ABC Limited was incorporated on 14th October 2020 with the objective of manufacturing of Cement. The plant was commissioned in April 2021, at a cost of ₹580 Crores at Somnath, Gujarat. The Company was promoted by Chahal

CS Executive · Company Law and Practice · PYQS · December 2023
ABC Limited was incorporated on 14th October 2020 with the objective of manufacturing of Cement. The plant was commissioned in April 2021, at a cost of ₹580 Crores at Somnath, Gujarat. The Company was promoted by Chahal group. It is important to note that at present, ABC Limited is not a listed Company. Over a period of time, ABC Limited has grown to become one of India's largest manufacturers and exporters of cement and having 800 members. The Quorum fixed by the Articles of ABC Limited was 7 members present. In line with its long-term vision, the company has diversified into Home Textiles, Cotton Yarn, Industrial/Edible Salt and Lignite Mining. The current composition of the Board of Directors of ABC Limited is as follows: Total number of directors: 10 Independent Directors: 5 (including one woman director) Whole-Time Directors: 3 (including Managing Director, Executive Director - Finance, and Executive Director - Operations) Non-Executive Promoter Directors: 2 (1 Chairman and 1 Vice Chairman). The Board approved Notice to call 1st Annual General Meeting on 24th December 2021 at 2.30 P.M. (IST) to approve several resolutions including adoption of audited financial statements of the Company for the financial year ended March 31, 2021; approval regarding appointment of directors etc. Record Date/Cut-off date for said AGM was fixed on 17th December 2021. Notice of the AGM contains Notes related to Proxy, which is reproduced as under: A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF. A PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER TO BE EFFECTIVE MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTY EIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING. A PROXY FORM IS ENCLOSED WITH THIS NOTICE. Based on the above integrated case and after considering following details of the persons present in the general meeting of ABC Limited, check whether the quorum of the Annual General Meeting is validly constituted or not. Mr. A, the representative of Governor of Gujarat. Mr. B & Mr. C are preference shareholders. Mr. D representing PQR Ltd. And XYZ Ltd. Mr. E, Mr. F, Mr. G and Mr. H are proxies of shareholders

Answer & Explanation:

Since Mr. A is the representative of the Governor of Maharashtra, shall be treated as a member personally presents (Section 112). Preference shareholders can vote only in relation to such matters which directly affect their rights. (Section 47) In this case, meeting was called to take decision on approval of financial statements and appointment of Directors, which does not affect their rights. Therefore, Mr. B & Mr. C cannot be counted for the purposes of quorum, though they may be personally present. Since Mr. D represents two body corporates, he would be treated as two members personally present. (Section 113) Since Mr. E, Mr. F, Mr. G and Mr. H are proxies of shareholders and members are not personally present. They are not considered while counting quorum. (Section 105) As per the section 103 (1) of the Companies Act, 2013, unless the articles of the company provide for a larger number, - (a) in case of a public company, - five members personally present if the number of members as on the date of meeting is not more than one thousand; fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand; thirty members personally present if the number of members as on the date of the meeting exceeds five thousand. From the above analysis, it can be concluded that only 3 members are personally present and the Quorum fixed by the Articles of ABC Ltd was 7 members present, so they do not constitute proper quorum.

Topics: Company Law

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