Short notice of agm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 September 2011 A listed company has given barely 8 to 9 days notice of its AGM to its shareholders which is in contravention of S.53 of the Companies' Act,1956. Can a shareholder having sufficient proof of the short notice, restrain the chairman of the meeting from commencing the proceedings of the meeting? What happens to the AGM,if the chairman listens to the aggrieved shareholder? If the chairman, at the insistence of the MD or other directors still continues with the proceedings, would the resolutions have validity? Would the holding of AGM be considered as illegal & S. 166 would be contravened. What would be the legal remedies? Can High Court, SEBI, ROC, CLB, BSE/NSE be approached in such a scenario? Request you to please throw light on the issues raised.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
Follow

23 September 2011 As provided in section 171, an advance notice of not less than 21 days shall be given for calling a general meeting of members. The requirement of 21 days means 21 clear days, exclusive of the day when notice is served and the day when the meeting is held [Bharat Kumar Dilwalia v Bharat Carbon and Ribbon Manufacturing Co. Ltd. (1973) 43 Comp Cas 197 (DB)(Del). See also Nagappa Chettiar (N.V.R.) v Madras Race Club (1949) 19 Comp Cas 175 (Mad)]. Thus, there should be at least 23 clear days for the despatch of a notice for a general meeting.

Calling of a general meeting at shorter notice:

Section 171(2) of the Act, provides that an Annual general meeting of a company can be called by giving shorter notice of less than 21 days, subject to consent being given by all the members entitled to attend and vote thereat.

Members shall give their consent in the prescribed Form 22A for convening a general meeting by shorter notice. The consent shall be obtained from the members entitled to attend the meeting either before or at the time of the meeting.

Sub-section (2) of section 171 is mandatory and consents means 'consent of members entitled to attend and vote' and 'not of members entitled to vote and present'. [Nagappa Chettiar (N.V.R.) v Madras Race Club (1949) 19 Comp Cas 175 (Mad)]

Consent may be obtained at the meeting, prior consent is not necessary Even though consent of shareholders to shorter notice for meeting at which a special resolution is passed, is not obtained prior to meeting, the consent obtained thereafter would validate the resolution. [Parikh Engg. & Body Building Co. Ltd., In re (1975) 45 Comp Cas 157 (Pat)]

So if consent is not given the resolution stands invalid.

Message likes : 1 times

RG - A Helping Hand

RG - A Helping Hand (Expert)
Follow

23 September 2011 To hold AGM on shorter notice 100% consent of members is required. If you have not given your consent and you can prove that than you can challenge the validity of AGM.

RG

Upgrade to CAclubindia Pro. Subscribe Now!

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2011 Further to this query since the period of 6 months would have elapsed on September 30, how can the AGM be held subsequently?