Section 122: applicability of Chapter VII to a One Person Company

Introduction

Sub-section (1) switches off section 98 and sections 100 to 111 for an OPC. Those provisions deal with calling general meetings, notice, quorum, chairperson, proxies, voting, postal ballot and circulation of members’ resolutions. Sub-section (2) says the ordinary business of an annual general meeting under section 102(2)(a) is transacted in the manner set out in sub-section (3).

Sub-sections (3) and (4) give the substitute procedure for member resolutions and, where the OPC has only one director, for board resolutions. Section 122 commenced on 1 April 2014 under S.O. 902(E). The India Code consolidated text shows no amendment, and its text matches the 2013 Gazette.

Key takeaways

Which provisions do not apply

Under sub-section (1), section 98 (power of the Tribunal to call meetings) and sections 100 to 111 (calling of extraordinary general meetings, notice, statement of business, quorum, chairperson, proxies, restriction on voting rights, voting by show of hands, poll, electronic voting, postal ballot and circulation of members’ resolutions) do not apply to a One Person Company.

Section 96(1) itself requires an annual general meeting only of a company other than a One Person Company. Sub-section (2) of section 122 then provides that the ordinary business described in section 102(2)(a), which other companies transact at their annual general meeting, is transacted by an OPC as provided in sub-section (3).

• India Code — consolidated Companies Act, 2013, section 122
• eGazette — MCA notification S.O. 902(E), 26 March 2014 (commencement from 1 April 2014)

Member resolutions

For the purposes of section 114, any business that must be transacted at an annual general meeting or other general meeting by an ordinary or special resolution is validly transacted if the member communicates the resolution to the company, and it is entered in the minutes-book maintained under section 118 and signed and dated by the member. That date is deemed to be the date of the meeting for all the purposes of the Act.

Board resolutions where there is one director

Sub-section (4) applies notwithstanding anything in the Act. Where the Board of a One Person Company has only one director, any business required to be transacted at a board meeting is validly transacted if the director’s resolution is entered in the minutes-book under section 118 and signed and dated by that director. That date is deemed to be the date of the board meeting for all purposes of the Act.

An OPC with two or more directors is outside sub-section (4) and follows the normal board-meeting provisions.

Practical preparation

Keep a bound or otherwise compliant minutes-book under section 118; record each member resolution with the member’s signature and date; record each sole-director resolution the same way; use the signed date as the meeting date in any filing that asks for it; diarise the annual adoption of accounts, auditor matters and other ordinary business through member resolutions.

Exemption notifications issued under section 462 can modify how some provisions apply to particular classes of companies (for example private, Government, Section 8 or Nidhi companies); check whether any applies to your company before relying on this guide.

Practical checklist

Glossary

One Person Company

A company with only one person as a member, defined in section 2(62).

Minutes-book

The book of minutes of proceedings that section 118 requires a company to keep.

Ordinary business

The business listed in section 102(2)(a): accounts and reports, dividends, appointment of directors in place of those retiring, and appointment and remuneration of auditors.

Frequently asked questions