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Proxies can be counted for quorum -- strange

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

01 September 2011

Friends

AOA of an independent private company provides that proxies can be counted for quorum. It is strange. Initially I was confused and one of the senior CS alerted me that section 170(1)(ii) of the Act does allow this. It is indeed an enriching experience.

Please go through the above provision and share your thoughts.

Regards,

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10 Replies

CS Smriti Sharma (ACS, B Samrish & Co.) (880 Points)
Replied 01 September 2011

Dear Dipjyoti

The quorum at general meetings of private companies and section 43A public company is 2 members personally present, unless the articles of the company provide for a larger number.Therefore physical presence of two members is must.For the purpose of ascertaining quorum, only members present in person, and not by proxies, are to be counted. Even the Articles cannot provide for counting of proxies for the purpose of quorum. However, exception to this rule is there in sections 167 and 186.

Attached herewith is an article on " quorum" which may throw some more light on the issue.

Thanks & Regards :

Smriti Sharma

B. Samrish & Co.

Company Secretaries

www.bsamrishindia.com

Attached File : 614127 819070 quorum.pdf downloaded: 1502 times

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Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 01 September 2011

Smriti

Thanks for your response. I wish to request you to revisit your thoughts. Look, section 174 deals with quorum. Section 170(1)(ii) clearly gives an authority to AOA to decide otherwise for an independednt private company.

I cannot gauge if I am right or wrong.

Regards,

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 01 September 2011

Dear Learned Members,

Section 174 provides that Unless the Article of the Company provides for a Larger Number, five members personally present shall be the quorum in case of Public Company (other than a public compnay which has become such by virtue of section 43A) and in case of private company two members personally present shall be the quorum.

Accordingly, 2 / 5 members PERSONALLY PRESENT shall only be counted for the quorum and not the proxies.

Article can only provide for the larger number and it cannot override the Companies Act.

Therefore the quorum shall be as under:-

Public Company= 5 members personally present

Private Company = 2 members personally present

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 01 September 2011

Dear Dipjyoti,

Article can not provide as you have mentioned above.

Articles can only provide otherwise in respect of subsections 3 to 5 of section 174.

Pavan Bharadwaj (Practicing Chartered Accountant) (353 Points)
Replied 01 September 2011

Proxies cannot be counted for quorum. However they can be counted if the meeting was adjourned meeting because of lack of Quorum. Articles con't provide that proxies can be counted,as it is against to Companies Act 1956

RG - A Helping Hand (Company Secretary) (13867 Points)
Replied 01 September 2011

Agree with you dipjyoti ji…

I was aware about the same as we have used section 170 a lot in our group companies.

It is indeed a powerful section for purely private company. Thanks for making aware everyone.

@ Ankur Ji….Sir kindly check section 170(1)(ii) where AOA of a purely private company provide otherwise.

1 Like

CS Bijoy (Expert) (6394 Points)
Replied 02 September 2011

Agreed with Ankur Sir.....

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 20 October 2011

Dear Richank Ji,

As per section 170(1)(ii) it is provided that the provisions of section 171 to 186 shall apply to the general meetings of Private Company unless otherwise provided therein or unless articles of the company provides otherwise.

However, Articles of the Company can only provide otherwise regarding the provision of section 174(3) to (5) and for section 174(1) it can only provide for larger number. As specifically specified therein.

Accordingly, the quorum shall be as under:

Public Company= 5 members personally present

Private Company = 2 members personally present

G.L.Subhramanian (PCS) (206 Points)
Replied 20 October 2011

Hi,

Section 174 says that 2 members personally present is quorum for private company. Section 170 says that Sections 171 to 186 does apply to private company only if the articles is silent.

In this scenario, 2 proxies shall be counted as quorum. But proxies are entitled to vote only on a poll (Section 176). But again Section 170 says that Sections 171 to 186 does apply to private company only if the articles is silent.

Therefore, for a private company to count proxy in quorum, the articles should give the power for proxy to vote by show of hands also.

Regards,

Subbu

1 Like