Meetings of Creditors, Debenture holders and Contributories:

Key Points:

1. Meetings of Creditors.
2. Notice of Meeting of Creditors.
3. Procedure of Meeting of Creditors.
4. Meeting of Debenture holders.
5. Notice of Meeting Under Section (101).
6. Who can send the Notice?
7. Period of Notice.
8. Contents of notice Under Section 100 (2).
9. Persons to whom Notice must be given Under Section 101 (3).
10. Method of Service (giving) of Notice.
11. Duties of Secretary regarding Notice.
12. Statement to be Annexed with Notice Under Section (102).

 

Link : https://smckk14.blogspot.com/2023/07/company-meetings-meetings-of-directors.html

1. Meetings of Creditors:

This meeting is meant by a meeting arranged by the company to discuss any plan / scheme for arrangement with its creditors.

Creditors Meetings are also organised in case of Creditors Voluntary Winding up. In such a case, the company calls meeting on the day at which the resolution for voluntary winding up is to be proposed. The notice is sent by the post to the creditors and published in at least two newspapers informing where the meeting to be conducted.

(i) Meeting of Creditors is conducted according to provision under section 108, 109, 110 and 111. (Voting)

(ii) In this meeting, the creditors may decide to approve, modify or reject the plan of repayment.

(iii) If modifications are suggested by the creditors, consent of the debtor is obtained for each modification.

(iv) On sufficient reason, the creators meeting may be adjourned for a period of not more than 7 days at a time.

2. Notice of Meeting of Creditors:

Notice is hereby given that, a meeting of the creditors (name of company) will be held at (address) on (date and time).

The winding up of the company commenced on (date) and I was appointed liquidator by resolution of the members of the company. As the directors declared that the company would be able to pay its debts in full within a period of (period) offer commerce winding up, the liquidation is proceeding as a member’s voluntary winding up.

I have formed the opinion that the company will not be able to pay its debts in full within that period and this meeting is summoned in order that the creditors may, if they so wish, exercise their right, the appoint some person other than myself to be liquidators of the company for the purpose of winding up the affairs and distributing the assets of the company.

A statement of the assets and liabilities of the company will be laid before the meeting.

3. Procedure of Meeting of Creditors:

In the meeting, the Board of Director (s) must present a statement of the financial position of the company along with a list of creditors and the projected payment of creditors.

Following steps may be taken with 2/3rd majority –

(i) If it is in the interest of all parties that the company wound up on the voluntary basis, the company would wound up voluntarily.

(ii) If the company may not be able to pay in full, then a resolution can be passed for winding up of the company by a Tribunal.

The notice of any resolution passed in meeting of the creditors must be filed with the registrar within a period of 10 days.

In case of violation by the company, it will be punished with fine of minimum ₹ 50,000 and maximum ₹ 2 lakh and director who is in default with 6 months of Jail along with minimum ₹ 50000 and maximum ₹ 2 lakhs or with both.

4. Meeting of Debenture holders:

Companies have the right to issue debentures and to implement the process of Meeting of Debenture holders. It is between Board of Directors and debenture holders to discuss rights and responsibilities related to debentures. This meeting is conducted as per provisions mentioned in ‘Debenture Trust Deed’. This meeting is called from time to time when the interest of debenture holders are involved at the time of reorganisation, amalgamation, reconstruction or winding up of the company. The rules and regulations mentioned in the deed are related to the notice of meeting, appointment of chairman of the meeting, passing resolution, quorum signing and minutes of the meeting.

5. Notice of Meeting under section (101):

Meaning –

It is necessary for a meeting to be valid that its notice must be sent through appropriate authority in proper format. Notice must be given to the persons who are eligible to attend meeting. In the notice, the concerned persons are informed about date, time, place and agenda of the meeting.

6. Who can send the Notice?  

Normally, the Board of Director sends the notice of meeting but this may be delegated by the Board to the Secretary. If the secretary sends the notice on the basis of order of board, he /she must mention ‘By order of Board’ or ‘On behalf of Board’ before signing the notice. If the Board makes any default in calling AGM, the central government may call it or Central government may direct the Board to conduct the meeting.

In such condition, The Central Government, at its own, may send the notice or any official of the company may send the notice obeying the order of government.

The members may also call the meeting, if the Board, does not call the meeting within 45 days after submitting the requisition of the Board.

In certain circumstances, the Government of India may call the meeting directly.

7. Period of Notice:

Notice of General Meeting must be sent at least before 21 days of meeting. In the period of 21 days, the day of receipt of notice and day of meeting are not included i.e. the company should send the notice before 23 days.

In the following cases, notice days may be less than 21 days –

(i) In case of AGM, if all the members entitled to present and to vote give their consent.

(ii) In case of other General Meeting, (a) If company has share capital at least 95% of members of paid up share capital who have voting rights. or (b) If company has not share capital, on the consent of the members who have 95% voting rights in total votes.

8. Contents of Notice Under Section 100 (2):

The notice should contain following information –

(i). Date, Time and Place,

(ii) Nature and Type,

(iii) Objective,

(iv) Agenda,

(v) Resolution to be passed, (if any)

(vi) Information of important contracts, (if any)

(vii) Right to appoint proxy with proxy form,

(ix) Section under which the meeting is being called.

9. Persons to whom notice must be given under section 101 (3):

(i) Every member, legal representative of deceased member or to liquidator of insolvent member,

(ii) Auditor (s),

(iii) Every Director,

In case of joint members, notice is sent to that person whose name is entered first in the register of members.

10. Method of Service (giving) of Notice:

Notice maybe sent on registered address or in person by post. When the company send notice of registered address through post by affixing stamp of proper value, it is considered as the notice has been delivered.

If the notice has been sent to the entitled person through registered post or UCP, on his request and he has paid the charge of post, it will be compulsory for the company to send the notice according to his request otherwise the notice could not be considered as delivered.

If companies sends notice through registered post, it is considered that the notice could have been delivered to the concerned person. If same member have no permanent address or registered address, they are informed through newspapers. In such a case, it is considered that the concerned person (s) has received the notice on the date at which the information of meeting has been published.

If, by any reason, the secretary forgets to send the notice or notice has been sent but not received, the meeting would not be invalid. U/s 104

11. Duties of Secretary regarding Notice:

(i) The draft of General Meeting is prepared as per instruction of Board of Directors and draft of Board meeting is prepared in consultation with chairman.

(ii) For all types of meetings, the notice must contain date, place, time and agenda.

(iii) Printing and Issue of Notice.

(iv) Attachment of essential document with notice e.g. Proxy form, Balance Sheet, Reports of Auditors and Directors and Auditor financial statement etc.

(v) Notice of GM to members, legal representative and liquidator to registered address. Notice of board of directors meeting to each director, who are in India and at the usual Indian address of directors who are not in India.

12. Statement to be Annexed with Notice Under Section (102):

(i) Description of Facts - It is mandatory to annex the statement of facts with the notice of meeting in request to special matters going to be transacted in any General Meeting.

(ii) Special Business - In case of any AGM, following matter other than under mentioned shall be treated as special business –

(a) Discussion on financial statement.

(b) Declaration of dividend.

(c) Appointment of new directors in place of retiring directors.

(d) Appointment of auditor (s) and deciding remunerations.

(iii) In case of Non-Disclosure or Insufficient Disclosure – Where, due to non-disclosure or insufficient disclosure of any statement by a promoter, director, manager or any other key managerial personnel, these happens any direct or indirect benefit to them or their relatives the company shall be liable to reimburse the amount of such benefit.

(iv) Penalty - In case of any default, every such promoter, director, manager or managerial personnel shall be liable for penalty of rupees 50,000 for self-benefits and in case of relatives, five times more.