Chapter VII - Management and Administration
Section 102
Section 102: statement annexed to the notice
Each item of special business in a general meeting notice needs an annexed statement of material facts, including the interests of directors, key managerial personnel and their relatives.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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.
Introduction
Section 102 makes sure members know who is interested in special business and have enough information to decide. At an AGM, everything except the four listed ordinary items is special business. At any other meeting, all business is special.
Non-disclosure carries two consequences. Any resulting benefit is held in trust for the company, and the person in default is liable to a penalty of fifty thousand rupees or five times the benefit, whichever is higher.
Key takeaways
What to disclose
The concern or interest of directors, the manager, other key managerial personnel and their relatives, plus any information members need to decide.
Ordinary AGM business
Financial statements and reports, dividend, reappointment of retiring directors, and appointment and remuneration of auditors.
Two per cent rule
If special business relates to another company, disclose shareholdings of two per cent or more in that company held by promoters, directors, the manager and key managerial personnel.
Identify special business
At an AGM, business is special unless it is one of four items: the financial statements and the Board’s and auditors’ reports, a dividend declaration, the appointment of directors in place of those retiring, or the appointment and remuneration of auditors. At any other meeting, all business is special.
- India Code — consolidated Companies Act, 2013, section 102
- eGazette — Companies (Amendment) Act, 2019 (22 of 2019)
- eGazette — S.O. 2754(E), 12 September 2013 (commencement)
- eGazette — G.S.R. 464(E), 5 June 2015 (exemptions for private companies)
- eGazette — G.S.R. 583(E), 13 June 2017 (amending G.S.R. 464(E))
Prepare the statement
For each item, state the nature of any concern or interest, financial or otherwise, of every director and the manager, every other key managerial person, and their relatives. Add any other information and facts that will help members understand the item’s meaning, scope and implications.
If an item relates to or affects another company, state the shareholding in that company of every promoter, director, manager and key managerial person where it is at least two per cent of that company’s paid-up share capital. If an item refers to a document, state the time and place for inspecting it.
Consequences of inadequate disclosure
If non-disclosure or insufficient disclosure lets a promoter, director, manager or key managerial person, or a relative, benefit directly or indirectly, the person holds the benefit in trust for the company and must compensate it.
Since the substitution deemed in force from 2 November 2018, every such person in default is also liable to a penalty of fifty thousand rupees or five times the benefit, whichever is higher.
Practical preparation
Classify each agenda item as ordinary or special. Collect interest declarations from directors, key managerial personnel and relatives. Check two per cent holdings in any affected company. Identify documents for inspection. Annex the statement to the notice.
For a private company, G.S.R. 464(E) of 5 June 2015 provides that sections 101 to 107 and section 109 apply unless otherwise specified in the respective sections or the articles provide otherwise. Paragraph 2A, inserted by G.S.R. 583(E) of 13 June 2017, limits the relaxations to a private company that has not defaulted in filing its financial statements under section 137 or its annual return under section 92.
Section 122(1) states that section 98 and sections 100 to 111 do not apply to a One Person Company.
Practical checklist
Do
- Collect fresh interest disclosures before each notice.
- State the inspection time and place for every referenced document.
Avoid
- Do not treat any AGM item outside the four listed items as ordinary business.
- Do not leave out relatives’ interests.
Illustrative example
Hypothetical: related contract at an EGM
An EGM will approve a contract with another company in which a director holds three per cent of the paid-up share capital.
Classify
All business at an EGM is special.
Disclose
The statement sets out the director’s interest and the three per cent shareholding.
Inspection
The statement says where and when the draft contract can be inspected.
Outcome
- Members receive the material facts that section 102 requires before voting.
Glossary
- Special business
- Business deemed special under section 102(2): every item at a non-AGM meeting, and at an AGM every item except the four listed.
- Explanatory statement
- The statement of material facts annexed to the notice under section 102(1).
Frequently asked questions
Is auditor appointment special business at an AGM?
No. The appointment of auditors and the fixing of their remuneration is one of the four ordinary items at an AGM.
What is the penalty for default?
Each promoter, director, manager or key managerial person in default is liable to a penalty of fifty thousand rupees or five times the benefit accruing to that person or any relative, whichever is higher. This is in addition to the duty to hold the benefit in trust and compensate the company.
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Contact BizeneedLast updated 11 October 2026