Section 111 of the Companies Act, 2013
Section 111 of the Companies Act, 2013
Title: "Circulation of Members’ Resolution"
Overview:
This section empowers members of a company to propose resolutions and require circulation of those resolutions to all other members before a general meeting.
Key Provisions:
1. Right to Circulate a Resolution:
A company must circulate a resolution proposed by:
Members holding at least 1/10th of the total voting power, or
At least 100 members holding shares on which an average sum of ₹1,00,000 (or more) has been paid-up.
2. Notice to the Company:
These members must give notice in writing to the company at least 6 weeks before the meeting, along with the signed resolution and a reasonable explanation.
3. Company’s Duty:
The company must send the proposed resolution and the explanatory statement to all members (at the company’s expense) in the same manner as notice of the meeting.
4. Refusal by the Company (when circulation is not required):
The company is not bound to circulate the resolution if:
It is defamatory, frivolous, or in breach of the law.
The members failed to meet the required number or voting threshold.
The resolution is substantially similar to one circulated in the past 2 years.
The request is received too late (less than 6 weeks before the meeting).
5. Penalty for Default:
If a company willfully fails to comply:
The company and every officer in default shall be liable to a fine up to ₹25,000.
Purpose:
This section ensures shareholder democracy by allowing minority shareholders to raise issues and have them formally addressed at company meetings.
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