Companies Act Section 113

Companies Act, Section 113: Representation of Corporations at Meetings of Companies and of Creditors

Section 113 of the Companies Act outlines the provisions for the representation of corporations (or bodies corporate) at meetings of companies and meetings of creditors. This section enables a corporation, whether or not it is a company within the meaning of the Act, to appoint a representative to act on its behalf at specific meetings. This is particularly important for situations where a corporation holds membership or creditor status within a company but may not have a direct individual presence at meetings.

Detailed Explanation of Section 113

1. Representation of a Body Corporate at Meetings of Companies:

Subsection (1)(a) states that a body corporate, which refers to any legal entity that is not necessarily a company (it can be a government body, an NGO, or another corporate entity), has the right to appoint a representative if it is a member of a company. The process for appointing a representative is defined as follows:

The body corporate must pass a resolution by its Board of Directors or other governing body authorizing the appointment of a person to act on its behalf.

The appointed representative is authorized to attend any meeting of the company or any meeting of a class of members within the company. This provision ensures that a corporate entity can maintain its participation in corporate governance even if it cannot be physically present at the meeting.

This allows for a flexible system where a body corporate (e.g., a company, an NGO, or a government body) can appoint any individual who it deems fit to represent its interests at company meetings, ensuring effective corporate governance.

2. Representation of a Body Corporate at Creditors' Meetings:

Subsection (1)(b) extends this representation right to situations where the body corporate is a creditor of a company. In this case, the body corporate can also appoint a representative to attend any creditors’ meeting held under the provisions of the Act, rules made thereunder, or in accordance with any debenture or trust deed.

The representative can be authorized by a resolution of the body corporate’s directors or other governing body.

This is applicable to creditors who may hold interests such as debentures in the company and need to participate in creditor-related decision-making processes.

This provision ensures that even when a corporation is acting in the capacity of a creditor and not just as a member, it still has the right to appoint a representative to safeguard its interests at creditors’ meetings. The process of appointing a representative is the same as that for membership-related meetings, involving a resolution passed by the governing body.

3. Rights and Powers of the Authorized Representative:

Subsection (2) clarifies that the person appointed by the body corporate to represent it at a meeting shall be entitled to exercise the same rights and powers as the body corporate itself would have had if it were present at the meeting.

This includes voting rights, such as the right to vote by proxy and vote by postal ballot. This means that the representative can not only attend and participate in the meeting but also exercise the same voting rights, further ensuring that the body corporate can fully participate in decision-making even without its physical presence.

These rights are crucial for enabling the appointed representative to act on behalf of the body corporate as though the entity itself were attending the meeting, thus ensuring its interests are represented effectively.