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 integrated case and after considering above mentioned details regarding proxies, is the rejection by the company in order? Your answer should be based on the applicable provisions of the Companies Act, 2013 and Secretarial Standards. You are also requested to write the provisions related to inspection of proxies. Mr. S, a shareholder of ABC Limited, issued two Proxies in respect of the shares held by him in favour of Mr. 'X' and Mr. 'Y'. The proxy in favour of 'X' was lodged on 22nd December 2021 at 10.00 A.M. and the one in favour of Mr. Y was lodged on 23rd December 2021 at 3.30 P.M. The company rejected both the proxies in favour of Mr. X as well as Mr. Y.

Answer & Explanation:

Section 105 of the Companies Act, 2013 provides that a member, who is entitled to attend and to vote, can appoint another person as a proxy to attend and vote at the meeting on his behalf. As per Section 105 of the Companies Act, 2013 and Para 6.6.1 of SS-2, a proxy should be deposited 48 hours before the time of the meeting. The SS-2 (Secretarial standard-2) also states that where allowed, a member can appoint one or more proxies, to attend and vote instead of himself and a proxy need not be a member. If a Company receives multiple Proxies for the same holdings of a Member, the Proxy which is dated last shall be considered valid. In the given case, the proxies should have, therefore, been deposited on or before 22nd December 2021 latest by 2.30 P.M. (the date of the meeting being 24th December 2021, at 2.30 P.M.). Proxy in favour of Mr. Y was deposited on 23rd December 2021 at 3.30 P.M. Therefore, proxy in favour of Mr. Y has become invalid, being less than 48 hours before the time of the meeting. Thus, rejecting the proxy in favour of Mr. X is unsustainable; because proxy in favour of Mr. X is valid since it was deposited in time (i.e. on 22nd December 2021 at 10.00 A.M.). Inspection of proxy: As per section 105(8) of the Companies Act, 2013, every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, is entitled to inspect the proxies lodged with the company, if at least 3 days' notice in writing is given to the company. Such notice shall be received at least three days before the commencement of the Meeting. As per para 6.8.2 of the SS-2, proxies shall be made available for inspection during the period beginning twenty-four hours before the time fixed for the commencement of the Meeting and ending with the conclusion of the Meeting. Every Member entitled to vote on any Resolution at a General Meeting is entitled to inspect the proxies lodged with the company. The inspection should be allowed during the period starting twenty-four hours before the time fixed for the commencement of the Meeting and ending with the conclusion of the Meeting. Inspection shall be allowed between 9 a.m. and 6 p.m. during such period.

Topics: Company Law, Secretarial Standards

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