Shorter notice for egm (companies act, 2013)

Co Act 2013 22974 views 4 replies

Arjun G.

DEF

57 Points Joined November 2013

Dear Experts,

As per section 101 of the Companies Act, 2013, General Meetings are to be convened at least 21 clear days before such meeting, provided that shorter notice may be valid with the consent of 95% of the members entitled to vote at that meeting.

Hence, the following question:

Since all the members of a company are bound by the provisions of the Articles of Association, can the Articles state a shorter period for notice of meeting? The idea would be to rely on the second paragraph of section 101, which allows a shorter notice with the consent of 95% of the members. Would it work if such consent is given beforehand in the Articles?

Thanks for your advices and opinions on this!

Replies (4)

Vandana J Doshi

Practising Company Secretary

12562 Points Joined May 2011

Hi Fennekk,

the general rule is that a company can put a stricter provision as compared to the provision given in the Act....it can never make a provision lenient in comparison to the Act....so you can put that in place of 95%, 100% approval is required....but you can never put that 90% approval can be done.

Hope it is clear...you can also refer to the specimen AOA as given in the ACt...

Regards

Arjun G.

DEF

57 Points Joined November 2013

Thanks a lot for your reply. I totally agree with you as to the possibility to enforce stricter - but not lighter - obligations in comparison with the Act.

However, what I am specifically looking for is the possibility for the members to agree collectively and in advance for shorter notice, through the Articles (I've been through the model AoA which are silent on this point), so that we don't have to collect the consent of 95% of the members every time we hold an EGM.

This could be formalized in the AoA or even in a Shareholders' Agreement, for instance, as followed: "In accordance with the provisions of Section 101 of the Act, any extraordinary general meeting of the Company shall be convened by giving at least 21 clear days' notice, or on such shorter notice, as may be decided by the Board of Directors'.

In this regard, 100% of the members of the Company would express their consent, for their time being in the Company, on convening on shorter notice, which would comply with the provisions of the Act.

What do you think? thanks a lot for your insight.