Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
01 September 2011Friends
AOA of an independent private company provides that proxies can be counted for quorum. It is strange. Initially I was confused and one of the senior CS alerted me that section 170(1)(ii) of the Act does allow this. It is indeed an enriching experience.
Please go through the above provision and share your thoughts.
Regards,
CS Smriti Sharma
(ACS, B Samrish & Co.)
(880 Points)
Replied 01 September 2011
Dear Dipjyoti
The quorum at general meetings of private companies and section 43A public company is 2 members personally present, unless the articles of the company provide for a larger number.Therefore physical presence of two members is must.For the purpose of ascertaining quorum, only members present in person, and not by proxies, are to be counted. Even the Articles cannot provide for counting of proxies for the purpose of quorum. However, exception to this rule is there in sections 167 and 186.
Attached herewith is an article on " quorum" which may throw some more light on the issue.
Thanks & Regards :
Smriti Sharma
B. Samrish & Co.
Company Secretaries
Dipjyoti Majumdar
(CA in service & CS. dipmaj@ rediffmail.com )
(3468 Points)
Replied 01 September 2011
Smriti
Thanks for your response. I wish to request you to revisit your thoughts. Look, section 174 deals with quorum. Section 170(1)(ii) clearly gives an authority to AOA to decide otherwise for an independednt private company.
I cannot gauge if I am right or wrong.
Regards,
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 01 September 2011
Dear Learned Members,
Section 174 provides that Unless the Article of the Company provides for a Larger Number, five members personally present shall be the quorum in case of Public Company (other than a public compnay which has become such by virtue of section 43A) and in case of private company two members personally present shall be the quorum.
Accordingly, 2 / 5 members PERSONALLY PRESENT shall only be counted for the quorum and not the proxies.
Article can only provide for the larger number and it cannot override the Companies Act.
Therefore the quorum shall be as under:-
Public Company= 5 members personally present
Private Company = 2 members personally present
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 01 September 2011
Dear Dipjyoti,
Article can not provide as you have mentioned above.
Articles can only provide otherwise in respect of subsections 3 to 5 of section 174.
Pavan Bharadwaj
(Practicing Chartered Accountant)
(353 Points)
Replied 01 September 2011
Proxies cannot be counted for quorum. However they can be counted if the meeting was adjourned meeting because of lack of Quorum. Articles con't provide that proxies can be counted,as it is against to Companies Act 1956
RG - A Helping Hand
(Company Secretary)
(13867 Points)
Replied 01 September 2011
RG
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 20 October 2011
Dear Richank Ji,
As per section 170(1)(ii) it is provided that the provisions of section 171 to 186 shall apply to the general meetings of Private Company unless otherwise provided therein or unless articles of the company provides otherwise.
However, Articles of the Company can only provide otherwise regarding the provision of section 174(3) to (5) and for section 174(1) it can only provide for larger number. As specifically specified therein.
Accordingly, the quorum shall be as under:
Public Company= 5 members personally present
Private Company = 2 members personally present
G.L.Subhramanian
(PCS)
(206 Points)
Replied 20 October 2011
Hi,
Section 174 says that 2 members personally present is quorum for private company. Section 170 says that Sections 171 to 186 does apply to private company only if the articles is silent.
In this scenario, 2 proxies shall be counted as quorum. But proxies are entitled to vote only on a poll (Section 176). But again Section 170 says that Sections 171 to 186 does apply to private company only if the articles is silent.
Therefore, for a private company to count proxy in quorum, the articles should give the power for proxy to vote by show of hands also.
Regards,
Subbu
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17853 Points)
Replied 21 October 2011
PLESE NOTE ARTICLES CANNOT OVERRIDE COMPANIES ACT.
CAclubindia
