Unit : 1 Notices, Agenda & Resolutions
Joint Stock Company
A joint-stock company may be defined as a commercial organization that is owned jointly by all of its owners. The shares symbolise the fact that each shareholder owns a particular quantity of equity in the firm. This form of the company may be found all over the world and is the most common type of business enterprise. A Joint-Stock Company is formed when a group of individuals split a company's capital into transferable shares. Purchasing shares is the only method to become a part of this ownership network.
According to James Stephenson,
“a company is an association of many persons who contribute money or money's worth to a common stock and employs it in some trade or business, and who share the profit and loss arising there from”.
Examples :
Tata Motors Limited.
Reliance Industries Limited, owned by Mukesh D. Ambani, is a premier example of the Joint-Stock Company in India.
State Bank of India
Jindal Steel & Power Ltd.
Grasim Industries Ltd.O
Oil & Natural Gas Ltd. (ONGC)
We can say that,
Joint-stock companies are businesses that combine the structure of a corporation with the flexibility and freedoms of a partnership/limited liability company.
Joint-stock companies are built to benefit all shareholders; each investor owns a piece of the company – in accordance with the amount they’ve invested – and takes a percentage of the company’s profits.
Shareholders get multiple voting rights, electing a board of directors to manage the company on their behalf, while still having a say in every part of how the company is run.
What is a Meeting?
In common parlance, the word meeting means an act of coming face to face, coming in company or coming together.
A meeting therefore, can be defined as a lawful association, or assembly of two or more persons by previous notice for transacting some business. The meeting must be validly summoned and convened. Such gatherings of the members of companies are known as company meetings.
Kinds of Company Meetings
The meetings of a company can be broadly classified into four kinds.
1. Meetings of the Shareholders.
2. Meetings of the Board of Directors and their Committees.
3. Meetings of the Debenture Holders.
4. Meetings of the Creditors.
Meeting of the Directors
Meetings of directors are called Board Meetings. These are the most important as well as the most frequently held meetings of the company. It is only at these meetings that all important matters relating to the company and its policies are discussed and decided upon.
Since the administration of the company lies in the hands of the Board, it should meet frequently for the proper conduct of the business of the company.
i) First Board Meeting
According to Section 173(1) of the Companies Act, 2013, every company shall conduct the first meeting of the Board of Directors within 30 days from the date of its incorporation. The notice issued to the director must specifically mention that it is the first Board Meeting of the company. Every officer has to give this particular notice of the board meeting and if any office fails to do so then he/she will be fined with a penalty of Rs. 25,000. Thus, it is important to conduct the first Board Meeting on time.
Following are the transactions that should take place for the first Board Meeting of the company post-incorporation:-
- Election of the Chairman of that particular meeting.
- Appointment of Chairman of Board of Directors.
- Noting of certificate of incorporation of the company.
- Noting of Memorandum of Association and Articles of Association of the company.
- Noting of first Directors of the company through consent sent by the company’s directors.
- Adopting the common seal of the company.
- Appointing the first Auditors of the company.
- Appointing Company Secretary, if needed.
- Producing a copy of the notice of the registered office of the company.
- Opening a bank account.
- Allotment of shares
- Approving the statement of preliminary expenses.
- Adoption of preliminary contracts.
- Purchase of books and registers by the Directors to the Secretary.
- Authorization for Board for taking loans, if required.
- Authorization for Board for making investments, if required.
- Decision regarding the date, time, and place for the next Board Meeting of the Company.
- Authorization for the printing of share certificates and issuance of share certificates.
- Any other necessities about the company.
2)Meeting of the shareholders
i) Extraordinary General Meeting
An Extraordinary General Meeting (an EGM) can be defined as a meeting of shareholders which is not an Annual General Meeting(an AGM). It is held when some urgent issue about the company arises or any situation of crisis and it requires the input of all senior executives and the Board.
Basically it is held in case of emergency situations and requires the attention of the Board. Members, and shareholders must be instructed on the purpose of the meeting so they have time to prepare their valuable input and then collectively decide further course of action.
However, only certain members with a significant stake in the company are allowed to call for an EGM. EGM can be called by board and requisitionist.
ii) Statutory Meeting
This is the first meeting of the shareholders conducted after the commencement of the business of a public company. Companies Act provides that every public company limited by shares or limited by guarantee and having a share capital should hold a meeting of the shareholders within 6 months but not earlier than one month from the date of commencement of business of the company.
Usually, the statutory meeting is the first general meeting of the company. It is conducted only once in the lifetime of the company. A private company or a public company having no share capital need not conduct a statutory meeting.
iii) Annual General Meeting
As per Companies Act, an annual general meeting must be held by every company once a year without fail. There cannot be a gap of more than 15 months between two AGMs.
However, the first AGM of a company can be held at any date, within a period of 18 months, since the date of incorporation of the company. Annual general meetings help members understand the company’s rate of growth and potential for improvement.
An AGM gives insights into what steps made the company more successful and which steps caused loss. it helps the members and the board to decide the future course of action.
Legally, a notice period of 21 days must be given to all the members before the meeting. However, there is an exception to this rule. If all the voting members consent, the meeting may be held at an earlier date. Further, the following documents are also to be sent with the notice. Articles of Association, company bylaws, and jurisdiction specifies the rules that govern annual general meeting.
The functions of business undertaken at a typical annual general meeting are listed as follows:
The declaration of dividend among shareholders
Consideration of annual accounts
Discussion of the director’s report and the auditor’s report
Appointment and fixing of the remuneration of the statutory auditors
Appointing replacement directors in place of existing directors retiring.
iv) Class Meetings
Class meetings are those meetings, which are held by the shareholders of a particular class of shares e.g. preference shareholders or debenture holders.
Class meetings are generally conducted when it is proposed to alter, vary or affect the rights of a particular class of shareholders. Thus, for effecting such changes it is necessary that a separate meeting of the holders of those shares is to be held and the matter is to be approved at the meeting by a special resolution.
For example, for cancelling the arrears of dividends on cumulative preference shares, it is necessary to call for a meeting of such shareholders and pass a resolution as required by Companies Act. In case of such a class meeting, the holders of other class of shares have no right to attend and vote.
3) Meetings of Debenture Holders
The debenture holders of a particular class conduct these meeting. They are generally conducted when the company wants to vary the terms of security or to modify their rights or to vary the rate of interest payable etc. Rules and Regulations regarding the holding of the meetings of the debenture holders are either entered in the Trust Deed or endorsed on the Debenture Bond so that they are binding upon the holders of debentures and upon the company.
4) Meetings of the Creditors
Strictly speaking, these are not meetings of a company. They are held when the company proposes to make a scheme of arrangements with its creditors. Companies like individuals may sometimes find it necessary to compromise or make some arrangements with their creditors, In these circumstances, a meeting of the creditors is necessary.
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