Explanatory Statement-Statement to be Annexed to Notice
(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.
(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.
Exceptions/
Modifications/ Adaptations
1. In case of private company - Section 102 shall apply
unless otherwise specified in respective sections or the articles of the
company provide otherwise. - Notification dated 5th june, 2015.
2. In case of Specified IFSC Public Company - Section 102 shall apply in case
of a Specified IFSC public company, unless otherwise specified in the articles
of the company. Notification Date 4th January, 2017.
DISCLAIMER: THE ARTICLE IS BASED ON
THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE
PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT
FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
THE AUTHOR – CS
DEEPAK SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN
BE REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911
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