Companies Act Section 103

Companies Act, Section 103: Quorum for Meetings

Section 103 of the Companies Act addresses the requirements for establishing a quorum for meetings of a company, which is a fundamental aspect of ensuring that meetings are valid and decisions made during those meetings are legally binding. The concept of quorum refers to the minimum number of members that must be present for a meeting to be considered properly constituted. This provision applies to all types of company meetings, including general meetings, and is designed to maintain order and legitimacy in corporate decision-making. The section provides specific guidelines for different types of companies, including public companies and private companies, and lays out the procedures to follow if a quorum is not present within the specified time frame. Below is a detailed explanation of the key provisions outlined in Section 103.

Subsection (1): Quorum Requirements

1. Quorum for Public Companies:

The quorum for a public company is determined by the number of members present, and it may vary based on the size of the company. The Companies Act provides specific numbers based on the total membership of the company as of the date of the meeting. The required quorum for a public company is as follows:

a. When the total number of members is not more than 1,000:

The quorum is five members who are present personally at the meeting.

b. When the total number of members is more than 1,000 but does not exceed 5,000:

The quorum requirement increases to fifteen members who must be personally present at the meeting.

c. When the total number of members exceeds 5,000:

The quorum for such large public companies is thirty members who must be present personally at the meeting.

These provisions ensure that a sufficient number of members are present to represent the interests of the company’s shareholder base, especially for public companies that have a larger and more diverse group of stakeholders.

2. Quorum for Private Companies:

For a private company, the quorum requirement is much lower due to the typically smaller size of its membership. The quorum for a private company is set at two members, both of whom must be personally present at the meeting.

This reflects the fact that private companies usually have a smaller membership and may not need as many members present to make decisions or conduct business.

Subsection (2): Absence of Quorum at the Scheduled Time

1. Procedure in Case of No Quorum:

If a quorum is not present within half an hour from the time appointed for the meeting to begin, the meeting is considered incomplete, and further action is required. The law stipulates two possible outcomes depending on the type of meeting being held:

a. General Meeting (Non-Requisitioned Meeting):

If a quorum is not present within the prescribed time, the meeting is adjourned to a later time. The adjourned meeting is to be held on:

The same day in the following week at the same time and place, or

At such other date, time, and place as determined by the Board of Directors.

The Board has the discretion to set a new date, time, and location for the adjourned meeting, but the company must provide proper notice to the members about the adjournment.

b. Meeting Called by Requisitionists (Requisitioned Meeting):

If the meeting is called by requisitionists (i.e., members who have requested the meeting under Section 100 of the Companies Act), and a quorum is not present within half an hour from the appointed time, the meeting shall stand cancelled.

The company must notify its members about the adjournment or cancellation, ensuring transparency and maintaining good communication.

2. Notice Requirement for Adjourned Meetings:

If the meeting is adjourned to another day, time, or place under the provisions of clause (a), the company must provide at least three days’ notice to its members. This notice must be given:

Individually to the members, or

By publishing an advertisement in newspapers that are widely circulated in the area where the company's registered office is located, with one advertisement in English and one in the vernacular language.

This ensures that all members are informed of the changes in meeting arrangements, giving them ample opportunity to attend or participate.

Subsection (3): Quorum at Adjourned Meetings

1. Quorum in Case of Adjourned Meetings:

If a quorum is not present within half an hour from the scheduled start of the adjourned meeting, the law allows the meeting to proceed with the members present at the meeting. This means that even if there is no quorum as originally required, the members who attend the adjourned meeting constitute the quorum, and the meeting can proceed.

This provision is designed to prevent further delays in the meeting process. It allows the meeting to proceed despite the lack of the originally required number of members, recognizing that the adjourned meeting may not require a full quorum due to the special circumstances under which it was called.