12 CONVENING & CONDUCT OF SHAREHOLDERS

MEETINGS
Q.1. What are the different kinds of
Ans. Meetings of shareholders of a
Meetings of shareholders? Explain.
()General Meetings company are of two types:
(i) Class Meetings.
General Meetings are those in which
participate. General Meetings of shareholders are shareholders
of a company
of two types:
-Annual General Meeting, and
- Extraordinary General Meeting,.
(i) Class Meetings. In such Meetings, it is only a
particular class of
chareholders who participate. Such Meetings of different classes of shareholders
are convened and held only if matters affecting these shareholders are to be
discussed and decided. As such, a Class Meeting is intended to be attended by
members or shareholders of the class for which it is called. In such a Meeting,
matters affecting or concerning that particular class only are discussed. Such
Class Meetings are at times necessary, otherwise all types of shareholders
attending such a Meeting may confuse or even complicate matters to be
discussed.
Q. 2. Explain the provisions of the Companies Act with regard to holding of
an Annual General Meeting by a company.
Ans. Annual General Meeting (AGM). It is the most important meeting of the
members (shareholders) of a company. This meeting is held every year to review
the progress of the company.
Importance of Annual General Meeting. The Annual General Meeting is an
important protection to the members for it is one occasion when they can be sure
of having an opportunity of meeting the Directors and questioning them on the
accounts, and on their report on thecompany's position and prospectus.
"t isat this Meeting that some of the Directors willretire and come up for re-election
and the shareholders willbe able to exercise real control by "refusing to re-elect a Director
twhose action and policy they disapprove" -Green LJ in Shaw and Sons (Salford)
Ltd. vs. Shaw.
Provisions regardingAnnual General Meeting:
1. Which companies are required to hold AGM. Section 96(1) provides that
every company other than aOne Person Company shall, in each year, hold, in
aition to any other meetings, a generalmeeting as its annual general meeting.
nis Section further provides that the company shall specify the meeting as such
in the notice
calling it.
. First AGM. The first AGM shall be held within a period of9 months from
ie date of closing of the first financial year of the company.
he company holds its first AGM as aforesaid, it shall not be necessary for the
company to hold any AGM in the year of its incorporation.
99
 100 SHIV DAS DBLHI UNIVERSITY SERIES

3. Subsequent AGM. There must be one AGM in each calendar

months. This time may be extended for a maximum

should
maximum time period between anytwo such AGMs months
of 3
not
beby
moryeare th. an Th1;e
the
if there are some special
reasons.
The AGM must be held within a period of 6 nonths from the date of Regjsta
the financial year or within 9 nonths where time has been extended by 3
by the Registrar. If AGM of a company is adjourned to asubsequent month
chosing
adjourned meeting is deemed to be the çontinuation of the earlier date,
meeting Thethe
adjourned meeting must also be held within 15 months of the previous
4. Power to convene an AGM. The Board of Directors is the proper meeting,
Convene an AGM.
5. Place of AGM. An AGM must be held either at the registered office of a
authority
company or at some other place within the city, town or village in which
registered office of the company is situated.
6. Time and day of the AGM. AGM must be held during business hoursi.
between 9 am to 6 p.m. and also on a working day. It cannot be held om.
National holiday. Provided that AGM of an unlisted company may be held
any place in India, if consent is given in writing or electronic mode, by allthe
members in advance.
7. Notice of the meeting. An Annual General Meeting can be called by givin
at least 21 days clear notice either in writing or through electronic mode in su
manner as may be prescribed.
The notice of the Annual General Meeting must be accompanied by a copy o
the audited Financial Statement for the previous financial year, the Annua
Report of the Directors and the Auditor's Report.
Every notice of a meeting shall specify the date, place, day and the hour of the
meeting and shall contain a statement of the business to be transacted at such
meeting.
The notice of every meeting of the company shall be given to
(a) every member of the company, legal representative of any deceasei
member or the assignee of an insolvent member;
(b) the auditor or auditors of the company; and
(c) every director of the company.
Any accidental omission to give notice to, or the non-receipt of such notce
any member or other person who is entitled to such notice for any meeting Sna
not invalidate the proceedings of the meeting.
8. Business transacted at the meeting. The business to be
AGM may comprise:
transacted at o
I. Ordinary Business. It relates to the
following matters:
(a) consideration of financial statemnents and the reports of the Boardo
Directors and auditors;
(b) the declaration of dividend;
(c) the appointmentof directors in place of those
(d) the appointment of auditors and fixation of retiring; and
II. Special Business. Any other business, other their
than remuneration.
ordinary busines
scheduled to be transacted at the meeting is known as special busines
Examples of special business to be conducted at an Annual Gener?
 CHAPTER 12: CONVENING & CONDUCT OF SHAREHOLDERS' MEETINGS 101

Meeting are: Change in the

Memorandum of Association and Articles of
Association, Buy-back of shares etc.
of TTribunal to call AGM. If default is made in holding an Annual
9. Power on the
General Meeting in accordance with Section 96, the Tribunal may,
application of any member of the company, call or direct the calling of the
Annual General Meeting ofthe company and give such directions as the
Tribunal
thinksexpedient in relation to the calling, holding and conducting of the meeting.
held shall be deemed to be the Annual General Meeting
Ageneral meeting so
of the company.
0 Penalty for default in holding AGM. If default is made in holding a meeting
ofthe company in accordance with Section 96, or in complyingwhowith any directions
is in default, shall
ofthe Tribunal, company and every officer of the Company
be punishable with fine which may extend to 1 lakh and in the case of a
enntinuing default, with a further fine which may extend to 5000 for every day
aker the first during which such default continues.
o.3. Write a note on Extraordinary General Meeting.
Ans. Meaning of Extraordinary General Meeting (EGM), All general meetings
other than the annual general mneeting are called extraordinary general meetings.
These meetings are convened to transact the business which caninot bethepostponed
Articles
Hll the next AGM, e.g., alteration in the Memorandum. Alteration in
etc. All business transacted at such meeting is called special business.
Who may call an Extraordinary General Meeting. Extraordinary general
meeting may be called:
(a) By the Board of Directors. The Board of Directors, may, whenever it
thinks fit, convene an extraordinary general meeting by passing a
resolution to that effect in the Board's meeting.
Members. The Board of
(b) By the Board of Directors on Requisition of the
Directors must call an extraordinary general meeting on the written
total voting
requisition of the members holding at least 1/10th of the matter. The
power and who have a right to vote in respect of the to be
requisition must state the matters to be considered in the meeting
called. It must be signed by the requisitiorists and deposited at the
requisition, the
registered office of the company. Within 21 days of theactually be held
directors must proceed to call the meeting which must
within 45 days from the date of requisition.
(c) By the Requisitionists. If the Board of Directors fails to call the meeting
may
within above mentioned time limit, the requisitionists themselves
The
call the meeting within 3 months of the date of requisition.
reasonable expenses incurred by the requisitionists for holding such a
turn,
meeting can be recovered by them from the company which,at in
directors fault.
shall recover the same from the remuneration of the
(a) By the Tribunal. The Tribunal can also order an extraordinary general
meeting to be called, held or conducted, if for any reason it is not
practicable to call or hold such a Meeting. The Tribunal may pass order
for callingsuch a Meeting on its own initiative or on the application of
any Director or any members entitled to vote at the Meeting.
 102 SHIV DAS DELHI UNIVERSITY SERIES
An EGM can be convened on a National holiday and at a place other than the
registered office of the company or the city in which the registered office is
situated.
Q 4. Explain 'ordinary business' and 'special business' which may be
transacted in a general meeting of a company. State alsothe meetings in which
such business may be transacted.
Ans. Ordinary Business. It relates to the following matters:
(a) consideration of financial statements and the reports of the Board of
Directors and auditors;
(b) the declaration of dividend;
(() the appointment of directors in place of those retiring and
remuneration.
(d) the appointmnent of auditors and fixation of their
Special Business. Any other business, other than ordinary business, scheduled
to be transacted at the meeting is known as special business. Examples of special
business to be conducted at an Annual General Meeting are: Change in the
Memorandum of Association and Articles of Association, Buy-back of shares etc.
Generally,ordinary business requires the passing of an ordinary resolution and
special business a special resolution. There are certain items of business which
require an ordinary resolution e.g., alteration of Share capital, lssue of Bonus
shares etc.
Ordinary business may be transacted only in the Annual General Meeting
whereas special business may be transacted in Annual General Meeting as well
as Extraordinary General Meeting.
Q. 5.What are the requisites of a valid Meeting? Explain.
Ans. Any Meeting to be called a valid meeting has to fulfil the following
requirements:
1. It must be duly convened by the proper authority.
2. Proper notice must be given to all those who are entitled to receive it.
3. Quoum must be present.
4. The chairman must preside.
5. Proper minutes of the proceedings should be kept.
1. Proper Authority. For General Meetings of the
Board of Directors is the proper authority to convenecompany's such
shareholders, the
Board of Directors has to pass a Resolution at its Meetings. For this, te
shareholders can be Annual General Meeting, Extraordinary meeting. Such a meetingor u
even any Class Meeting of General Meeting
such meetings may be called by orshareholders of the company. In certain cases, e
or by the National Company Law requisitioned by the shareholders themselve
2. Notice. The notice of Tribunal.
every
(a) every member of the meeting of the company shall be given deceased to
member or the company, legal representative of any
(b) the auditor or assigneeofof an insolvent member;
auditors the company; and
(c) every director of the
For General Meeting of the
advance. While calculating 21
company.
members, notice has to be given at least 21 dayt
meeting are not included. In case days,
thethenotice
dateisofsent
the by
issue
post,and2 the tor of
days date the
pOstal
 CHAPTER 12: CONVENING & CONDUCT OF SHAREHOLDERS' MEETINGS 103

transitare oNcluded. Therefore, the notice of a general meeting should be sent 25

beforethe date of the meeting if
days the notice is sent by post. The notice should
containthe agenda of the mneeting which means a list of all the items to be
discussedinthe meeting. The notice must specify the place, time and purpose
themeeting.
The meeting may be held even witha shorter notice if it is so aggreed by at
least95%of the memnbers entitled to vote in such meeting.
Deliberate omission to give notice to any member can render the meeting
invalid. An accidental omission to give notice to or non-receipt of it by any
individual member will not affect the meeting's validity. The notice must contain
statement about the business to be transacted at the meeting clearly dividing
a
business into Ordinary Business and Special Business. The notice may be sent
the member
a
by post or by courier or by such electronic or other mode as may be
to
prescribed.
present
3. Quorum. It means the minimum number of members required to be
then the
the meeting. If this minimum number of members is not present, it. Generally, it
be transacted at
meeting is held to be invalid and no business can wherein of the
Association of the company the requirement
Ísthe Articles of whether it is a Board Meeting
Ouorum is specified regarding various meetings
members.
or General Meeting of the at the beginning of the meeting. It need not
Quorum is required to be present
throughout or at the time of taking votes on any resolution. A quorum
he present of Board's Meetings.
must be present throughout in the casecontains provisions relating to the number of
Section 103 of the Companies Act for a meeting of the company.
members which would constitute quorum of the company provide for a larger
Articles
As per Section 103, unless, the
number
company
(a) in case of a publicpersonally number of members as on the
present if the
()five nembers more than one thousand;
meeting is not
date of
personally present if the number of members as on
(ii)fifteen members more than one thousand but less than or equal
the date of meeting is
on
the number of members as
to five thousand;
personally present if
(iii) thirty members
meeting is more than five thousand; shall
the date of
company, two memberS personally present
private
(0) in the case of a meeting of the company.
torm the quorum for a within half-an-hour from the time
not present
f the quorum is the meeting of the company next
appointed forholding adjourned to the same day in the such
shall stand other date and
() the nmeetingsame time and place, or to such
week at the or
place as the Board may determine; cancelled.
other time and
by the requisitionists shall stand place of
if called day,time or
(ii) the meeting,
adjourned meeting or of a change of3 days notice to the
In case of an company shall give not less than advertisement in the
meeting, the individually or by publishing an
members either
 104 SHIV DAS DELHI UNIVERSITY SERIES
vernacular
newspapers (one in English and one in language)
circulation at the place where the registered office of
situated.
" If at the adjourned meeting also, a quorum
the
is not
wh ich
company
present
is'inis
half-an-hour from the time appointed for holding
members present shall be the quorum.
the meeting,witthhein
Can one person constitute a quorum?
Ordinarily one person present in the meeting can not form a quorum.
Under the following circumstances, even one person present may form th.
quorum for a general meeting.
() When the Tribunal calls or directs the calling of an Annual Gen.
Meeting, it may give directionto the company that one member present
in personor by proxy shallbe deemed to constitute a meeting.
(i) In case of class meetings, if all the shares ofa particular class are heldby
one person, he shall constitute the quorum.
(iti) If there is only one creditor or debentureholder, he shall constitute
quorum for the creditors'/debentureholders' meeting.
4. Chairman of the Meeting [Section 104]. The successful conduct of any
meeting is largely dependent upon the personality of the Chairman. He acts as
the Presiding Officer of the company's meeting. It is the Chairman who is
responsible for maintaining order and also conducting the meeting. He puts
motions before the meeting, counts the votes, announces the results and also
certifies the records (minutes) of the meeting by putting his signatures.
Unless the Articles of the company provide otherwise, the members personaly
present at the meeting shall elect one of themselves to be the Chairman thereof on
the show of hands.
If a poll is demanded on the election of the Chairman, it shall be taken in
accordance with the provisions of this Act and the Chairman elected on a show of
hands shall continue to be the Chairman of the meeting until some other person
is elected as Chairman as a result of the poll, and such other person shall be the
Chairman for the rest of the meeting.
Section 104 leaves the appointment of the Chairman to be regulated by the
Articles of the company. The provisions of this Section would be applicable only
if the Articles do not otherwise provide. The Articles generally
contain provision
on the lines of Regulations 45 to 47 contained in Table F of Schedule I. Thes
Regulations are as follows:
Regulation 45. The Chairman, if any,of the Board shall preside as Chairman
every general meeting of the company.
Regulation 46. If there is no such Chairman, or if he is not present within
fifteen minutes after the time appointed for holding the meeting or is unwilling
to act as the Chairman of the
meeting, the elect one of the
directors present to be the Chairman of thedirectors present shall
Regulation 47. If at any meeting, no directormeeting.
is willing to act as Chairman or i
no director is present within fifteen minutes after the time appointed for holding
the meeting, the members present shall choose one of the members Presentto be
the Chairman of the meeting.
 CHAPTER 12- CONVENING &CONDUCT OF SHAREHOLDERS' MEETINGS 105
5 Minutes (Section 118). Minutes mean a written record of all the proceedings
meeting. Some important points
of 0Every company shall take steps pertaining
the to get the tominutes
minutesof are follows: of
the asproceedingS
general meetings, meetings of the Board of Directors and
its
and every resolution passed by postal ballot prepared withincommittees
30 days of
conclusion of such meeting or passing of
resolution by postal ballot.
() Separate minutes books have to be maintained for each type of Meeting.
Every minutes book shall be in a bound form and not in aloose-leaf
form.
(i) Every page of the minutes book must be serially numbered.
Vl Minutes must present a fair and proper summary of all the proceedings
conducted at the Meeting.
n) A!! appointments made at any of the meetings aforesaid shall be
included in the minutes of the meeting.
(ni) In the case of a meeting of Board of Directors or of a committee of the
Board, the minutes shall also contain
(a) the names of the directors present at the meeting; and
(b) in the case of each resolution passed at the meeting, the names of the
directors, if any, dissenting from, or not concurring with the
resolution.
(vin There shall not be included in the mínutes, any matter which, in the
opinion of the Chairnman of the meeting
(a) is or could reasonably be regarded as defamatory of any person;
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.
The Chairman shallexercise absolute discretion in regard to the inclusion
or non-inclusion of any matter in the minutes on the grounds stated
above.
The minutes kept in accordance with the provisions of the Act shall be
the evidence of the proceedings recorded therein.
(ix) Each page of every such book shall be initialed or signed and the last
page of the record of proceedings of each meeting or each report in such
books shall be dated and signed within a period of 30 days:
(a) In the case of minutes of proceedings of a meeting of the Board or of
acommittee thereof, by the Chairman of the said meeting or the
Chairman of the next succeeding meeting
(b) In the case of minutes of proceedings of a general meeting, by the
Chairman of the same meeting
Chairman
() In case of every resolution passed by postal ballot, by the
of the Board.
(*) The minutes book of general meetings shall be kept at the registered
office of the company.
)Minutes constitute a prima-facie proof of meetings being in order.
() The minutes book shall be open for inspection to members during
business hours without any charge.
Q. 6. Write a note on
Proxy.
 UNIVERSITY SERIES
106 SHIV DAS DELHI
member is entitled to attend and vote either
meeting, a
Ans. Proxy. In any means an authority to represent and vote
Person or by proxy. So a
proxy of proxy that a personfor
appointed
member ina meeting.
to represent is through this instrument
It member. The person so appointed to represent
another
another
member of the
another is called a proxy. Proxy' need not be a
meeting.
company.
The
speak in the
proxy does not get a right to
Thus, Proxy means
appointed to represent a member of the company, and
() A person which person is appointed to vote for a member at
(ii) An instrument by a
the meeting of the company.
Provisions of the Companies Act relating tomemberProxy:
of a company shall h
() Section 105(1) provides that every proxy to attend and vote insted
entitled to appoint another person as his
of himself.
company.
(ü) A proxy need not be a member of the shall not be
(i1) A proxy shall not have the right to speak at such meeting and
entitled to vote except on a pol.
behalf of such member or
(10) A person appointed as proxy shall act on number of shares as may
number of members not exceeding 50 and such
be prescribed.
(o) Section 105(2) provides that every notice sent by a company for calling a
meeting must prominently mention the right of a member to appoint a
proxy along with the fact that the proxy need not be a member of the
company.
(vi) The instrument appointing a proxy shall -
(a) be in writing; and
(b) be signed by the member or his attorney duly authorised in writing
or, if the member is a body corporate, be under its seal or be signed by an
officer or an attorney duly authorised by it.
(vi) 'Proxy' instrument has to be deposited with the company 48hours betore
the time of the meeting.
(viii) For each meeting a separate proxy is required.
(ix) No invitation to appoint any person as proxy shall be issued at us
company'sexpense.
(x) Every member entitled to vote at the meeting of the company shall be
entitled to inspect the proxy during the period beginning 24 hours before
the time fixed for the meeting and ernding with the conclusion of the
meeting
(xi) A proxy is revocable and subject to the provisions of the Articles, itcan
be revoked any time, before it is acted upon. Death or insanity ofthe
member appointing the proxy also revokes the authority of the prony
provided the company receives intimation in writing of such death of
insanity at its office before the
(xii) A member can prevent commencement
the proxy of thethemeeting
from exercising right to vote
himself
attending the
Q. 7. Write a note meeting and voting at the meeting.
on voting at general meeting.
 CHAPTER 12: CONVENING & CONDUCT OF MEETINGS 107
Ans. Voting at General
SHAREHOLDERS
Meeting. Any motion proposed in a meeting of the
company is decided by votes
of the
proxies. A vote means members rightmembers presentmayeither
which he/she in person
exercise or by
as deemed fit
in his/her interest. But such a vote must be exercised keeping in mind the best
interest ofthe company.
Method of Voting. The voting in a company may take place either:
(i) by show ofhands,
(i) by poll, or
(ii) through electronic means.
() Voting by show of hands. It is the simplest method of voting, results of
which can be given by the Chairman immediately. However, this method
violates the confidentiality of the members' wishes. Again, voting is not
proportional to the shareholdings held by the members.
(ii) Voting by poll. As against the voting by show of hands, poll means
counting of votes in favour and against amotion. It is done whenever it
is so demanded. In a poll, voting rights of different members are in
proportion to their shareholdings.
Whocan demand a poll. On a motion, decision to take voting by poll may be
taken by the Chairman on his own accord or_a demand for a poll may be made by
the members present. Poll will be a necessary mode of voting in the following
cases:

(a) In case of a company having share capital. When poll is demanded by

any member present in person or by proxy, such a member or proxy
must be holding shares (i) with power to vote not less than 1/10th of the
total voting power; or (i) with an aggregate sumn of not less than
5 lakhs paid up value or such higher amount as may be prescribed.
(b) present
In case inofperson
any other company, when demanded by any member(s)
or by proxy and havingnot less than 1/10th of the total
voting power.
When a poll is taken, a member is free tosplit his votes in favour of as well as
against the same Resolution. He has the right to distribute his votes in any
manner he chooses.
The manner of taking a poll is to be decided by the Chairman. He appoints two
SCrutineers (one of whom must be a member, if available and willing) to
SCrutinise the votes given on the poll. A declaration of the Chairman that a
Resolution has or has not been carried is prima-facie evidence of the Resolution.
A poll on a Resolution for the adjournment of the Meeting or for the
appointment of Chairman must be immnediately taken. Chairman, in all other
Cases, must take poll at any suitable time but not later than 48 hours of the
demand for poll. Íf apoll is not completed on the same day, it will be continued
On the next day and the Chairman will not be entitled to close the poll.
l the Articles so provide, members holding shares on which calls are in arrear,
or in regard to which Company has exercised right of lien, may not be allowed to
vote on poll.
(ii) Voting through electronic means. The Central Government may prescribe
the class or classes of companies and the manner in which a member may
exercise his right to vote by electronic means (Section 108).
 108 SHIV DAS DELHI UNIVERSITY SERIES
and Administration) Rules
Rule 20 of the Companies (Management
provides the following rules relating tovoting through
1. Every listed company or a company having
electronic means.
1,000 or more
2014,
exercise their
shall provide to its members facility to
general meetings by electronic means.
sharvoteeholderthes,
right to at
2. A member may exercise his right to vote at any general
electronic means and the company may pass any resolution by meeting by
voting system.
3. The company shall follow the following procedure, namely:
electronic
() the notices of the meeting shall be sent to all the m
memberS, auditors
of the company, or directors;
(ii) the notice shallalso be placed on the website of the company,if any.
(ii) the notice of the meeting shall clearly mention that the business mav
be transacted through electronic voting system and the company is
providing facility for voting by electronic means;
(io) the notice shall clearly indicate the process and manner for voting by
electronic means and the time schedule including the time period
during which the votes may be cast and shallalso provide the login
ID and create a facility for generating password and for keeping
security and casting of vote in a secure manner;
() the company shall cause an advertisement to be published, not less
than 5 days before the date of beginning of the voting period, at least
once in a vernacular newspaper and at least once in an English
newspaper including the following matter, namely:
(a) statement that the business may be transacted by electronic voting
(b) the date of completion of sending of notices;
(c) the date and time of commencement of voting through
means;
electronic
(d) the date and time of the end of voting through
(e) the statement that voting shall not be allowed electronic means;
date and time; beyond the said
(9 website address of the
(g) contact details of thecompany and agency, if any, and
person responsible to address the
grievances connected with the electronic voting;
(vi) the e-voting shall remain open for not less than 1 day and not more
than 3 days:
In all such cases, such voting period
prior to the date of should be completed 3 day
the general meeting:
(vi) during the e-voting period, shareholders of the company, may cast
their vote electronically;
(viii) at the end of the voting
forthwith be blocked; period, the portal where votes are cast
shall
(ix) the Board of
(x) the scrutiniserDirectors shall appoint one
shall, within a period ofscrutiniser;
days from the date not exceeding 3 work
of
conclusion of e-voting
votes in the presence of at least 3 witrnesses not inperiod, unblock the
the employment of
 ONVENING &CONDUCT OF
the nnpnr ad make
favvr or a SHAREHOLDERS
scrutiniser's report of
MEETINGS 109

() subiet to
against. it any. torthwith to the the votes cast tn
deeni
the reipt ot Chairman,
to be passed on thesutficient votes, the resolution shall be
the menmbes. date of the relevant general
are the different meeting o
shareholders? Explain.types of Resolutions which may be passed in a
Sesolution. ln an Meeting the
torm f popoals matters which are put for
m be brought for
and are called 'motions', consideration
In a Meeting
anv other memberconsideration either by the Chairman oranybysuch
or for decision andalso. Any such motion, after due discussion,theis
its decision is
"Rsution". So a
Resolution recorded in the form of
means formal recording
as expressed by voting. of the wishes of the
Gernerally, Resolutions are of three
1. Ohiinarv Resolution
Seial Resolution
Resolution requiring special notice.
: Ordinary Resolution (Section 114(1)]. It is a resolution of
ndr the Companies Act has been duly given and which iswhich notice
passed with
Sne majonty ot the members present either in person or through proxies.
Sile majority means that the votes cast in favour of the resolution exceed the
Sgainst the esolution. It may be passed either by a show of hands or
eletoriallv or ona poll.
An orinary resolution is passed for the ordinary business transacted at the
Aal General Meeting for example.
< consideration of financial statement and the reports of the Board of
Directors and auditors;
the declaration of dividernd;
(the appointment of diretors in place of those retiring; and
(the appointment of auditos and fixation of their remuneration.
There are certain items of special business which require an ordinary resolution
(2) Alteration of the name clause of the company at the direction of the
Central Govermment Section 16(1).
Alteration of the share capital Section 65(1).
) Issue of bonus shares Section 63(2).
Removal of adirector other than the director appointed by the Tribunal
under Section 169(1).
-Special Resolution (Section 114(2)]. A Special Resolution is one which is
uired in transacting special business and it is required to be passed by a three
th majority. Section 114(2) of the Companies Act provides that a resolution
Stal be special resolution when:
(2) Ihe intention to propose it as a Special Resolution has been duly
specified in the notice calling the General Meeting: hands.
1e) Ihe votes cast in favour of the Resolution (whether by ashow of
or electronically, or by apoll) by the members present, in person, or by
110 SHIV DAS DELHI UNIVERSITY SERIES
3 times the votes Cast
Proxy, or by postal ballot are not less than
the Resolution by the members.
Special Resolution is needed for the. purposes such as:
agains
Memorandum of Association.
() Change in Objects Clause of Association as regards
(11) Change in Memorandum of arnother.
"Registered Office'
of the company from one State to
(i) Alteration of the Articles of Association.
(io) Reduction of share capital. the prospechus
() Making variation in terms of contracts mentioned in
(oi) Changing shareholders' rights.
beyond 15.
(vi) Increasing maximum number of directors
(vii) Removal of an auditor.
(ix) Buy-back of shares.
3. Resolution requiring special notice [Section 115]. It is not an independe.
class of Resolution. Rather, it is a kind of Ordinary Resolution with the differene
that the mover has to give a 14 days' prior notice of the intention to move such.
Resolution. The company, on receipt of such a notice, will give a notice of fhe
Resolution to the members at least 7days before the meeting in the same manner
in which notice for meeting is given.
Special notice of the intention to move such resolution shall be given to the
company by members holdings minimum 1% of the total voting power or
holding shares on which an aggregate of not less ?5 lakhs has been paid up on
the date of the notice.
Special notice is required by the Act in the following cases:
1. For appointing an auditor other than the retiring auditor or for a
resolution providing that an auditor retiring shall not be reappointed
except where the retiring auditor has completed a consecutive tenure of5
years.
2. For removal of a Director before the expiry of his term or for
appointment of a Director in place of the Director so removed.
Q.9. Distinguish between on ordinary resolution and a special resolution.
Ans. Ordinary resolution. See Q. 8, on the Opposite Page 110.
Special resolution. See Q. 8, on the Opposite Page 110.
Distinction between an Ordinary resolution and a Special resolution
Point of Distinction Ordinary Resolution Special Resolution
1. Nature of Business Usually, items of ordinary
Usually, items of specal
business
of
require passing business require passing
an ordinary resolution. of a special resolution.
2. Majority It is passed by simple It is passed by 3/4h
majority. majority. In case of a
Special resolution, votes
cast in favour of
resolution should be 3
times the votes cas
against it.
 CHAPTER 12:
CONVENING & CONDUCT OF
3. Filing of the Copy
of the Resolution
SHAREHOLDERS'
Not required to be filed
MEETINGS 111
with the ROC. Required to be filed
with ROC with the ROC within 30
4. Explanatory Sta Not days of passing it.
tement alongwith required to be sent Required to be sent
the Notice alongwith the notice of
the meeting. alongwith the notice of
the meeting. The
statemernt should give all
material facts about the
items of special business.
5.Casting Vote of The Chairman can
the Chairman give
his casting vote in case
The Chairman does not
a tie. of have a casting vote.

Q. 10. Write a note on passing of resolution by Postal Ballot.

Ans. Passing of Resolution by Postal Ballot. Section 2(65) of the Companies
Act, 2013 defines 'postal ballot as
mode.
voting by post or through any electronic
Section 110 contains provisions regarding passing of resolution by
ballot. These provisions are as follows: postal
1. A Company:
(a) shall, in respect of such items of business as the Central
Government
may, by notification, declare to be transacted only by means of postal
ballot; and
(b) may, in respect of any item of business, other than ordinary business
and any business in respect of which directors or auditors have the
right to be heard at any meeting, transact by means of postal ballot,
in such manner as may be prescribed, instead of transacting such
business at a general meeting.
2. If a resolution is assented to by the requisite majority of the shareholders
by means of a postal ballot, it shall be deemed to have been duly passed
at a general meeting convened on that behalf.
One Person Company and other companies having members upto 200 are not
required to transact any business through postal ballot.
List of items of business in which the resolution has to be passed through
Postal Ballot: The items of business in which the resolution shall be passed
through Postal Ballot are as follows:
(a) Alteration of the objects clause of the Memorandum;
(b) Alteration of Articles of Association in relation to insertion or removalof
the provisions which are required to be included in the Articles of a
Company in order to constitute it a private company;
() Change in the place of registered office outside the local limits of any
City, town or village as specified in Section 12(5);
(a) Change in objects for which a company has raised money from public
through prospectus and still has any unutilised amount out of the monev
SO raised under Section 13(8);
(e) Issue of shares with differential rights as to voting or dividend or
otherwise under Section 43;
 DELHI UNIVERSITY SERIES
112 " SHIV DAS or debentures or
rights attachedto a class of shares other
the
) Variation in specified under Section 48;
securities as company under Section 68(1);
of shares by a
(8) Buy-back director under Section 151;
(1) Election of a
whole or substantially the whole of
an undertaking of a

() Sale of the specified under Section 180;

Company as guarantee or providing security in excess of
) Giving loans or extending
under Section 186.
the limit specified
PRACTICAL PROBLEMS
issued anotice of its Annual GeneralMeeting to be held2014
1. Prosperity Ltd. notice was posted to the members on 16
October.
2014. The
7 Novemnber,
the company alleged that the company had not complied with the
Few members of with regard to the period of notice and as such
provisions of the Companies Act
Decide, giving reasons:
the Meeting was not validly called.
() Whether the Meeting has been
validly called?
requirement?
(i) Is the notice shorter than the mandatory
(ii) Can the shortfall be condoned?
For General Meeting of the members, notice has to be given at least 21
Ans. the date of the issue and the
days in advance. While calculating 21 days, the notice is sent by post, 2
date of the meeting are not included. In case
notice of a general
days for postal transit arê excluded. Therefore, the meeting if the notice
meeting should be sent 25 days before the date of the
is sent by post.
Hence, in this case the meeting is not validly called as the notice is
shorter, than the mandatory requirement. But this shorter notice can be
condoned if it is so agreed by at least 95% of the members entitled to vote.
2. Reliance industries Ltd. has its registered office at Mumbai. The company desis
to hold an Extraordinary General Meeting in New Delhi. Examine the validity
of the company's desire with reference to the relevant provisions of the Companes
Act, 2013.
Ans. Unlike AGM, there is no specificprovision in the Companies Act whct
prohibits the holding of an Extraordinary General Meeting at a place other
than the registered office or a place outside the town, city or village n
which the registered office is situated. Thus, unless the Articles of
Association of the company provide otherwise, it is legally possible to
an Extraordinary General Meeting (EGM) of the company in New Delhi.
3. A Proxy was appointed by a member on an instrument duly executed. Willthe
vote cast by the Proxy by valid in the following cases:
(i) When the member himself attends and casts his vote at the Meeting without
revoking the authority of the Proxy; and
(ii) When the member died in the meantime.
Ans. () Proxy' is always revocable as a proxy is only an
agent of the Pvs
appointing the proxy i.e,, the principal. Such a can always
principal
revoke the authority given to his agent at any time before the
 CHAPTER 12:
CONVENING &
CONDUCT OF
authority is
exercised
is allowed till the by such an SHAREHOLDERS MEETINGS 113
agent. In case of a proxy, revocation
time or before the
the
shareholder, the
and also vote at who has
appointed
proxy has voted. So in this case,
the
proxy, can personally attend
automatically and meeting. If he does so,
vote cast by him will notthen the proxy is revoked
i) Further the death or even be valid.
(e.g lunacy or any other incapability of the
does not insolvency) he has
revoke the after
appointed shareholaer
proxy generally
his death or such proxy until the Company has received notice of
incapacity incapability.
received the notice of the death orof the If the has
proxy would be invalid. menmber, the votecomparny
cast by the
For details: (Refer to Q. 6,
A. A Company has 100 Chapter 12). Page 107
members.
them. 20 members do not attend the
It sends notice of the General Meeting to all of
present, 20 abstain from voting. How many meeting. Out of 80 members who are
resolution if if is to be passed as a Special members should vote in favour of a
Hint: In case of a Special Resolution, votes Resolution?
must be at least 3 times the votes cast cast in favour of the resolution
only 60 members are to vote. Hence, against the
resolutiorn. In this case
minimum
their votes in favour of the resolution as 45 members should give
it.
against maximum of 15 against
a
For details: (Refer to Q. 8, Chapter 12). Page 110
5. GaneeU, the Chairman, at an Annual General Meeting,
declares a
after a show of hands, the voting being "20 in favour, 50 againstmotion carried
it and 60 in
favour voted by proxy." The company's Articles provide that a proxy is entitled
to vote on apoll. Is he right in his judgement?
Ans. Ganeev, the Chairmarn is not right in his judgement. Since the Articles
provide that a proxy is not entitled to vote by show of hands, therefore
60 votes in favour voted (by show of hands) by proxy are not to be
counted.
6. The Articles of Association of XLtd. require the personal presence of 7members
to constitute Quorum of General meetings. The following persons were present
in the Extraordinary General Meeting toconsider the appointment of Managing
Director.
() A, the representative of Governor of Madhya Pradesh.
(i) Band c, shareholders of preference shares.
(1) D, representing Y Ltd. and Z Ltd.
(10) E, F, G and H as proxies of shareholders.
Can it be said that the quorum was present in the meeting?
Ans.For members present in and not by proxies
the Purposes of quorum, onlyrepresenting
are to be counted. However, A, the Governor of Madhya
Fradesh and D representing Y Ltd. and Z Ltd. will be considered as
Pradesh. y
present in person. (It is assumed that Governor of Madhya
Ltd. and z Ltd. are the members of the company). The quorum requires
members.
the personal presence of 7members but there is ashortfall of 4
ITeference shareholders are not to be cournted tor the purpose of quorum
 SERIES
SHIV DAS DELHI UNIVERSITY
114 except where the proposed business includes any item directly affecting
a proper Quorum.
them. Hence it is not
confiscated by income tax authori:..
books of acompany were
7. The accountsvear, accounts of the company were not v
As a result the
aparticular meeting in the absence of accounts.
Should the Company hold any ånnual general meeting, all business +o1
Hint: Problem. In the case of special business, other than
transacted shall be deemed as and the reports of the board
consideration of financial statements
() The
of Directors and Auditors;
(ii) The declaration of dividend; those retiring:
(ii) The appointment of directors in place of
(iv) The appointment of auditors.
It is mandatory on the part of the Board of Directors of the comparny to
lay the accounts at every annual general meeting, within statutory
period. If the accounts are not ready for being laid at the meeting, the
usual practice is tohold the meeting, transact all the business except the
adoption of accounts and then adjourn the meeting to a subsequent date
for adoption of accounts. But the later date also has to be within the
statutory time limit.
Inthe present case, if the Income Tax Department has confiscated books
of accounts of the company, then offence is not punishable.
 BOOKS OF ACCOUNTS
14

Accounts to be maintained by a
Write a note on Books of
Q.Ans.1. Books of Accownts. As per Section 2(13) of the Companies company.
Act, 2013,
"Books of(a)accounts" include records maintained in respect of:
all sums of money received and expended by the company and the
expenditure take
matters in respect of which the receipt and place,
(b) allsales and purchases of goods and services by the compan:
(c) the assets and liabilities of the company; and
(d) in the case of such class of companies engaged in production of suct
goods or providing such services as may be specified under Section
148, such particulars relating to utilization of material or labour
other items of cost as may be prescribed.
Place of keeping Books of Accounts. Section 128 requires that every companr
shall keep at its registered office proper books of accounts. However, these boo
may be kept at such other place in India as the Board of Directors thinks fit. .
that case, within 7days of the decision, a notice in writing indicating fulladdres
has to be given to the Registrar of Companies.
System of Accounting. The books of accounts should be kept on accual bas
and according to the double entry system of accounting.
Inspection of Books of Accounts. Section 128 provides that any director caI
inspect the Books of Accounts and other books and papers of the company
during business hours.
Period of preservation. The books of accounts together with the vouchers
relevant to entry in such books, relating to period of at least 8 financial yeas
immediately preceding the current year shall be preserved in good order.
In case an investigation has been ordered, the Central
Government shall havt
power to ask the company to keep the books of accounts for
eight financial years. a period longer tha
Persons responsible for keeping the Books of persons
responsible for the maintenance of books of accounts etc.Accounts: The
() Managing Director shall be
(ii) Whole-Time Director in
(iii) Chief Financial Officer; charge of finance
(iv) Any other person of the
complying with company charged by the Board with duty
provisions of
In case the aforementioned persons ofSection 128. fail to take reasonable sters
the company
to secure compliance of this
punishable with imprisonmentsection they shall,
for aterm which inmayrespect 1 yearofence,
extendof toeach Orwith
fine which shall not be less
than ? 5,000 but which lakhs
both. may extend to :5

120
 Maintenance of Books CHAPTER 14: BOOOKS OF
of
Accounts in ACCOUNTS 12
2013
permitsthe
companies
papers electronic mode.
to maintain Electronic Form. The
books of accounts and Companies Act,
Discuss the other books and
Q.2.
statemernts. provisions of the Companies Act, 2013
Ans. According to
Section relating to financial
financial statement in relation to 2(40),
a
of the
Companies Act, 2013, the term
() a balance sheet as at the company includes.
end of
loss account, or in the
aprofit and
the financial
case of a
year;
activity not for profit, an incomne and company carrying on any
financial year; expenditure account for the
(m) cash flow statement for the financial year;
(iv) astatement of changes in
) any explanatory note annexed equity, if applicable; and
to, or forming part of, any document
referred to in sub-clause (i) to sub-clause
The financial statement, with respect to One (iv) above.
Person Company, Small company
and Dormant company, may not include the cash flow statement.
The yrovisions relating to financial statement are as follows [Section 129):
1 The financial statement shall give a true and fair view of the state of affairs
of the company or comparies, comply with the accountingstandards notified
under Section 133 and shall be in the form or forms as may be provided for
different class or classes of companies in Schedule III. This provision does not
apply to any insurance or banking company or any company engaged in the
generation or supply of electricity, or to any other class of company for which a
form of financial statement has been specified in or under the Act governing such
class of company.
2. At every annual general meeting of a company, the Board of Directors of the
Company shall lay before such meeting itsfinancial statement for the financial year.
3. Where a company has one or more subsidiaries, it shall, in addition, prepare
in
aconsolidated financial statement of the company and of all the subsidiariesthe
be laid before
the same förm and manner as that of its own which shall also
annual general meeting of the company along with the laying of its financial
financial statement, a
Statement. The company shall also attach along with its
statement containing the salient features of the financial statement of
Separate
ssubsidiary or subsidiaries in such formcompany as may be prescribed.
does not comply with the
4. Where the financial statement of a disclose in its financial statements, the
shall
accounting standards, the company for such deviation and the
eviation from the accounting standards, the reasons
financial effects, if any, arisingofout of such deviation.
Provisions of Section 129. In case of non
renalty for Contravention the 129 the managing director, the whole-
provision of Section
Compliance of
time director in any charge of finance, the Chief
Financial Officer or any other person
requirements of this
duty of complying with the
charsectigoedn
by the Board with the
and in the absence of any of the officers
for a
mentioned above, allthe directors
term which may extend to 1 year or
shall be Punishable with imprisonment
with fine which shall not be less than ? 50,000 but which may
extend to ?5 lakhs
Or with both.
 UNIVERSITY SERIES
SHIV DAS DELHI
122
Statements. The financial statements,
consolidated
Authentication of Financial
financial statement,
inchuding
if any, shall be approved by the Board o
Directors before they are signed on behalf of the Board by the chairperson of the
company where he is authorised by the Board or by two directors out of whih
one shall be the managing director, if any, and the Chief Executive Officer, the
Chief Financial Officer and the company secretary of the company, wherever
they are appointed, or in the case of One Person Company, only by one director,
submission to the auditor for his report thereon. statement.
for
report shall be attached to every financial
The Auditors' As per
Filing of Financial Statements etc. with the Registrar. financial Section
137
consolidated
any, financial
of the with
copy along statements
all the
including statements,
if
documents which are required to be attached to succh
financial statements, duly adopted at the Annual General Meeting of the
days of Annual Genera
company,. shall be filed with the Registrar within 30
Meeting.
Q. 3. Discuss the provisions relating to 'National Financial Reporting
Authority' as laid down in Companies Act, 2013.
Ans. Constitution of National Financial Reporting Authority:
Section 132: The Central Government may, by notification, constitute a
National Financial Reporting Authority to provide for matters relating to
accounting and auditing standards under this Act.
The National Financial Reporting Authority shall perform its functions
through such divisions as may be prescribed.]
Functions of National Financial Reporting Authority:
(a) Make recommendations to the Central Government on the formulation
and laying down of accounting and auditing policies and standards for
adoption by companies or class of companies or their auditors, as the
case may be;
(6) Monitor and enforce the compliance with accounting standards and
auditing standards in such manner as may be prescribed;
() Oversee the quality of service of the professions associated with
ensuring compliance with such standards, and suggest measures
required for improvement in quality of service and such other relateu
matters as may be prescribed; and
(d) Perform such other functions relating to clauses (a), (b)
prescribed. and (c) as may
The National Financial
who shall be a person ofReporting
eminence Authority shall expertise
and having chairperson
consist ofina accountancy,
auditing, finance or law to be appointed by the Central
Government
other members not exceeding fifteen consisting of part-time and anu
full-time
members as may be prescribed:
Each division of the National Financial Reporting Authority shall be presided
over by the Chairperson or a full-time Member authorised by the Chairpersot
There shall be an
Authority consisting executive body of the
of the Chairperson and National Members Reporting
full-time Financial of such
Authority for efficient discharge of its functions under sub-section (2) [othertht
 CHAPTER 14: BOOKS OF ACCOUNTS 123
cdause(a)]and sub-section (4).]
Providedthat the terms and
chairpersonand members shallconditions
be such as
and the manner of appointment of the
may be prescribed:
Provided further that the
chairperson and
tothe Central Government in the prescribedmembers declaration
shall makenoa conflict of
form regarding
interestorlack of
independence in respect of his or their appointment:
Provided also that the
employment with chairperson
National
and members, who are in full-time
associated with any audit firm Financial Reporting Authority shall not be
(including
COurse of their appointment and two related
years after ceasingfirms)
consultancy the
duringsuch
to hold
appointment.
Powers of the National Financial Reporting Authority:
National Financial Reporting Authority shall
(a) have the power to investigate, either suo moto or on a reference made to
it by the Central Government, for such class of
bodies corporate or
persons, in such manner as may be prescribed into the matters Or
professional or other misconduct committed by any member or firmof
chartered accountants, registered under the Chartered Accountants Act,
1949:
Provided that no other institute or body shall initiate or continue any
proceedingsin such matters of misconduct where the National Financial
Reporting Authority has initiated an investigation under this section;
(b) have the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908, while trying a suit, in respect of the following
matters, namely
() discovery and production of books of account and other
documents, at such place and at such time as may be specified by
the National Financial Reporting Authority;
(i) summoning and enforcing the attendance of persons and
examining them on oath;
(ii) inspection of any books, registers and other documents of any
person referred to in clause (b) at any place;
(iv) issuing commissions for examination of witnesses or documents;
(c) where professional or other misconduct is proved, have the power to
make order for
(A)imposing penalty of
I. not less than one lakh rupees, but which may extend to five times of
the fees received, in case of individuals; and
II. not less than five lakh rupees, but which may extend to ten times of
the fees received, in case of firms;
(B)debarring the member or the firm from
I. being appointed as an auditor or internal auditor or undertaking
any audit in respect of financial statements or internal audit of the
functions and activities of any company or body corporate; or
I. performing any valuation as provided under Section 247,
for a minimum period of six months or such higher period not
 UNIVERSITY SERIES
DAS DELHI determined by
124 SHIV the
exceeding ten years
as may be National the amount, if any, which CHAPTER 14: BOOKS OF
Reporting
The National Authority.
Financial Reporting Authority shall prepare in such form and a
may be
prescribed|its annual
report
Financi d (k)dividend;
material changes
() position of and
it
recommendsif should beACcoUNTS125
paid by way
financial year as financial year and forward
companycommi
whichtmhave
ents,
each the of
suchtime for
its activities
during
full account of Government and the
the
Central
Government
Comptroller and
shall
a
cause copythe giherngae financial year of the
and the date of
the company to OCcurred
any, affecting the
financial
which the between the end
ofreport;
of the
to the Central audit report given byParliament.
anna
Audirteogarr-Gdeninegral the
the
(m)the
conservation financial statements relate
outgo, inenergy,
report and the House of
India to be laid
before each
the Companies Act, 2013 earnings and suchtechnology mayabsorpt
be ion, foreign
Q. 4. Discuss
Directors' Report
the provisions of
(Board's Report). (n) a statement
indicating develmanner
management policy for opment
as
and prescribed; exchange
Ans. Board's
Report or Directors'
Report:
elements of risk, if any, thecompany includingimplementation of a risk
Section 134(3) of the
Act:
statement, including
consolidated
financial statement. the existence of the
company;
which in theopinion ofidentification therein of
the Board may threaten
(1) The financial bythe Board of Directors before they are signed on ,i any (o) the detailsabout the policy
company on Corporate social developed and
shall be approved chairperson of the company where he is
Board
the Board authorisedbelhalf
the directors out of which one shall be managing director, ifby of
or bybytwo
the year;
of alisted
implemented
responsibility initiatives by the
taken during the
Financial Officer and (p) in case company and every other publicc
Officer, the Chief
and the Chief Executive wherever they are appointed, or in the companyany.
the case of paid-up share capital as may be a company having such
secretary of the company, director, for submission to the auditor
anner in which tormal annual prescribed, statement indicating the
Person Company, only by one for hisOne eard, its Committees and of evaluation the performance
of of
report thereon.
(2) The auditors' report shall be attached to every financial statement. euch other matters as may be individual
prescribed.
directors has been made: the
statements laid before a Provided that where disclosures referred to in
(3) There shall be attached to company general
in included in the financial statements, such
this sub-section have been
meeting, a report by its Board of Directors, which shall include of being repeated in the Board's report. disclosures shall be referred to instead
referred
(a) the web address, if any, where annual return | to in
sub-section
(3) Provided further that where the policy referred to in
of Section 92 has been placed
made available on company's website, if any, it shall be clause (e) or clause (o) is
(b) number of meetings of the Board; be requirements under such clauses if the salient featuressufficient compliance
of the policv and any
of
(c) Directors' Responsibility Statement; dhange therein are speciBied in briet in the Board's report and the web-address is
(ca) details in respect of frauds reported by auditors under sub-section (1).4 indicated therein at which the complete policy is available
Section 143 other than those which are reportable to the Cen aA) The Central Government may prescribe an abridged Board's
Government; the purpose of compliance with this section by One Person Company report, for
(d) a statement on declaration given by independent directors under suk or small
company
section (6) of Section 149; (4) The report of the Board of Directors to be attached to the financial
(e) in case of a company covered under sub-section (1) of Section 128 statement under this section shall, in case of a One Person Company, mean a
company's policy on directors' appointment and remuneration report containing explanations or comments by the Board on every qualification,
including criteria for determining qualifications, positive attributes. reservation or adverse remark or disclaimer made by the auditor in his report.
independence of a director and other matters provided under sub-section (5) The Directors' Responsibility Statement referred to in clause (c) of sub
(3) of Section 178; section (3) shall state that
() explanations or comments by the Board on every qualification,
reservation or adverse remark or disclaimer made (a) in the preparation of the annual accounts, the applicable accounting
() by the auditor in his report; and standards had been followed along with proper explanation relating to
(1) by the company secretary in practice in his material departures;
(g) particulars of loans, guarantees or secretarial audit report; (b) the directors had selected such accounting policies and applied them
investments under Section 186;
(h) particulars of contracts or arrangements consistently and made judgments and estimates that are reasonable and
in sub-section (1) of Section 188 in the
with related parties referred to prudent so as to give a true and fair view of the state of affairs of the
(i) the state of the prescribed form; company at the end of the financial year and of the profit and loss of the
(i) the amounts, if company's affairs;
any, which it
company for that period;
proposes to carry to any reserves, (c) the directors had taken proper and sufficient care for the maintenance of
126 SHIV DAS DELHI UNIVERSITY SERIES
adequate accounting records in accordance with the
Act for safeguarding the assets of the company and for provisions of hi
detecting fraud and other irregularities;
(d) the directors had prepared the annual accOunts on a preventing and
basis; and
(e) the directors, in the case of a listed company, had laid
going coNCern
down
financial controls to be followed by the company and that such intetna
financial controls are adequate and were operating effectively.
Q.5. Write a note on Directors' Responsibility statement. interna
Ans. Directors' Responsibility Statement. The Board's
include a"Directors Responsibility Statement", which as per isSectionReport required t,
shall state that:
() in the preparation of the annual accounts, the applicable 1345),
standards had been followed along with proper explanation
material departures;
areclaotuntingingto
(i) the directors had selected such accounting policies and applied thes
consistently and made judgements and estimates that are reasonable an
prudent so as to give a true and fair view of the state of
company at the end of the financial year and of the profit andaffairs
loss ofof the
company for that period;
(ül) the directors had taken proper and _ufficient care
for the mairitenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the company and for
detecting fraud and other irregularities; preventing and
(iv) the directors had prepared the annual
and açcounts on a going concern basis;
(v) in the case of a listed company, the
directors had
financial controls to be followed by the company andlaidthatdown internal
financial controls are such internal
adequate were operating effectively.The term
"internal financial controls"
and
refers to the policies and procedures
adopted by the company for ensuring the orderly and efficient conduct
of its business, including
adherence to company's policies, the
safeguarding of its assets the prevention and detection of frauds and
errors, the accuracy and completeness
timely preparing of reliable financial of the accounting records and e
(vi) the directors -had devised information.
proper system
provisions of all applicable laws and thattosuch ensure compliance with ut
and operating effectively. systems were adequat
Q. 6. State the provisions of the
Return'. Companies Act, 2013 regarding "Annu
Ans. Annual Return. As per
Section 92 every
an 'Annual Return' in the
prescribed form companytheis required to prepare
stood on the close of the financial year containing particulars as u
() its registered office, principalregarding the following:
holding, subsidiary and associate business activities, particulars o
(ii) its shares, debentures and other companies;
securities and shareholding patteri
 CHAPTER 14: BOoKS OF
its.indebtedness;
members and
ACCOUNTS 127
io) its
debent ure-h
close of the previous financial
(o) its promoters, directors, key
old ers
year;
along with changes therein since the
therein sincethe
meetings of
close of the managerial
previous personnel along with changes
financial
(oi) along members class
or a year;
with attendance details: thereof, Board and its various committees
remuneration of
(oi) directors and key
(vii) penalties or punishments imposed manageri
officers and on theal personnel;
details
of
compounding of
Company, its directors or
against such penalty orpunishment: offences and appeals made
(ix) matters relating to certification of
prescribed; compliances, disclosures as may be
() details, as may be prescribed, in respect of
Foreign Institutional shares held by or on behalf of
Investors
countries of incorporation, indicating their names, addresses,
held by them; and registration and percentage of shareholding
(x) such other matters as may be
prescribed.
Sioning of annual return. The annual return must be
the Company Secretary, orwhere there is no Company signed by a Director and
Secretary in Practice. Secretary, by a Company
Annual return of One Person Company and Small company must be
the Company Secretary, or where there is no Company Secretary, by thesigned by
of the company.
Director
Certification of annual return. The annual return,filed by a listed company or,
by an unlisted company having such paid-up capital and turnover as may be
prescribed, must also be certified by a Company Secretary in practice in the
prescribed form, stating
() that the annual return discloses the facts correctly and adequately, and
(i) that the company has complied with all the provisions of this Act.
Ika Company Secretary in Practice certifies the annual return otherwise than in
conformity with the requirements of this Section or the rules made thereunder, he
shallbe punishable with fine ranging from ? 50,000 to ?5 lakhs.
Filing of annual return with ROC. Every company shall file with the Register
or Companies a copy of the annual return, within 60 days from the date on which
he Annual General Meeting is held or where no Annual General Meeting is held
n any year within 60 days from the date on which the Annual Meeting should
have been heldItogether with statement specifying the reasons for not holding the
Annual General Meeting.
An extract of the annual return in such form as may be prescribed shallform
part of the Board's
Q.7. Write a notereport.
on Statutory Books and Registers.
Ans. Statutory books and registers. Every company has to maintain the
fol owi)ngRegister of Investrments made by the company but not held in its own
books and registers at its registered office:
name (For example, where a company holds shares in a wholly owned
subsidiary company in the name of its nominees) under Section 187(3).
128 SHIV DAS DELHI UNIVERSITY SERIES
(i) Register of Charges, under Section 85.
(m) Register of Members, under Section 88.
(i0) Register of Debentureholders, under Section 88.
(0) Register of any other security-holders, under Section 88.
(i) Foreign Register, of Members and Debentureholders and other
security-holders residing outside India under Section 88.
(vin) Minutes Book, under Section 118.
(vii) Books of Accounts, under Section 128.
(ix) Register of Contracts with companies and firms in which the directors of
the company are interested, under Section 189.
(r) Register of Directors and Key Managerial Personnel and their
shareholding under Section 170.
(xi) Register of loans and investments etc. made by the
company in other
comparies, under Section 186(9):
(zii) Books of Accounts to be kept by Company
Tribunal under Section 293. Liquidator in winding up by