Resolutions to be Filed, and the Report on the Annual General Meeting

Clause (e) was omitted by the Companies (Amendment) Act 2017. It covered resolutions passed by a company in relation to the voluntary winding up of another company.

Three observations that earn marks.

Clause (b) catches unanimity used to avoid formality. If every member agrees to something that would otherwise have needed a special resolution, the informal agreement is filed just as a special resolution would be. The public file is not defeated by everybody nodding.

Clause (c) is the only Board resolution on the list by name, and it is about the managing director: his appointment, reappointment, renewal or any variation of his terms. Whoever runs the company, and on what terms, is a matter of public record.

Clause (f) points at the Insolvency and Bankruptcy Code. The Act's own list no longer refers to a voluntary winding up under this Act, because sections 304 to 323 were omitted. The live provision is section 59 of the Insolvency and Bankruptcy Code 2016.

Clause (g) brings in section 179(3), the Board's powers exercisable only by resolution at a meeting, such as making calls, authorising a buy-back, issuing securities, borrowing, investing and granting loans.

The first proviso to clause (g) restricts inspection: no person shall be entitled under section 399 to inspect or obtain copies of such resolutions. So a section 179(3) resolution is filed but is not open to the general public, because it would reveal commercially sensitive decisions.

The second proviso to clause (g) exempts lending businesses. Clause (g) does not apply to a resolution to grant loans, or give guarantee or provide security in respect of loans under section 179(3)(f) in the ordinary course of business by (a) a banking company, (b) a prescribed class of non-banking financial company registered under Chapter IIIB of the Reserve Bank of India Act 1934, and (c) a prescribed class of housing finance company registered under the National Housing Bank Act 1987. A bank that had to file a resolution for every loan would file nothing else.

The filing, and the articles: section 117(1)

A copy of every such resolution or agreement, together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting at which the resolution was proposed, shall be filed with the Registrar within thirty days of the passing or making thereof, in the prescribed manner and with the prescribed fees.

Note that the explanatory statement travels with the resolution. The public file gets not only what was decided but the material facts the members were given.

The proviso: every copy of the articles. A copy of every resolution which has the effect of altering the articles, and a copy of every agreement referred to in sub-section (3), shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.

Read this with section 15, which requires every alteration to be noted in every copy of the memorandum or articles, on pain of one thousand rupees per copy.

The penalty: section 117(2)

If a company fails to file within the period:

• the company shall be liable to a penalty of ten thousand rupees, and in case of continuing failure a further one hundred rupees for each day after the first, subject to a maximum of two lakh rupees; and
• every officer in default, including the liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees, and a further one hundred rupees for each day, subject to a maximum of fifty thousand rupees.

Note the express inclusion of the liquidator. Clause (f) concerns a winding up, by which time the officers may have gone and the liquidator is in charge.

Report on the annual general meeting: section 121

Section 121(1). Every listed public company shall prepare, in the prescribed manner, a report on each annual general meeting, including the confirmation to the effect that the meeting was convened, held and conducted as per the provisions of this Act and the rules.

Two limits and one requirement. It applies to a listed public company only, not to every company. It is for the annual general meeting only. And its content includes an express confirmation on three matters: convened, held and conducted in accordance with the Act.

Section 121(2). The company shall file a copy with the Registrar within thirty days of the conclusion of the annual general meeting, with the prescribed fees or additional fees.

Section 121(3): the penalty. On failure to file in time:

• the company is liable to a penalty of one lakh rupees, and in case of continuing failure a further five hundred rupees for each day, subject to a maximum of five lakh rupees; and
• every officer in default is liable to a penalty of not less than twenty-five thousand rupees, and a further five hundred rupees for each day, subject to a maximum of one lakh rupees.

These are markedly heavier than the section 117 penalties, which is a fair indication of how seriously the Act treats a listed company's assurance about its own meeting.

The One Person Company: section 122

Section 122(1). Section 98 and sections 100 to 111 shall not apply to a One Person Company. So no Tribunal-ordered meeting under section 98, no extraordinary general meeting machinery, no notice, quorum, chairman, proxy, voting, poll or postal ballot provisions, and no circulation of members' resolutions.

Section 122(2). The ordinary business listed in section 102(2)(a), which other companies must transact at an annual general meeting, shall be transacted as provided in sub-section (3).

Section 122(3): a resolution without a meeting. For the purposes of section 114, any business required to be transacted at an annual general meeting or other general meeting by ordinary or special resolution is sufficiently done if the resolution is communicated by the member to the company and entered in the minutes book under section 118, signed and dated by the member, and that date shall be deemed to be the date of the meeting for all purposes of the Act.

Section 122(4): the same for a sole director. Notwithstanding anything in the Act, where there is only one director on the Board of a One Person Company, any business required to be transacted at a Board meeting is sufficiently done if the resolution is entered in the minutes book, signed and dated by that director, and that date is deemed to be the date of the Board meeting.

The logic is simple and worth stating: rules about notice, quorum and voting exist to protect members from each other. Where there is one member, there is nobody to protect him from, so the Act replaces the meeting with a signed, dated entry in the minutes book.

A worked example

Wardha Textiles Limited, a listed public company, holds its annual general meeting on 12 September 2028 and passes several resolutions.

A special resolution altering its articles. It is within section 117(3)(a), so a copy, with the explanatory statement under section 102, must be filed with the Registrar within thirty days, by 12 October 2028. And by the proviso to section 117(1) the resolution must be embodied in or annexed to every copy of the articles issued afterwards, quite apart from the duty under section 15 to note the alteration in every copy.

A unanimous informal agreement. All the members agree in writing to something that would otherwise have required a special resolution. Clause (b) catches it: it must be filed exactly as a special resolution would be.

A Board resolution appointing a managing director. Within clause (c), because it relates to the appointment of a managing director. So is a later resolution varying his terms.

A Board resolution under section 179(3) authorising a borrowing. Within clause (g), so it is filed. But by the first proviso, no person may inspect or obtain a copy of it under section 399: it is on the file, not on display.

Change the company. Had the resolution been passed by a banking company to grant a loan in the ordinary course of its business under section 179(3)(f), the second proviso would exempt it from clause (g) altogether.

A class meeting. The preference shareholders agree, by the majority their terms require, to a variation binding the whole class. Within clause (d), so it is filed.

Late filing. The company files on 30 October, eighteen days late. Under section 117(2) it pays ten thousand rupees plus one hundred rupees for each day after the first, capped at two lakh rupees, and every officer in default pays ten thousand rupees plus one hundred a day, capped at fifty thousand rupees.

The report on the meeting. Being a listed public company, it must also prepare a report on the annual general meeting in the prescribed manner, confirming that the meeting was convened, held and conducted in accordance with the Act and the rules, and file it with the Registrar within thirty days of the conclusion, by 12 October 2028: section 121.

If that is late, the company pays one lakh rupees plus five hundred rupees a day, capped at five lakh, and every officer in default not less than twenty-five thousand rupees plus five hundred a day, capped at one lakh.

An unlisted company has no obligation under section 121 at all.

And a One Person Company. Marathwada Design (OPC) Private Limited has one member and one director. It holds no general meeting: by section 122(3) its member simply communicates the resolution to the company and enters it in the minutes book, signed and dated, and that date is deemed the date of the meeting. Its sole director does the same for Board business under section 122(4). Sections 98 and 100 to 111 do not apply to it at all.

Distinctions that carry marks

What this does NOT mean

It does not mean every resolution is filed. Only those in the section 117(3) list, and ordinary resolutions generally are not.

It does not mean a filed section 179(3) resolution is public. The first proviso to clause (g) bars inspection and copies under section 399.

It does not mean every company files a report on its annual general meeting. Section 121 binds a listed public company.

It does not mean a One Person Company must hold meetings. Section 122(3) and (4) replace them with a signed, dated entry in the minutes book, and that date is deemed the date of the meeting.

Quick revision

• 117(1): file with the Registrar within thirty days a copy of every resolution or agreement in the 117(3) list, with the section 102 explanatory statement. Proviso: a resolution altering the articles, and every 117(3) agreement, must be embodied in or annexed to every copy of the articles issued afterwards.
• 117(2): company ten thousand plus one hundred a day, max two lakh; every officer in default, including the liquidator, ten thousand plus one hundred a day, max fifty thousand.
• 117(3): (a) special resolutions; (b) unanimous agreements that would otherwise need one; (c) Board resolutions or agreements on the appointment, reappointment, renewal or variation of terms of a managing director; (d) class resolutions and agreements binding a class; (e) omitted; (f) voluntary winding up under IBC section 59; (g) section 179(3) resolutions, not inspectable under section 399, and not applying to ordinary-course lending by a banking company or a prescribed NBFC or housing finance company; (h) as prescribed.
• 121: a listed public company prepares a report on each AGM confirming it was convened, held and conducted per the Act, and files it within thirty days of the conclusion. Penalty: company one lakh plus five hundred a day, max five lakh; officer in default not less than twenty-five thousand plus five hundred a day, max one lakh.
• 122: sections 98 and 100 to 111 do not apply to a One Person Company; its resolutions are communicated by the member, entered in the minutes book, signed and dated, and that date is deemed the date of the meeting, and the same for a sole director's Board business.

Test yourself

1. Within what time must a special resolution be filed, and with what? Within thirty days of its passing, with the Registrar, together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting: section 117(1).

2. Which Board resolutions must be filed under section 117? Those relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director under clause (c), and resolutions passed in pursuance of section 179(3) under clause (g).

3. Can a member of the public inspect a filed section 179(3) resolution? No. The first proviso to clause (g) provides that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions.

4. Which companies are exempt from filing ordinary-course lending resolutions? A banking company, a prescribed class of non-banking financial company registered under Chapter IIIB of the Reserve Bank of India Act 1934, and a prescribed class of housing finance company registered under the National Housing Bank Act 1987, in respect of resolutions to grant loans or give guarantees or security under section 179(3)(f) in the ordinary course of business: second proviso to clause (g).

5. Who must file a report on the annual general meeting, and what must it confirm? Every listed public company, and the report must include the confirmation that the meeting was convened, held and conducted as per the provisions of this Act and the rules. It is filed within thirty days of the conclusion of the meeting: section 121.

6. How does a One Person Company pass a resolution? The member communicates the resolution to the company and it is entered in the minutes book under section 118, signed and dated by the member, and that date is deemed to be the date of the meeting for all purposes of the Act: section 122(3). Where there is only one director, the same applies to Board business under section 122(4).