified to act as such during the absence or incapacity
of some other director.
Any person who holds office, or acts, as a director of more than twenty companies in
contravention of the foregoing provisions shall be punishable with fine which may
extend to five thousand rupees in respect of each of those companies after the first
twenty.
Vacation of office by directors
The office of a director shall become vacant if :-

a. he fails to obtain within the time specified ( 2 months ) or at any time

b.

thereafter ceases to hold, the share qualification, if any, required of him by

the articles of the company
he is found to be of unsound mind by a Court of competent jurisdiction

c. he applies to be adjudicated an insolvent

d. he is adjudged an insolvent
e. he is convicted by a Court of any offence involving moral turpitude and is
sentenced in respect thereof to imprisonment for not less than six months

f. he fails to pay any call in respect of shares of the company held by him,
whether alone or jointly with others, with in six months from the last date
fixed for the payment of the call unless the Central Government has, by
notification in the Official Gazette removed such disqualification.

g. he absents himself from three consecutive meetings of the Board of directors,

or from all meetings of the Board, for a continuous period of three months,
whichever is longer, without obtaining leave of absence from the Board

h. he, whether by himself or by any person for his benefit or on his account or
any firm in which he is a partner or any private company of which he is a
director, accepts a loan, or any guarantee or security for a loan, from the
company in contravention of section 295 ( without due authorization of the
Central Government )

i. he acts in contravention of section 299 ( failure to disclose interest in any

transaction with the company )

j. he becomes disqualified by an order of Court under section 203

k. he is removed by the members by- resolution at a general meeting
l. having been appointed a director by virtue of his holding any office or other
employment in the company, he ceases to hold such office or other
employment in the company.
The disqualification referred to in clauses (d). (e) and (j) shall not take effect,-

a. for thirty days from the date of the adjudication sentence or order
b. where any appeal or petition is preferred within the thirty days aforesaid
against the adjudication, sentence or conviction resulting in the sentence, or
order until the expiry of seven days from the date on which such appeal or
petition is disposed of

c. where within the seven days aforesaid, any further appeal or petition is
preferred in respect of the adjudication, sentence, conviction, or order, and
the appeal or petition, if allowed, would result in the removal of the
disqualification, until such further appeal or petition is disposed of.
If a person functions as a director, knowing that his office has vacated on account of
the above provisions, shall be liable to a fine upto Rs. 500/- per day of default.
A private company which is not a subsidiary of a public company may, by its articles,
provide, that the office of director shall be vacated on any grounds in addition to
those specified in above
Removal of directors
A company may, by ordinary resolution, remove a director (not being a director
appointed by the Central Government in pursuance of section 408) before the expiry
of his period of office. This provision shall not apply where the company has availed
itself of the option given to it of proportional representation on the Board of Directors

to appoint not less than two-thirds of the total number of directors according to the
principle of proportional representation.
Special notice shall be required of any resolution to remove a director, or to appoint
somebody instead of a director so removed at the meeting at which he is removed.
On receipt of notice of a resolution to remove a director under this section, the
company shall forthwith send a copy thereof to the director concerned, and the
director (whether or not he is a member of the company) shall be entitled to be heard
on the resolution at the meeting.
Where notice is given of a resolution to remove a director and the director concerned
makes representations in writing to the company (not exceeding a reasonable length)
and requests their notification to members of the company, the company shall,
unless the representations are received by it too late for it to do so :-

a. in any notice of the resolution given to members of the company state the
b.

fact of the representations having been made; and

send a copy of the representations to every member of the company to whom
notice of the meeting is sent

If a copy of the representations is not sent as aforesaid because they were received
too late or because of the company's default, the director may (without prejudice to
his right to be heard orally) require that the representations shall be read out at the
meeting.
However, copies of the representations need not be sent out and the representations
need not be read out at the meeting if, on the application either of the company or of
any other person who claims to be aggrieved, the Company Law Board is satisfied
that the rights conferred by this provision are being abused to secure needless
publicity for defamatory matter and the Company Law Board may order the
company's costs on the application to be paid in whole or in part by the director.
A vacancy created by the removal of a director if he had been appointed by the
company in general meeting or by the board in on a casual vacancy, be filled by the
appointment of another director in his stead by the meeting at which he is removed,
provided special notice of the intended appointment has been given.
A director so appointed shall hold office until the date up to which his predecessor
would have held office if he had not been removed as aforesaid.
If the vacancy is not filled, it may be filled as a causal vacancy in accordance with the
provisions.
The above provisions of removal of a director shall not affect :-

a. any compensation or damages payable to him in respect of the termination of

b.

his appointment as director or of any appointment terminating with that as

director
any other power to remove a director which may exist apart from this
provision.