company law
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Anonymous
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19 March 2011
what are the instances in which one single person can form a quorum
19 March 2011
Quorum for Meeting
"Quorum" means the minimum number of persons required to be present at a meeting for transacting corporate business. In the absence of a quorum the proceedings of the meeting will be a nullity. The provisions of the Companies Act, 1956, are very specific in regard to minimum number of Directors or members who shall form a quorum either for a Board Meeting or for a General Meeting of the members and require that without quorum, no business can be transacted subject, of course, to certain exceptions. Section 287 provides for the quorum of Board Meetings and section 174 provides for the quorum of General Meetings. The provisions contained in section 174 may be overridden by the articles of association of a company to the extent of providing a larger quorum and not a smaller quorum.
"Quorum" means the minimum number of persons required to be present at a meeting for transacting corporate business. In the absence of a quorum the proceedings of the meeting will be a nullity. The provisions of the Companies Act, 1956, are very specific in regard to minimum number of Directors or members who shall form a quorum either for a Board Meeting or for a General Meeting of the members and require that without quorum, no business can be transacted subject, of course, to certain exceptions. Section 287 provides for the quorum of Board Meetings and section 174 provides for the quorum of General Meetings. The provisions contained in section 174 may be overridden by the articles of association of a company to the extent of providing a larger quorum and not a smaller quorum.
19 March 2011
Quorum in different cases
The general rule is that at least two Directors or one-third of the total number of Directors, whichever is higher should be present in order to constitute a quorum of a meeting of the Board and for a General Meeting, at least five members of a company should be personally present in the case of public company (other than a public company which
has become such by virtue of section 43A) and at least two members should be personally present in the case of any other company. In exception to the above provisions, there may be valid meeting with 'one person' present. Following are the cases of one-man meeting:
(a) Where all of the shares of a particular class (Preference Shares) are held by one person, that person can
constitute a meeting of preference shareholders., This may also happen in the case of debenture-holders' meeting where all the debentures issued by a company are held by one person.
(b) Usually the articles of companies authorise the Board of Directors, subject to the provisions of the Companies Act, to delegate any of its powers to a committee consisting of such Director or Directors as it thinks fit, and if there is no stipulation in such delegation in regard to quorum, one person, if he forms such committee, shall constitute a valid meeting of that committee.
(c) Regulation 75 of Table 'A' of Schedule I provides (and most of the companies' Articles of Association similarly provide) that if the number of Directors is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing Director or Directors may act for the purpose of increasing the number of Directors or for summoning a General Meeting. In such a case, one Director may form a valid meeting for the limited purpose of appointment of a new Director or Directors or for summoning a General Meeting of the company.
(d) In the event of default of holding an Annual General Meeting of a company in accordance with section 166, Explanation under sub-section (1) of section 167 of the Act provides that with the direction of the 'Company Law Board', one member of the company shall be deemed to constitute a meeting (one member present in person or by proxy).
(e) If a meeting other than the Annual General Meeting cannot be called according to the manner prescribed by the Act or the articles, Explanation to sub-section (1) of section 186 provides that the Company Law Board may order a meeting to be held by one member present in person or by proxy.
Where the total number of members of a company becomes reduced below the quorum fixed for a meeting, it would appear that the rule as to quorum will be satisfied, if all the members of the company though less than the quorum fixed under the articles are present. [Palmer's Company Law]
The required quorum should not only be present at the time when the meeting proceeds to do business (Regulation 49 in Table A) but it should also be present when questions are brought before the meeting and are being decided. Henderson v. Lonitt & Co. Ltd., (1894) 1 Rethe 674,
Quorum being a mandatory provision even adjourned board meetings should have quorum and if such meetings are held without quorum. They will be void. Maharani Yogeshwari Kumari v. Lake Shore Palace Hotel, (1996) 21 CLA 107 (Raj).
The general rule is that at least two Directors or one-third of the total number of Directors, whichever is higher should be present in order to constitute a quorum of a meeting of the Board and for a General Meeting, at least five members of a company should be personally present in the case of public company (other than a public company which
has become such by virtue of section 43A) and at least two members should be personally present in the case of any other company. In exception to the above provisions, there may be valid meeting with 'one person' present. Following are the cases of one-man meeting:
(a) Where all of the shares of a particular class (Preference Shares) are held by one person, that person can
constitute a meeting of preference shareholders., This may also happen in the case of debenture-holders' meeting where all the debentures issued by a company are held by one person.
(b) Usually the articles of companies authorise the Board of Directors, subject to the provisions of the Companies Act, to delegate any of its powers to a committee consisting of such Director or Directors as it thinks fit, and if there is no stipulation in such delegation in regard to quorum, one person, if he forms such committee, shall constitute a valid meeting of that committee.
(c) Regulation 75 of Table 'A' of Schedule I provides (and most of the companies' Articles of Association similarly provide) that if the number of Directors is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing Director or Directors may act for the purpose of increasing the number of Directors or for summoning a General Meeting. In such a case, one Director may form a valid meeting for the limited purpose of appointment of a new Director or Directors or for summoning a General Meeting of the company.
(d) In the event of default of holding an Annual General Meeting of a company in accordance with section 166, Explanation under sub-section (1) of section 167 of the Act provides that with the direction of the 'Company Law Board', one member of the company shall be deemed to constitute a meeting (one member present in person or by proxy).
(e) If a meeting other than the Annual General Meeting cannot be called according to the manner prescribed by the Act or the articles, Explanation to sub-section (1) of section 186 provides that the Company Law Board may order a meeting to be held by one member present in person or by proxy.
Where the total number of members of a company becomes reduced below the quorum fixed for a meeting, it would appear that the rule as to quorum will be satisfied, if all the members of the company though less than the quorum fixed under the articles are present. [Palmer's Company Law]
The required quorum should not only be present at the time when the meeting proceeds to do business (Regulation 49 in Table A) but it should also be present when questions are brought before the meeting and are being decided. Henderson v. Lonitt & Co. Ltd., (1894) 1 Rethe 674,
Quorum being a mandatory provision even adjourned board meetings should have quorum and if such meetings are held without quorum. They will be void. Maharani Yogeshwari Kumari v. Lake Shore Palace Hotel, (1996) 21 CLA 107 (Raj).
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