Board and General Meetings for Indian Companies
By Gunjan Sinha
Oct. 10 – Limited Liability Companies (LLCs) duly incorporated in India with the Company Registrar are governed by provisions of The Companies Act, 1956. The corporate scenario in India is more or less stringent when it comes to the governance of companies. Company management must comprise of a minimum two directors for a private limited company; they are responsible for carrying out business of the company in an efficient, profitable and legal manner.
To facilitate this objective, there are various provisions in The Companies Act which make it mandatory for companies to hold meetings of the board of directors in each quarter. There must be at least four board meetings duly held with a quorum of two directors present in person in a financial year starting from April, and one in each quarter. The board meetings can be held at any place in India or even abroad, and at any day (including a public holiday), and even after the business working hours, as per the convenience and availability of the directors, of which the directors should receive a prior notice of at least seven days defining the meeting agenda.
The minutes of the previous meeting are approved and signed by the chairman in the next board meeting. The minutes of the meeting should be maintained in minute book leaves which are binded and available at the business premises of the company for inspection.
The general meetings of the shareholders of the company can be categorized into the annual general meeting (AGM) and extra-ordinary general meeting (EGM). The quorum shall consist of a minimum two members in person, or authorized representatives of the artificial person must be present within 30 minutes of the commencement of the meeting, for a validly held meeting of shareholders of the company. A general meeting is said to be validly conducted when the shareholders receive a notice of the meeting sent out by the board of directors defining the agenda at least 21 days prior to the meeting. A provision exists where general meetings can be held at a shorter notice at the approval of shareholders.
The AGM is mandatory to be conducted once every year and covers the adopting of financials, appointing auditors, declaration of dividends, appointing a director in place of a retiring director and any other special business which is to be considered and approved by the shareholders in their meeting. The AGM has to be held at the registered office of the company or within the city in which the registered office of the company is situated, unless otherwise specified by the articles of the company.
The EGM is conducted to discuss any extra-ordinary business which arises between two AGMs. The EGM is held primarily for the businesses which are beyond the authority of the board of directors to disperse and which cannot be delayed until the next AGM for shareholder approval.
Shareholders who are unable to physically attend any AGM or EGM may appoint any natural person as their proxy to vote at the meeting, this is for both natural and artificial persons.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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