Let’s try to find out how short, a shorter notice of a general meeting should be? Should it be 1 week, one day or an hour or even less?
A general meeting of a company may be called by giving not less than clear twenty-one days' notice either in writing or through electronic mode in such manner as may be prescribed under the Companies Act, 2013.
The period of twenty-one days' instead of fourteen days' was first introduced under Companies Act, 1956 and the concept of clear days was first introduced under Companies Act, 2013 ('the Act').
Period of clear twenty-one days' is provided to the members to enable them to campaign and canvass the proxies if they so desired and also to canvass opinion in favor or against a particular resolution proposed to be considered at the meeting of a company.
The Act also provides that a general meeting may be called after giving a shorter notice than twenty-one clear days if consent, in writing or by electronic mode, is obtained from members as per below:
(i) in the case of an annual general meeting, by not less than ninty-five percent. of the members entitled to vote thereat; and
(ii) in the case of any other general meeting, by members of the company-
(a) holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
(b) having, if the company has no share capital, not less than ninty-five per cent. of the total voting power exercisable at that meeting:
Provided further that where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub section in respect of the former resolution or resolutions and not in respect of the latter.
It is pertinent to note that all the members must be furnished with the copy of agenda along with all the relevant documents keeping in mind the requirements of law together with the Notice and the Meeting shall be held only if the consent is received for holding the meeting at shorter notice prior to the time fixed for the Meeting.
As a general rule obtaining of consent for a shorter notice cannot dispense other requirements under the Act.
The Act is silent on how short can a shorter - notice of general meeting be, however, if a company is in position of receiving the consent from all of its members i.e a unanimous consent to convene a general meeting at a shorter notice, the meeting can even be convened immediately after serving the notice to all the members and receipt of consents.
Convening of a meeting at a shorter notice is based on the Duomatic principal as stated in the Express Engineering Works Re (1920).
The Duomatic principle is a sound and sensible principle of company law allowing the members of the company to reach an agreement without the need for strict compliance with formal procedures, what matters is the unanimous assent of those who ultimately exercise power over the affairs of the company through their right to attend and vote at a general meeting. It does not matter whether the formal procedures in question are stipulated for in the articles of association or in the Companies Act. What matters is that all the members have reached an agreement and If they have, they cannot be heard to say that they are not bound by it because the formal procedures were not followed. The position is treated in the same way as if the agreed formal procedure had been followed.
However, if the consent to convene a general meeting at a shorter notice is received from requisite majority and not from the full or 100% majority then a Company must give at least seven days 'notice in case candidature of any director (other than a retiring director) is proposed to be placed at a general meeting to comply with the requirement of the Section 160 of the Act and in any other case at least 48 hours' notice should be given to the members to appoint a proxy if they do wish so in accordance with the Section 105 of the Act.
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