INDIA Law and Practice Contributed by: C R Dua, Sanjeev Kaul, Abhinav Rastogi and Ashish Malkotia, Dua Associates
• to receive the notice of the general meeting along with an explanatory statement setting out the material facts concerning each item of special business to be transacted at the general meeting; • to inspect the minutes book of the general meet- ings; • to inspect the statutory registers maintained by the company under the Act, such as the register of members, the register of contracts or arrange- ments in which directors are interested; and • to inspect the annual returns submitted by the company. 2.5 Format of Meeting Shareholders’ meetings are held physically. However, COVID-19-related restrictions on the movement of persons in 2020 led to the government permitting companies to hold such meetings through videocon- ferencing or other audio-visual means for a prescribed period; this has been repeatedly extended by the government and is currently valid until 30 September 2025. Certain classes of companies are also required to provide e-voting and postal ballot facilities to share- holders. 2.6 Quorum, Voting Requirements and Proposal of Resolutions The quorum requirements for the general meetings are as follows. • For a public company, if on the date of the meet- ing, the total members of the company are: (a) not more than 1,000 – five members personally present; (b) between 1,000 and 5,000 – 15 members per- sonally present; and (c) more than 5,000 – 30 members personally present. • For a private company – two members personally present. However, the articles can provide for a higher quorum. 2.7 Types of Resolutions and Thresholds There are two primary types of resolutions, which the shareholders pass by casting their votes either on a show of hands, electronically or in a poll: an “ordinary resolution” and a “special resolution”.
An ordinary resolution is a resolution for which a notice has been duly given and must be passed by a simple majority (votes cast in favour exceed the votes against the resolution). A resolution is classified as a special resolution when the notice for the general meeting clearly indicates the intention to propose it as such. For a special resolu- tion to be approved, the votes in favour must be at least three times the number of votes cast against it. This means that at least 75% of the votes must be in favour of the resolution for it to be adopted. Only the votes of members who are “entitled and vot- ing” are counted. The Act also prescribes a special majority for very few matters – eg, a compromise or arrangement with creditors and members requires the approval of the majority of members representing 75% in value of the share capital voting in person or by proxy or postal ballot. 2.8 Shareholder Approval Certain matters are reserved under the Act for share- holders’ approval by way of ordinary resolution or special resolution. Matters requiring ordinary resolution include: • appointing a director in place of those retiring; • considering the audited financial statements and the reports of the directors and auditors; • declaring a dividend; • appointing auditors and fixing their remuneration; • removing a director; • entering into certain related party transactions; and • altering the memorandum to increase, consolidate, sub-divide, convert or cancel share capital. Matters requiring special resolution include: • altering the objects clause in the memorandum of a company or changing the place of its registered office from one state to another; • changing the name of a company; • altering the articles; • varying the rights of special classes of shares;
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