AGM Delay and a Requisitioned EGM at Kaveri Infra Limited
Kaveri Infra Limited is an unlisted public company with 1,450 members and paid-up equity capital of ₹15 crore. Its financial year ended on 31 March 2024. The annual general meeting has not been held. The Board has fixed 28 December 2024 as the date, explaining that the statutory auditor's re-appointment and the finalisation of accounts need more time. Separately, on 3 June 2024, 180 members holding 12% of the paid-up capital deposited a validly signed requisition under Section 100 at the registered office, demanding an extraordinary general meeting to remove the Managing Director under Section 169. The company dispatched notice for that EGM on 20 July 2024, convening it on 30 August 2024, and proposes to move the removal resolution without any special notice. The Managing Director's family holds 30% of the shares. The requisitionists want to know whether the Board's timetable is lawful and whether they can call the meeting themselves.
1. Is the Board's proposed date of 28 December 2024 for the annual general meeting lawful? State the consequences if it is not.
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Statutory deadline. Under Section 96(1) a company must hold its AGM once in every year, within six months from the close of the financial year, and the gap between two AGMs cannot exceed fifteen months. For the year ended 31 March 2024 the outer limit is therefore 30 September 2024.
Extension. The proviso to Section 96(1) allows the Registrar to extend the period by up to three months for special reasons, but only on an application made before the expiry of the period. Delay in finalising accounts or in re-appointing the auditor is ordinary administrative difficulty, not a "special reason"; an extension on those grounds is unlikely to be granted.
Consequence. An AGM held on 28 December 2024 would be beyond both the six-month and the fifteen-month limits. The meeting and the resolutions passed at it are exposed to challenge, and the company and every officer in default are punishable with fine under Section 99, with a continuing fine for each day the default continues. The 30 September date is also the trigger for the related filings and for the auditor's re-appointment under Section 139(1), which must be ratified at that meeting.
Advice. The Board should either convene the AGM well before 30 September 2024, or apply to the Registrar for extension immediately, setting out a genuine special reason rather than workload.
2. Analyse the validity of the Board's handling of the Section 100 requisition, and state the requisitionists' options with dates.
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Board's duty. On a valid requisition by members holding at least one-tenth of the paid-up capital, Section 100(2) requires the Board to call the EGM within 21 days of the deposit and to hold it within 45 days of the deposit.
Application to the dates. The requisition was deposited on 3 June 2024, so the meeting had to be called by 24 June 2024 and held by 18 July 2024. The notice issued on 20 July 2024 and the meeting convened for 30 August 2024 satisfy neither limb. The Board's timetable is invalid and the delay is unexplained.
Requisitionists' remedy. Because the Board failed to proceed duly, Section 100(4) permits the requisitionists themselves to call the meeting, but it must be held within three months of the deposit of the requisition, i.e. by 3 September 2024. They should therefore issue notice immediately, on not less than 21 clear days under Section 101, unless 95% of the members entitled to vote consent to shorter notice. Reasonable expenses incurred by them are recoverable from the company, which may in turn recover them from the defaulting directors under Section 100(6). The window closes on 3 September 2024, so any further delay destroys the remedy.
3. The company proposes to pass the resolution removing the Managing Director without special notice. Is that valid, and what protection does the Managing Director have?
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Special notice is mandatory. Section 169(2) requires special notice of a resolution to remove a director before the expiry of his term. Under Section 115, special notice means the intention to move the resolution must be given to the company at least 14 days before the meeting; where the meeting is called on 21 clear days' notice, the company must then give members notice of the resolution at least seven days before the meeting. The company cannot dispense with this by ordinary majority consent.
Effect of omission. A removal resolution moved without special notice is invalid and can be restrained or set aside, even if it carries 70% of the votes. The defect goes to jurisdiction, not to the majority's strength.
Rights of the director. Under Section 169(3) the director is entitled to make a representation in writing against his removal, which the company must send to members with the notice of the meeting; under Section 169(4) he may also attend and speak at the meeting, whether or not he is a member and whether or not the company has circulated his representation. His family's 30% shareholding does not affect these rights, though it may affect the vote.
Practical step. The requisitionists should serve special notice simultaneously with the EGM notice and preserve proof of service; the company should circulate the representation or record at the meeting why it was not circulated.