What is Section 19 of the Companies Act?

Can a company issue shares without shareholder approval?

One Class of Shares: If your company is a private limited company with only one class of shares, directors can issue new shares without prior shareholder approval, provided this is not prohibited by the company's Articles.

Who can call for AGM?

But any single director of a corporation may call a general meeting unless the corporation's rule book provides otherwise. Members of a corporation cannot call a general meeting or AGM unless the rule book says they can. But... members can ask the directors to call a general meeting.

Can a 50% shareholder remove a director?

The Articles may provide a procedure for this; otherwise the statutory procedure must be used. The statutory procedure allows any director to be removed by ordinary resolution of the shareholders in general meetings (i.e., the holders of more than 50% of the voting shares must agree).

What is the maximum limit of share buyback?

The SEBI guidelines indicate that the upper limit of share buyback is 25% or less than the total of the paid-up capital and free reserves of the company.

Is 21 days notice mandatory for AGM?

A notice for AGM should be prepared in written or electronic mode at least before 21 days from AGM as per (Section 101(1)). However, the minimum notice period for AGMcan be less if 95% of members agree. Notice has to be sent to all members, auditors and directors at least 21 days prior to the meeting.

What rights does a 75% shareholder have?

A special resolution requires at least 75 percent of those voting in favour. These votes are usually passed on a show of hands unless a poll is demanded. Shareholders can also apply to the court for relief if they believe their interests are being unfairly prejudiced (s. 994).

What companies are exempted from audit?

Qualification Criteria

Currently, a company is exempted from having its accounts audited if it is an exempt private company with annual revenue of $5 million or less.

Is a 50% owned company a subsidiary?

Ownership of a subsidiary is usually achieved by owning a majority of its shares. This gives the parent the necessary votes to elect their nominees as directors of the subsidiary, and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary.

What is Section 19 1 of the Companies Act?

Section 19(1)(b) of the Companies Act, Act 71 of 2008 (the “Act”) provides that a company has all legal capacity and powers of a natural person as far as it can be applied. The purposes and powers of a company may be limited, restricted, or qualified in the Memorandum of Incorporation (“MOI”).

Is it mandatory to pay sitting fees to directors?

A company may pay a sitting fee to a director for attending meetings of the Board or committees thereof, such sum as may be decided by the Board of directors thereof which shall not exceed one lakh rupees per meeting of the Board or committee thereof: Provided that for Independent Directors and Women Directors, the ...

Does a parent company own the assets of a subsidiary?

As a subsidiary company is its own legal entity, any losses it incurs are not transferred to the parent company. The parent or holding company also holds the subsidiary's assets, so those assets are protected if the subsidiary company faces losses.

What is the new rule for buyback?

The New Buyback Tax Rules (From 1 October 2024)

Amount received is “deemed dividend”: The full consideration received by the shareholder in a buyback is treated as dividend under section 2(22)(f) and is taxable in the shareholder's hands (as “Income from Other Sources”) at the applicable slab or treaty rate.

Who owns the shares after a share buyback?

The company either retires the repurchased shares or keeps them as treasury stock, available for reissuance.

When can a company not buy back shares?

If the Buyback Is Optional → Yes, the Company Can Refuse

Companies often decline buybacks when: They lack the cash flow. Buybacks would breach solvency tests. They want to retain capital.

Can a director just walk away from a company?

Directors can end their directorship and responsibilities to a company by resigning, provided there is at least one actively appointed director remaining at the company. If the company later faces insolvency or legal issues, your actions as a director can be investigated.

Who has more control, a director or shareholder?

Generally, directors have more day-to-day control over a company, but shareholders—especially majority shareholders—can exert significant influence through voting rights and resolutions.

How to get rid of an unwanted shareholder?

Legal and agreement‑based methods for removing a shareholder

1. Refer to the shareholders' agreement.
2. Consult professionals.
3. Claim majority.
4. Negotiate.
5. Create a noncompete agreement.

What are common AGM meeting mistakes?

Common mistakes consist of missing the AGM cut-off date and failing to record resolutions with the Registrar of Companies.

What does EGM stand for?

An Extraordinary General Meeting (EGM) is an urgent meeting called to address pressing company issues or emergencies. These matters require the immediate attention of the board, shareholders and senior company executives. An EGM is also referred to as a special general meeting or an emergency general meeting.

Which companies are not required to hold AGM?

All companies except One Person Company (OPC) should hold an AGM after the end of each financial year.