Section 103 of the Companies Act, 2013 which corresponds to section 174 of the Companies Act, 1956 has been notified on 12th September 2013 so it is effective from that date.
It has made a substantial departure from the erstwhile provisions. Previously 5 members personally present in case of a public company constituted a quorum. The section 103 stipulates graded requirements of quorum depending upon the number of shareholders. If the number of shareholders as on the date of the general meeting is less than 1000, then 5 members personally present will constitute a quorum. If the number of members of the company as on the date of the general meeting is between 1001 to 5000 then quorum requirement is 15 members personally present and in case the number of members is more than 5000, then quorum requirement is 30 members personally present.
In case of a private company however, the quorum requirement is the same i.e. two members personally present.
Further if the quorum is not present within half an hour of the appointed time, then the meeting shall be adjourned to the same day next week at the same time and place or such other time and place as the Board may determine.
However, if the general meeting is called by requisitionists under section 100 (erstwhile section 169) then in case the quorum is not present within half an hour as above, then the meeting will stand cancelled.
For the adjourned meeting however, the company will have to give a fresh notice of at least 3 days either by sending individual notices to the shareholders or by publishing an advertisement in newspapers in English and in vernacular language in the district where the registered office of the company is situated.
If at the adjourned meeting also quorum is not present within half an hour of the appointed time, then whatever quorum is present will constitute a proper quorum.
Since the section has been brought into effect on 12th September 2013, the quorum requirements will apply to all general meetings held after that date i.e. it will apply to substantially all the annual general meetings held for the purpose of approving the financial statements for the year ended 31st March 2013. The companies which had their annual general meetings on 12th September itself or a couple of days thereafter would have been taken unawares by this development.
Also many companies have their registered offices at the factory sites which are located in remote villages or towns. In such cases it will become difficult for them to arrange quorum of 30 members personally present because there may not be many shareholders of that company in that remote area. However, the companies could consider granting employee stock options to the workers of the company in order to take care of this eventuality in the future. Good for the workers though. Some positive always comes out.
The section unfortunately has not made any provision for counting quorum where the general meetings are simultaneously telecasted via video conferencing or webcasting methods to shareholders in main centres such as Mumbai, Bangalore, Chennai etc. by taking proper precautions of verifying the shareholder details. A modern company law should have taken cognizance of the technologies available which makes many old provisions redundant. If a company is doing a simulcast of the general meeting at different centres and the verification of the shareholders attending are properly made by the agencies in order to count them as “members personally present”, then there is no reason why such shareholders attending the general meeting sitting in their cities should not have been counted for the purpose.