Companies Act Section 102 — Statement to be annexed to notice

CHAPTER VII MANAGEMENT AND ADMINISTRATION

Commercial / Corporate

Summary

Sub-section (1) requires that a statement containing certain material facts be attached to the notice of a general meeting, for each item of special business to be discussed at that meeting. This statement must include the nature of any concern or interest, whether financial or otherwise, that each director, the manager (if any), every other key managerial personnel, and their relatives may have in each item of business. The statement must also include any other information and facts that would help members understand the meaning, scope, and implications of the business items and make a decision on them.

Under clause (b) of sub-section (1), the statement must include any other information and facts that may enable members to understand the meaning, scope, and implications of the items of business and to take a decision on them.

Sub-section (2) clarifies what counts as special business for the purpose of sub-section (1). In the case of an annual general meeting, all business is deemed to be special except for the consideration of financial statements and the reports of the Board of Directors and auditors, the declaration of any dividend, the appointment of directors in place of those retiring, and the appointment of, and fixing of the remuneration of, the auditors. In the case of any other meeting, all business is deemed to be special.

The proviso to sub-section (2) adds that if any item of special business at a meeting relates to or affects another company, the statement must also set out the extent of shareholding interest in that other company of every promoter, director, manager (if any), and every other key managerial personnel of the first-mentioned company, provided that such shareholding is not less than two per cent of the paid-up share capital of that other company.

Sub-section (3) states that if any item of business refers to a document that is to be considered at the meeting, the statement under sub-section (1) must specify the time and place where that document can be inspected.

Sub-section (4) provides that if, due to non-disclosure or insufficient disclosure in the statement, a promoter, director, manager (if any), or other key managerial personnel, or their relatives, directly or indirectly receive any benefit, then that person must hold such benefit in trust for the company. Without prejudice to any other action under this Act or any other law, that person is also liable to compensate the company to the extent of the benefit received.

Sub-section (5) states that, without prejudice to sub-section (4), if there is any default in complying with the provisions of this section, every promoter, director, manager, or other key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees or five times the amount of benefit accruing to such person or any of his relatives, whichever is higher.

Official Text

(1) A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting, namely:—

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of—

(i) every director and the manager, if any;

(ii) every other key managerial personnel; and

(iii) relatives of the persons mentioned in sub-clauses

(i) and (ii);

(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.

(2) For the purposes of sub-section (1),—

(a) in the case of an annual general meeting, all business to be transacted thereat shall be deemed special, other than—

(i) the consideration of financial statements and the reports of the Board of Directors and auditors;

(ii) the declaration of any dividend;

(iii) the appointment of directors in place of those retiring;

(iv) the appointment of, and the fixing of the remuneration of, the auditors; and

(b) in the case of any other meeting, all business shall be deemed to be special:

Provided that where any item of special business to be transacted at a meeting of the company relates to or affects any other company, the extent of shareholding interest in that other company of every promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned company shall, if the extent of such shareholding is not less than two per cent. of the paid-up share capital of that company, also be set out in the statement.

(3) Where any item of business refers to any document, which is to be considered at the meeting, the time and place where such document can be inspected shall be specified in the statement under sub-section (1).

(4) Where as a result of the non-disclosure or insufficient disclosure in any statement referred to in sub-section (1), being made by a promoter, director, manager, if any, or other key managerial personnel, any benefit which accrues to such promoter, director, manager or other key managerial personnel or their relatives, either directly or indirectly, the promoter, director, manager or other key managerial personnel, as the case may be, shall hold such benefit in trust for the company, and shall, without prejudice to any other action being taken against him under this Act or under any other law for the time being in force, be liable to compensate the company to the extent of the benefit received by him. 1[

(5) Without prejudice to the provisions of sub-section (4), if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees or five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is higher.]