Dear Adarsh and Ankur

thank you very much for your much appreciated help and concern !

From what i have read on section 169, it is mentioned that it is the Board of directors that shall call the EGM of the company. So then we come back again into the same problem : this resolution to call an EGM has to be approved by the 2 directors, isn't it ?

Or can the managing director take that decision alone according to the request of one member holding 99;9% of the company share, even if this member is him ?

If not then what to do ?

I am trying to find the text of section 186 but cannot get it form internet.

This link is empty : https://www.vakilno1.com/bareacts/companiesact/s186.htm

Could you please send me the link or copy and paste the section 186 ?

Regarding the transfer of shares this is a problem because i am a foreigner (french national) and i have no relatives in India to whom i could transfer the shares i dont know also if the board of directors has to agree also that decision or not ...

Regarding the section 174 and the "s" in member"s", my understanding is that even ONE MEMBER will be in the spirit of the law because it is mentioned at 1) quorum is 2 for pvt ltd and at 5) if quorum is not present then members present shall be a quorum (but if quorum is not present that means there could be only one person. So that person should be accepted as the quorum otherwise the section 174 is meaningless regarding the pvt ltd companies and not applicable.

What are your suggestions ?

Very kindly

alex

186. Power of Tribunal/Court to order meeting to be called.-

(1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the Tribunal/Court may, either of its own motion or 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,-

(a) order a meeting of the company to be called, held and conducted in such manner as the Court thinks fit; and

(b) give such ancillary or consequential directions as the Court thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act and of the company's articles.

Explanation.-The directions that may be given under this sub- section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.

one query : plz suggest.

the question is to conduct a valid EGM for removing the director and appointing another one. OR conduct a valid BM for the same or to effect transfer.

let me connect the query to this case. MrA ( with 99%) and Mr,.B(1%). private ltd company.

Question 1 : what if B remains absent for three consecutive meetings without leave of absence. As per section 283 (1)(g): the office of director becomes vacant . Now what is the procedure for taking in another director since the minimum number of director need be 2. How can we conduct the BM for without quorum .

Question no 2: Isn't an exit through section 284 read with section 174(5) and section 171(2)(ii) , possible?

Regards

Neeta

From what i have read on section 169, it is mentioned that it is the Board of directors that shall call the EGM of the company. So then we come back again into the same problem : this resolution to call an EGM has to be approved by the 2 directors, isn't it ?

Or can the managing director take that decision alone according to the request of one member holding 99;9% of the company share, even if this member is him ?

If not then what to do ?

Re :  The board cannot deny if requisition is made u/s 169. even if board denied that GM, it will still be valid even if it is held at otherthan registered office. Thats y i choose this route of section 169. but the problem is quorum in this meeting. Quorum can be exists if Mr. A transfers some shares to other relatives & after that they makes requisition for EGM to replace the Director Mr.B.. but the problem is how to register the transfer of shares by Mr.A to others WITHOUT BOARD MEETING?

I am trying to find the text of section 186 but cannot get it form internet.

This link is empty : https://www.vakilno1.com/bareacts/companiesact/s186.htm

Could you please send me the link or copy and paste the section 186 ?

 
Re :  as provided by Ankur Ji in above post.

Regarding the transfer of shares this is a problem because i am a foreigner (french national) and i have no relatives in India to whom i could transfer the shares i dont know also if the board of directors has to agree also that decision or not ...

Re : the main problem is Registering the transfer without board meeting which is not possible as Ankur ji also agreed with this (he is having good command in company law matters).

Regarding the section 174 and the "s" in member"s", my understanding is that even ONE MEMBER will be in the spirit of the law because it is mentioned at 1) quorum is 2 for pvt ltd and at 5) if quorum is not present then members present shall be a quorum (but if quorum is not present that means there could be only one person. So that person should be accepted as the quorum otherwise the section 174 is meaningless regarding the pvt ltd companies and not applicable.

 Re : Agreed wid ur interpretation. (Really u have good understanding of Law)

Yes you may consider section 174(5) meaningless where there is only 1 member left. This is well settled legal opinion.

Do some research on the word impracticable used in section 186 to understand the true need of section 186. This is a very interesting and may help you during your professional life.

Dear Neeta,

Route of section 283(1)(g) is a time consuming route. I think you have missed the 3 months period read with whichever is longer phrase.

Further i can easily escape myself from section 283(1)(g) by giving a valid lave of absence letter to the company with a delivery proof. What Say???

Originally posted by : Neeta
	one query : plz suggest. the question is to conduct a valid EGM for removing the director and appointing another one. OR conduct a valid BM for the same or to effect transfer. let me connect the query to this case. MrA ( with 99%) and Mr,.B(1%). private ltd company. Question 1 : what if B remains absent for three consecutive meetings without leave of absence. As per section 283 (1)(g): the office of director becomes vacant . Now what is the procedure for taking in another director since the minimum number of director need be 2. How can we conduct the BM for without quorum . Question no 2: Isn't an exit through section 284 read with section 174(5) and section 171(2)(ii) , possible? Regards Neeta

Dear Neeta,

Answer 1 :  The Company will be in default of Sec 252.  It is Casual Vacancy but Sec 262 is not applicable to pvt companies. So the next appointment will be as per AOA or u/s 258 in EGM by OR subject to sec 252,255 & 259.

Here again, EGM is impracticable due to lack of quorum. So go wid the route of Sec 186.

Originally posted by : Ankur Garg
	Do some research on the word impracticable used in section 186 to understand the true need of section 186. This is a very interesting and may help you during your professional life.

Yes, I will surely search on this.

ofcourse ankur sir , i haven't missed that in this case B can easily escape by giving leave of absence but my query was WHAT if B neither attends the meeting nor gives leave of absence( imagine if B has eloped ) .What should A do to conduct a Board meeting and appoint another director. I think here again our act provides for 186 or is there any other remedy.

Ofcourse , in this case , section 186 solves the issue , very straight and legal way out. ( If i m right its for the meeting of the company and not Board ) so thru ' 186 section 284 can be effected.

I was just confusing out with the interpretation of Mr.Alex about section 174(5): And ofcourse as said by u : its a well settled legal opinion. And hence interpretations apart : Minimum number must be 2 to form the quorum.

ok, plz one more query : In a Board meeting ( 2 directors  only ) One say YES and the other NO. can the one being the director and chairman , cast his vote under regulation 74(2) of Table A  to get the resolution passed ??? plz advice.

REFERENCE TO SECTION 186 :

The main principles involved in the application of section 186 have been clearly brought out in Ruttonjee & Co. Ltd., In re (1970) 40 Comp. Cas. 491 (Cal.) , reproduced below:

     u  (i) Ordinarily, the Court would not interfere in the domestic management of a company conducted in accordance with its articles,

     u  (ii) the discretion conferred on the Court under section 186 should be sparingly and with caution used such that the Court does not become a shareholder or a director of the company trying to participate in the internecine squabbles within the company,

     u  (iii) the word ‘impracticable’ means impracticable from a reasonable point of view,

     u  (iv) the Court should take a common sense view of the matter and must act as a prudent man of business,

     u  (v) a prudent man of business has not a sensitive, officious view of intervention in case of every rivalry between two groups of directors; prudence demands that the Court ordinarily keeps itself aloof from participating in quarrels of rival groups of directors or shareholders,

     u  (vi) where the meeting can be called only by the directors and there exist serious doubts and controversies as to who the directors are, and there appears the possibility that one or the other or both the meetings called by the rival groups of directors may be invalid, the Court ought not to expose the shareholders to uncertainties—and hold that a position has arisen which makes it ‘impracticable’ to convene a meeting in any manner in which meetings of the company may be called,

     u  (vii) upon the consideration of all the facts and circumstances of a case, when it can say with a reasonable approach to certainty or even prima facie that a meeting called, in the manner in which meetings are ordinarily called under the Act or under the articles, would be invalid, the Court should exercise its powers under section 186, and

     u  (viii) before exercising the power in its discretion under section 186, the Court must be satisfied—when the director or shareholder makes the application—that it has been made bona fide in the larger interests of the company for removing a deadlock otherwise irremovable.

I think, Table A is not applicable in case of private company..

Table A is applicable on that public company which has adopted the Table A & applicable only on those points in respect of which AOA is silent..

No doubts , Table A is applicable to Pvt co also . Where AOA is silent ( the AOA specifies the application of Table A unless otherwise prvided in AOA ) : TO private company also.

Neeta, all your points are valid as always.

In the situation above --- only 2 directors (same 2 as shareholders) along with dispute among them----BM is not possible due to lack of quorum u/s 287 and even GM is also not possible due to lack of quorum u/s 174.

Here question of section 174(5) is not possible coz with one director you can’t summon a GM. However calling of EGM with one director is possible under regulation-48(2) provided you haven’t exclude Table A.

Now let’s presume that you are able to call EGM with the help of Table A provision but still problem of quorum shall persists. Here section 174(5) is not going to help you coz section 174(5) doesn’t recognize one man meeting.

So as per my suggestion route of section-186 is the best solution. In this GM control will be in the hands of tribunal/CLB and you can’t pass anything you want. So use this meeting to increase strength of board.

Later on with increased board of director’s strength you can do anything by a validly called BM and consequent GM.

Hope am able to bring some clarity.

Neeta,

For casting vote query I’d request you to have a look at page no. 11 of 23 of my handwritten notes.

Yes in case of equality of votes he can use his casting vote. But there are certain preconditions for this:

1. A validly called BM

2. Compliance with section 287.

3. Valid equality of votes

4. This casting vote power is available to the original routine chairman appointed by board under regulation 76(1) and not available to the chairman elected temporarily under regulation 76(2).

Regards

yes, 100 % clear and agree with ur points.

However , wud like to present some interpretation and case study as regards this issue, just for our references apart from the bare act. And as per this case study , things are favourable if BM is conducted by a single director to appoint additional director.( regualtion 75 of table A)( hops i ve interpreted the regualtion rightly )

Plz accept for reference :

Ranbaxy Laboratories Ltd v. Dr. Jayaram Chigurupati And Others [2010] 153 Comp Cas 162 CLB

Facts:
A petition filed u/s 397/398 of the Companies Act, 1956, the applicant seeking a declaration that the Board meeting held by the respondent did not have proper quorum in accordance with the provisions of section 287(2) of the Act. The meeting was held by one Director due to resignation of other directors.
Respondent submitted that the board meeting convened was in accordance with regulation 75 of table A of Schedule I to the Act, and also in article 97 of AOA which stated that if number of directors falls below requisite quorum, a single director could be considered as quorum and the meeting was valid.

Respondent relied on the case of Maharashtra Power Development Corporation Ltd. v. Dabhol Power Co. [2004] 120 Comp Cas 560 (Bom) to support his argument that according to SEBI regulations, 1997, the acquirer or persons acting in concert with him shall not be entitled to be appointed on Board of directors of the target company during the offer period. The applicant company was acting in concert with respondent and who was an acquirer of shares of respondent company.

Decision:
The court held that the appointment of additional director at the Board meeting held by a single director was in accordance with section 260 of the Act and there was no violation of the provisions of section 287(2) of the Act. All the decisions taken at the meeting are valid.

The applicant having acted in concert with respondent cannot appoint any person on the board of target company.
The Board was directed to go ahead with the conduct of Board meeting in accordance with provisions of the Act since the proceedings were held to be valid .