Legal Studies

Legal studies is the cream topic in this present day world. It concerns about the knowledge, skill and performance in the field of law. To be an adept lawyer there is no way other than the study of law. There are many subjects and topics of law and one cannot be a good and dexterous lawyer in all the subjects. So one should choose a topic like Criminal Law, Civil law, company law, Mercantile law or any other subject so that it makes him an expert. Nontheless in academic sessions a student should have a fairly knowledge in each and every subject to secure a good result.

Meeting Under Company Law (Bangladesh)
Meeting is a very important act for the company. In the meeting all the decisions of importance are taken. Participation of the members as well as the directors is necessary to make a meeting meaningful. Meeting is an important instrument for management which increases the efficiency of an institution or company.
Generally, meeting is an association of persons, who associates together to do a lawful act.
J.C. Denier says that Company meeting is a meeting which is held to protect joint interest of the concerned parties (Shareholders, Directors, creditors).
According to M.C. Shukla, company meeting is the gathering of members to decide on lawful acts of the company.
From the above discussion we can find some features of company meeting. Such as –
1) It is a gathering of members, directors and interested parties,
2) It is held to protect interest of the shareholders, creditors and directors,
3) It is arranged to take decision on company affairs.

These meetings are described below:
A. Meeting of shareholders:
1. Statutory meeting: According to Avtar Singh, “ The first meeting of the shareholders of a public company is known as statutory meeting” It has to be called within six months from the date on which the company is entitled to co commence the business, but it cannot be held within one month from the date on which the company is entitled to commence the business as the requirement of section 83(1). In Palmer’s Company law the importance of statutory meeting is explained.
Object: The obvious purpose of a statutory meeting with its preliminary report is to put the shareholders of the company in possession of all the important facts relating the company.
Statutory Report: A statutory report should be framed about the meeting. The statutory report shall contain –
a. Description about share,
b. Cash received from share,
c. Payments and receipts,
d. Description about directors,
e. Particulars of any contract,
f. About underwriting contract,
g. Arrears for any director,
h. The particulars of any commission or brokerage.

Certification: Statutory report shall be certified as correct by ‘not less than two directors.’
Sending of report: The board of directors shall deliver the copy of the statutory report to the registrar of the company to register it.
Default in Filing statutory report: if a petition is presented to the court in the manner provided by provided by part V for winding up of the company on the ground of default of filing a statutory report after holding the statutory meeting The Court may, instead of directing that the company be wound up, give directions for the presentation of the report or for holding a meeting or make such other order as may be just. There is a fine of 5000 Taka if there is any deviation made in this regard.

Annual General meeting: Every company is required to call at least one meeting of its shareholders each year. This meeting is called the Annual General Meeting (AGM).
According to section 81(1) Of The Company Act 1994 - Every company shall in each tear of the Gregorian calendar hold in addition to any other meetings a general meeting as such in the notice calling it and not more than fourteen months shall elapse between the date of one general meeting of a company and that of the next.
The calling of general meeting is a duty imposed on the directors by the Act. In the case of Madan Gopal Dev v. West Bengal (1969) it was held that though the company is not functioning, it is obligatory to hold AGM.
Proviso to Section 81(1) provides that a company may hold a general meeting within a period not more than eighteen months from the date of its incorporation.

Extra – Ordinary General meeting: The meeting which is held to discuss about and taking decisions about important matters are called Extra- ordinary General meeting. This meeting is held within two annual general meetings. This meeting can be called either by the share holders or the directors. This meeting can be called on the requisition of the holders of not less than one tenth of the issued share capital of the company. The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the registered office of the company. if the directors do not take steps, then the shareholders themselves can call the meeting within three months of their requisition.

Directors’ meeting: The meetings which are arranged and held among the directors are called the Directors’ meeting. The different kinds of directors, meeting are given below:

1. Council meeting: directors can arrange this kind of meeting to do casual worksand solve various problems of the company. Articles of association of a company, incorporates about this type of meeting. Table A of the Company Act 1994 describes about this type of meeting. According to Section 96 The Directors should call this type of meeting in every three months and they must call at least three meetings a year. The issues of this meeting can be:

• Share allotment,
• Appointment of employees,
• Promotion,
• Transfer,
• Share transfer,
• Issue of debentures,
• Contract in favour of a company, etc.

2. Committee Meeting: Sometimes the directors form committee and gives report about some incidents by taking inquiry into the matter. The committee holds the meeting to discuss about the matter, to make decisions and report about the matter.

Special Meeting: Special meetings are those meetings which are held in special circumstances by special persons. Those are:
a. Class Meeting: There are different types of share in a company. Such as: Preference share, General share, etc. The shareholders are named in their own types of shares. When the different types of shareholders hold meeting among the same type of share holders are called class meeting. Only the majority shareholders of the concerned class can take decision on the meeting. Articles of association describes about the procedure of this type of meeting.
b. Creditors’ meeting: This meeting can be called by the directors as well as by the creditors. On the dissolution of the company on unification or restoration of a company this type of meeting is called. The main purpose of this meeting is to negotiate with the creditors for the purpose of safeguarding the company from damage.

Process of extraordinary general meeting:
Definition: All general meetings other than annual general meeting shall be called as extraordinary general meeting. Extraordinary general meeting is a meeting which is held for some special purposes within two annual general meetings.
Process: An extraordinary general meeting can be called either by directors or by the shareholders. The process of calling an EGM is given below:
1. Requisition by shareholders: The requisition of the EGM must be made by at least one tenth of the shareholders of paid up capital.
2. Arrangement by the directors: When the requisition is duly made the directors are bound to call the meeting forthwith.
3. Contents of the meeting: The requisition must state the objects of the meeting . It must be signed by the requisitionists and deposited at the registered office of the Company. When an extraordinary meeting is called for special and certain matters no other business can be added afterwards.
4. Self arrangement by the shareholders: When a requisition is at the registered office of the company the directors should, within twenty one days, move to call a meeting and the meeting should actually be held with in 45 days from the date of the requisition. If the directors fail to do so, the requisitionists may themselves proceed to call a meeting, and claim the necessary expenses from the company.
5. Process followed: Any meeting called under this section by the requisitionists shall be held in the same manner as nearly as possible the meeting called by the directors.


Remedy available in case of refusal to hold such meeting:
1. The shareholders can call meeting themselves.
2. The can get expenses which are reasonably incurred in the proceeding of the meeting.
3. The expenses can be cut from the remuneration of the directors.
The Karnataka High court held that the refusal on the part of the directors to call a meeting on requisition does not amount to any offence under section 169 of the Indian Companies Act 1956. Our provision of section 84 resembles with section 169 of the Indian Company Act. So in our country that rule is applicable.

Procedure and requisites of a valid meeting:
Meeting is a procedural work which is made mandatory by the Company Act. So, there are various requirements of a valid meeting. Those are described in a nut shell:
1. Proper authority:
The first requirement of a valid meeting is that it should be called by a proper authority. Obviously the proper authority is the board of directors, except when the meeting has, in the event of default of the directors, been called by the requisitionists, or by the court.
2. Notice:
The second requirement of a valid meeting is that a proper notice of the meeting should be given to the members. An annual general meeting may be called by notice fourteen days in writing, and a meeting other than an annual general meeting or a meeting for the passing of special; resolution may be called by twenty – one days notice in writing. It was held in The case of Azad publications v. Md. Quamrul Anam Khan that notice of an AGM must be sent by registered post. In an Indian case N.V.R. Nagappa Chettier v. Madras race club is an illustration in point –
“Notices were posted on October 16, for a meeting to be held on November 7. The notice was held to be short by one day as in computing the interval of twenty one days, date of posting and date of meeting should be excluded.”

Under section 95 of the Company Act it is emanated that – Notice of every meeting of the board of directors of a company shall be given in writing to every director for the time being in Bangladesh.

3. Chairman:
For the proper conduct of a meeting a Chairman is must. His appointment is usually regulated by Articles of Association. But if there is nothing in the Articles of Association, the members personally present at the meeting shall elect one of the members as the Chairman. In the case of Ram Narain v. Ram kishen (1911) 10 IC 515, it was held that a Chairman who presides over a meeting of a company is neither wholly a ministerial officer nor wholly a judicial officer; his duties are of a mixed nature, and he is not liable to be mulcted in damages, if acting bona fide according to the best of his judgment and without malice.

4. Voting:
The business of a meeting is done in the form of a resolution passed at the meeting. Shareholders have the right to discuss every proposed resolution and to move amendments. According to section 85(a)(i) in annual general meeting all the members are entitled to vote.
Regulation 57 of the Schedule 1 enumerates that the votes should be given by show hands unless a pole is demanded before or at the declaration of the result of show hands according to the provisions of section 85. It is clear that any resolution including a resolution for election of the directors, has in the first instance, got to be put to the vote of the meeting, which must decide on show hands.
According to section 85(2)(d) – in case the company originally having share capital, every member will have one vote in respect of each share or each hundred taka of stock held by him and in any other case, every member shall have one vote.
So we can say that whatever might be the amount of shares or amount of money, every member shall have one vote only. In section 85(2)(c) it is said that, on a poll votes may be given either personally or by proxy. Voting can be taken by polls and on a poll a person can vote on behalf of other by proxy. The instrument appointing a proxy shall be in writing under the hand or the appointer or on his authority duly authorized in writing, or if the appointer is a company or corporation either under seal or under the hands of officer or an attorney duly authorized.

5. Quorum:
Another requirement of a valid meeting is Quorum. Quorum means the minimum number of members that must be present at the meeting.
Quorum for public limited company: For public limited company or for any company other than private limited company five members personally present shall be a quorum.
Quorum for Private limited company: In case of private limited company whose number of members does not exceed six, two members will be sufficient to make a quorum. And in case where the member is more than six, three members are needed.
According to the case of Sharp v. Dawes, Lord Coleridge gave a suggestion that the word ‘Meeting’ prima facie means a coming together of more than one person.’ But to be a meeting in the meaning of the Act, the procedure must be followed properly. So quorum as an essential element of meeting should be existing.

6. Resolution: If the decision of a meeting is adopted with the majority or all members’ vote, it is called a resolution.
B.N Tandon says that – a resolution is a motion or a proposition with or without any amendment which has been adopted at a meeting. Resolutions are of three kinds:
1. General resolution,
2. Special resolution,
3. Extra- ordinary resolution.

Ordinary resolution: A resolution is said to be ordinary when the votes cast n favour of it at a general meeting of a company exceed the votes, if any, cast against the resolution. In other words, ordinary resolution means a resolution passed by a simple majority of shareholders.
According to B.N.Tandon, ‘ A motion when passed by a simple majority of the members present at the meeting and who are entitled to cast vote or by their proxies when allowed is called an ordinary resolution.

Special Resolution: A resolution shall be a special resolution when it has been passed by such majority as is required for passing of an extra-ordinary and at a general meeting of which not less than 21 days notice specifying the intention to propose a resolution as a special resolution has been duly given. The decision of special resolution shall be submitted to the registrar within 15 days of the passing of resolution. The special resolution can be passed about –
1. Name change,
2. Change of any clause of memorandum,
3. Change of any article of Articles of association,
4. Lessening of capital,
5. Determining the salary of the members,
6. Dissolution of the company voluntarily,

Extra-ordinary resolution: A resolution shall be an extra-ordinary resolution when it has been passed by a majority of not less than three-fourth of such members entitled to vote as are present in person or by proxy, where proxies are allowed, at a general meeting of which notice specifying the intention to pass the resolution as an extra-ordinary resolution, has been duly passed.

Registration of resolution: A copy of every special resolution and extra-ordinary shall, within fifteen days from the passing thereof, be printed or type-written and duly certified under the signature of an officer of the company and filed with the registrar who shall record the same.
It was observed in Mousel & co. ltd. V. The Registrar, that the registrar has a quasi – judicial function and certain discretion in the matter of recording resolutions.

Winding up of a company

Winding up is a process where the company’s asset will be gathered and will be used to pay all debts, and the balance for the cost of winding up will be distributed among the shareholders according to their interests in the company. According to Professor Gower, ‘Winding up of a company is the process where-by its life is ended and its property administered for the benefit of its creditors and members. In the process of winding up the assets of the company are realized by converting them into money and the same is then applied for the satisfaction of the debts. The shareholders do not get anything until the creditors are fully paid. The process of winding up is called liquidation. The process of winding up begins when the court passes an order of winding up or a resolution is passed for voluntary winding up. The company is dissolved after the completion of the winding up proceedings. On the dissolution the company ceases to exist.
Methods of winding up: The process which is followed in the course of winding up is called method of winding up. Section 234 lays down three methods of winding up. Those are –

a. Winding up by the court,
b. Voluntary winding up,
c. Winding up under the supervision of the court.
The brief discussion of these three abovementioned methods is given below:
Winding up by the Court: The court gives order for winding up, if the share-holders, or the creditors or the Registrar of the company Applies to the court, or on any other reasonable ground. After close scrutiny of section 241, we can get six grounds of winding up of a company by court. Those grounds are written below:

1. Passing of special resolution: If the company passes special resolution and resolves that the company would be wound up by the court, then the court can dissolve the company. In an Indian case the company itself was the petitioner and the financial condition of the company was eroded, the court ordered winding up for public interest. Though the company passes a resolution the court is not bound to order for winding up. The power is discretionary. The court may not order for winding up if it would be opposed to public interest or company’s interest. Parties seeking for an order from a court must have equity in their favour.
2. Failure to make statutory report or hold statutory meeting: If the company fails to file statutory report or to hold the statutory meeting the court may order to wind up the company. The petition for winding up on this ground can be presented either by the registrar or by a contributory.

3. Failure to commence business: A company may be wound up by the court if the company does not commence its business within a year of incorporation, or suspends its business for a whole year. The court will see in this case that whether there is a reasonable hope of the company commencing or resuming business and doing it at a profit and the substratum of the company has disappeared. In this case the court also commented that in the matter of winding up the wishes of the creditors and contributories have to be taken into consideration and the court may call a meeting for ascertaining their wishes. If the company is solvent and there are no allegations of mismanagement, and it is hopeful of doing profitable business in future, it is not necessary to wind it up only because it suspended its business for over a year. Only business which is authorized by the memorandum is to be considered to determine whether the company has suspended its business or not. Company does not cease to carry on business if it transfers its undertakings to a subsidiary company. Where the company’s subsidiaries were functioning winding up was not ordered though the company itself had ceased to function. In the case of Vega Sweaters (Pvt.) Ltd The court held that If the business of a company has been stopped for more than one year and the number of shareholders falls below two, the company is liable to be wound up. In an Indian case winding up was ordered where because of the heavy indebtedness of the company’s assets were under creditor’s possession and no business could be done for more than one year.

4. Number of members below the limit: If the number of members is reduced, in the case of private company below two, or, in case of any other company, below seven, the court may order to wind up the company. This is a hard and fast rule which is to be followed strictly if there is no reasonable excuse.

5. Inability to pay debts: A company may be wound up by the court if it is unable to pay debts. A debt must be a determined or definite sum of money payable at a future date. Where the company acts as guarantor for repayment of a loan, and the principal has defaulted, the amount guaranteed has become a debt for which a petition for winding up lies. Winding up is a last resort and cannot be installed merely because the company is unable its debt as long as it can be resurrected by a scheme or arrangement. Inability to pay debts is explained in section 242. It lays down that –

(1) A company shall be deemed to be unable to pay its debts--
(i) if a creditor, by assignment or otherwise, to whom the company is indebted for a sum exceeding five thousand taka then due, has served on the company, by causing the same to be delivered by registered post or otherwise at its registered office, a demand under his hands requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or
(ii) if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
(iii) if it is proved to the satisfaction of the Court that the company is unable to pay its debts, the Court shall take into account the contingent and prospective liabilities of the company.
(2) The demand referred to in clause (i) of sub--section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by an agent or legal advisor duly authorised on his behalf, or in the case of a firm, if it is signed by such agent, or by a legal adviser or by any one member of the firm on behalf of the firm.
Creditor who is unable to obtain payment of his debt has the right ex debito justiciate to a winding up order. In the case of Bangladesh Tyres Ltd. V Agrani Bank & Others the maintainability of the application for winding up on grounds of inability to pay debts was challenged upon a counter claim of money by the appellant company. The court found that the counter claim to be just an allegation, no evidence having been placed been placed before the court in support of the counter claim. Such counter claim was not acceptable. The debt must be presently payable to the creditors. It is necessary that the creditor should have delivered the demand to the registered office of the company. Statutory notice is a highly formal and important document and it would appear to follow that the provision of the Act as to service upon the company must be strictly observed. In the case of decreed debt under section 242(1)(ii), question of bona fide dispute may arise, and the court may instead of passing an winding up order, allow the petitioner to stand over on an undertaking by the company. In determining the inability of the company to pay debts the court shall take into account the prospective and contingent liability. The expression commercial insolvency was explained by Sir James in European Life Assurance Society, Re.

6. Just and equitable Ground: Section 241(vi) gives the court a wide discretion in winding up a company on just and equitable ground. The court can give due regard to some points. Those are: a. Interest of the company, b. Interest of the employees, c. interest of the creditors, d. interest of the shareholders, e. general public interest should also be considered.
There must be a strong ground for liquidating a company. It is said that , the winding up matter is a serious affairs which is evident from the perusal of the entire part V, of the Act and in this connection the anxiety of the Privy council in the case of unjustified winding up order may be noticed. A limited company being a juristic person, lives, runs and functions under the provisions of a statute, death warrant can be issued under the same statute. The death warrant in the form of winding up should be sparingly issued. To the last minute effort should be made to save a company from liquidation. Moreover the court may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioner and he is acting unreasonably in seeking to have the company wound up, instead of pursuing that other remedy. There are some reasons of winding up of a company on just and equitable ground.