This section requires a statement with key facts about special business to be annexed to the notice of a general meeting to enable members to understand the implications of the items of business.
What the section says
In plain terms
(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 statement with key facts about each special business item to be discussed at a general meeting must be attached to the meeting notice, including details about the interests of directors, managers, and their relatives in each item.
(1)(a)the nature of concern or interest, financial or otherwise, if any, in respect of each items of—
(1)(a)(i)every director and the manager, if any;
(1)(a)(ii)every other key managerial personnel; and
(1)(a)(iii)relatives of the persons mentioned in sub-clauses (i) and (ii);
(1)(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),—
All business at an annual general meeting is considered special, except for routine items like financial statements and auditor appointments, and for other meetings all business is special.
(2)(a)in the case of an annual general meeting, all business to be transacted thereat shall be deemed special, other than—
(2)(a)(i)the consideration of financial statements and the reports of the Board of Directors and auditors;
(2)(a)(ii)the declaration of any dividend;
(2)(a)(iii)the appointment of directors in place of those retiring;
(2)(a)(iv)the appointment of, and the fixing of the remuneration of, the auditors; and
(2)(b)in the case of any other meeting, all business shall be deemed to be special:
provisoProvided 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).
If a business item refers to a document to be considered at the meeting, the statement must specify where and when the document can be inspected.
(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.
If a promoter, director, or manager fails to disclose or sufficiently disclose information and receives a benefit, they must hold the benefit in trust for the company and compensate the company to the extent of the benefit received.
(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.]
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.