Provisions of the Company’s Act relating to
Statutory Meeting
(Sec. 165 of the Companies Act, 1956 – This section is not included in the new
Companies Act, but due to absence of proper notification, this section should
also be studied)
Statutory Meeting: A public
company limited by shares or a guarantee company having share capital is
required to hold a statutory meeting. Such a statutory meeting is held only
once in the lifetime of the company. Such a meeting must be held within a
period of not less than one month or within a period not more than six months
from the date on which it is entitled to commence business i.e. it obtains
certificate of commencement of business. In a statutory meeting, the following
matters only can be discussed:
Ø Floatation
of shares / debentures by the company
Ø Modification
to contracts mentioned in the prospectus
The purpose of the meeting is to enable
members to know all important matters pertaining to the formation of the
company and its initial life history. The matters discussed include which
shares have been taken up, what money has been received, what contracts have
been entered into, what sums have been spent on preliminary expenses, etc. The
members of the company present at the meeting may discuss any other matter
relating to the formation of the Company or arising out of the statutory report
also, even if no prior notice has been given for such other discussions but no
resolution can be passed of which notice have not been given in accordance with
the provisions of the Act.
A notice of at least 21 days before the
meeting must be given to members unless consent is accorded to a shorter notice
by members, holding not less than 95% of voting rights in the company. A
statutory meeting may be adjourned from time to time by the members present at
the meeting.
Provisions
Relating to Statutory Report
1. Companies which can hold such meeting: A
company limited by shares and a company limited by guarantee & having share
capital are the companies which can hold statutory meeting.
2. Companies which need not hold the meeting:
Private company whether independent or
subsidiary of a public company.
A public company not having share capital
An unlimited public company.
A public company limited by guarantee and not
having share capital
A Government company.
3. Time limit for the meeting: A
statutory meeting may be held within a period of Not less than one month not
more than 6 months From the date of receiving the certificate of commencement
of business.
4. Notice of the meeting: A
minimum of 21 clear days notice is to be given.
5. Object: The
main purpose of the meeting is to enable the members of the company to know at
an early date the financial position and the prospects of the company and also
to provide them an opportunity to discuss on various matters arising out of
promotion and formation of the company.
6. Importance: this
meeting is held only once during the life time of the company and is the first
meeting of the company.
7. Adjournment of Statutory
meeting: The statutory meeting may be adjourned from time to
time according to the provision of the companies Act, 1956 and the power to
adjourn vests in the hand of the shareholders.
8. Penalties: If
default is made complying the requirement of section 165, every person
responsible shall be punishable with a fine extended to Rs. 5,000/-. If the
company fails to call a statutory meeting then it becomes a sound ground for
the winding up of the company.