2015 (6) TMI 1146 - Board - Companies Law

CLB authorizes sole shareholder to conduct EGM, appoint new directors

The Company Law Board authorized the Petitioner, holding 99.9996% share capital, to call and conduct an Extraordinary General Meeting due to the lack of ... Approval of Bench to holding Extraordinary General Meeting u/s 186 of the Companies Act, 1956 - Held that:- On hearing the submissions and pleadings of the Petitioner Counsel, it appears that there are two shareholders in the Respondent Company, one is the Petitioner holding 99.99% shareholding in the company, another is Mr Jeifrey Waterous holding one share in the company, he resigned from the company as director in the year 2011 itself and since then he is not available for attending any meeting of the company. It needless to say one member cannot be situated quorum to hold general meeting, therefore, it can be said that it has become impracicable to hold general meeting of Respondent Company, then the only recourse available to the Petitioner to hold Extraordinary General Meeting (except ACM) in the company is invoking jurisdiction u/s 186 of the Companies Act, 1956. It is evident under section 186 of the Act 1956, when it is impracticable to hold General Meeting. then any member or director can take recourse under this section to call a meeting of a company other than annual general meeting with the leave of 18. Here, in this Company, no directors are continuing, there is only one shareholder, who ordinarily cannot hold meeting without approval of CLB. Hence, CLB, invoking jurisdiction under section 186 of the Companies Act, 1956, holds that the petitioner alone shall be deemed to constitute a meeting, and authorises the petitioner to call. hold and conduct EoGM on 21.7.2015 at 4.00 PM. As to other reliefs, CLB need not give any special direction for the appointment of Directors as mentioned in relief (a), because EoGM can take a decision with the powers it has, for which CLB need not give any directions. Issues:1. Calling and conducting an Extraordinary General Meeting by the sole shareholder.2. Allowing the sole shareholder to constitute the quorum for the meeting.3. Authorization for newly appointed directors to make filings with the Registrar of Companies.4. Giving ancillary or consequential directions regarding the meeting, Companies Act, and Articles of Association.5. Seeking further orders as deemed fit by the Company Law Board.Analysis:1. The Petitioner, holding 99.9996% share capital of the Respondent Company, sought approval to call and conduct an Extraordinary General Meeting (EGM) as there were no directors on the Board. The Petitioner proposed appointing new directors for the smooth functioning of the company.2. With only one shareholder available, including a resigned shareholder holding one share, it was impracticable to call a general meeting due to the lack of a quorum. The Company Law Board (CLB) noted that invoking jurisdiction under section 186 of the Companies Act, 1956, was necessary to hold the EGM.3. Under section 186 of the Companies Act, 1956, when it is impracticable to hold a general meeting, a member or director can call a meeting with the leave of the CLB. In this case, since there were no continuing directors and only one shareholder, the CLB authorized the Petitioner to call, hold, and conduct the EGM.4. The CLB determined that no special direction was needed for the appointment of directors as the EGM had the power to make such decisions without additional instructions. The Board emphasized that the EGM could proceed with its existing powers.5. Consequently, the Company Petition was disposed of, with the CLB granting approval for the Petitioner to hold the EGM, authorizing the Petitioner to act as the sole member constituting the meeting. The CLB directed the EGM to take place on a specified date and time for the necessary proceedings.