Question6: The Annual General Meeting of the Z ltd. was scheduled to be held on 30th December 2018...

 Question6: The Annual General Meeting of the Z ltd. was scheduled to be held on 30th December 2018. Due to insufficient quorum, it had to be adjourned. What rules should be followed while adjourning the meeting? What is the quorum required for Z ltd.? What if the quorum is not present in a general meeting? Can a single member constitute quorum of a general meeting?

Answer : rules should be followed while adjourning the meeting

1) If any members’ meeting cannot be organized because a quorum has not attended or because the greater percentage of the membership required to constitute a quorum for particular purposes has not attended, wherever the latter percentage of attendance may be required by the terms of the Articles of Incorporation, these Amended and Restated Bylaws, or the Amended and Restated Declaration, the members who are present, either in person or by proxy, may adjourn the meeting from time to time until a quorum is present.

2) If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 10.1 hereof. In the case of any meeting called for the election of Directors, those who attend the second of such adjourned meetings, although less than a quorum as fixed in Section 6.1 hereof, shall nevertheless constitute a quorum for the purpose of electing Directors.

3) If a quorum is not present or represented at any meeting of the Members, the meeting may be adjourned by majority vote of the Units entitled to be voted which are present, either in person or by proxy, until such time as the requisite number of Units constituting a quorum is present. August 10, 1999 Restated October 26, 2004.

The Companies Act, 2013 (hereinafter referred to as the Act) requires that a company established under the Act has to hold General meetings as well as Board meetings periodically. To ensure that the companies follow this regulation and that such meetings are held properly, it requires a quorum to be met for it to be deemed as a valid meeting.
A ‘Quorum’ in simple words means the minimum number of members that have to be present. Under the Act, the quorum for a General Meeting, a Board Meeting and an Extraordinary General Meeting is enumerated within its provisions.

Quorum Required for a General Meeting

Section 103 of the Act states the quorum required for a General Meeting. Under this Section, unless the Articles of Association of the company provide for a larger quorum, the minimum quorum must be: For public companies:

  • 5 members present if as on the date of the meeting being held, the number of members in the company does not exceed one thousand.
  • 15 members present if as on the date of the meeting there are more that one thousand members but less than five thousand members.
  • 30 members present if as on the date of the meeting there are more than five thousand members.

For private companies:

  • In the case of a private company regardless of the number of members, two members must be present for the quorum to be met for a meeting.

Sub-clause (2) and (3) of the same Section, the Act provides for when the quorum has not been met. If the quorum is not present within half an hour of the timeset for the meeting to begin, then the following options will be applicable:

  • The meeting will be adjourned, and it shall be held on the same day and at the same time next week, or any other date and time as the Board may determine. If the meeting is adjourned then the date, time and place of the meeting will be notified personally or via advertisement. The advertisement must be published in both English as well as the vernacular language in a newspaper which is in circulation at a place where the registered office of the company is situated.
  • The meeting, if called by requisitionists under Section 100, shall stand cancelled.
  • Under sub-clause (3), if the quorum is not present at the adjourned meeting, then the members present shall be the quorum.

Quorum Required for a Board Meeting

A board meeting is a meeting that is held between the directors of a company. Such meetings are held usually to take important decisions about the company. To make sure that such decisions are not taken arbitrarily, the Act requires a quorum for the meeting and the decisions taken in the meeting to be valid. Section 174 of the Act provides the quorum for a board meeting:

  1. Section 174 (1) states: – The quorum for a board meeting must be 1/3rd of the total number of directors or 2 directors whichever is the higher number. Therefore in case, there are only three directors in a company, then at least two must be present even though 1/3rd would entail that only one director needs to be present. – If the directors are not physically present but take part in the meeting via any audio/visual means, they too shall be considered part of the quorum.

  2. Section 174(2) states: – In the case where the quorum for a board meeting is not present, the directors may only take two courses of action: 1. They may act for the purpose of increasing the number of directors to that fixed for the quorum or, 2. They may act to summon a general meeting.

  3. Section 174(3) states: Where the number of interested directors ,i.e. directors who have invested in the company, exceeds or is equal to 2/3rd of the board of directors, the number of not interested directors present at the meeting has to be at least 2 for the quorum.

  4. Section 174(4) states: – In the case where the board meeting could take due to the lack of the quorum, the board meeting shall be adjourned. This is subject to the Articles of Association of the company. Therefore as long as the articles of the company do to state otherwise the meeting will be adjourned – The meeting will be adjourned to the same time and place as the original meeting on the same day the following week. – In the case where the adjourned date is a national holiday, then the board meeting will be held at the same place and time on the following day.

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