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Companies Act of 1994

Delay in holding AGM and its consequence

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18th-Jan-2020       
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High Court Division  :
(Statutory Original Jurisdiction)

Md Rezaul Hasan J
Shamsul Haque Chowdhury ... Petitioner
        vs
Chittagong Abahoni Limited
and others…….Respondents.
    
Judgment     
December 4th, 2017

Companies Act (XVIII of 1994)
Section 81(2)
The entire period of delay that has occurred in holding the AGM of the company is hereby condoned on condition that only the person who was member of the club before 5-6-2016 shall be entitled to receive notice, attend the meeting and to vote in the AGMs. The board decision dated 5-6-2016, to issue further 61,000 shares of Taka 100 each before holding the outstanding application should remain out of consideration in calling and holding the AGMs for the years 2012, 2013, 2014, 2015, 2016 and 2017 …………………………………… (10)
Mustafizur Rahman Khan, Advocate-For the Petitioners.
None appears-For the Respondents
Judgment
Md Rezaul Hasan J : This is an application under Section 81 (2) of the Companies Act,  1994  (the Act).
The facts for disposal of this petition is that the respondent No. 1 is a private  company limited by guarantee and shares duly incorporated under Sections 18 and 29 of the Companies Act, 1994; respondent No. 2 is the Registrar of Joint Stock Companies and Firms; and respondent No.3 is Assistant Registrar of respondent No.2; the addresses of the respondents are stated in the cause title; that the object clauses of the respondent No.1 Company, which was incorporated in 2002, provides, inter alia, that the respondent No.1 Company would take over the title, interest, liabilities and the responsibilities of directing and managing of the Chittagong Abahoni Krira Chakra and Abahoni Junior, which were unregistered organizations (Annexure- "A" that at the time of incorporation, the authorized share capital of the Company was Taka 1,00,00,000 (Taka one crore only) divided into 1,00,000 (one lac) ordinary shares of Taka 1,000 each. Of the said share capital 31 individuals as named in the Memorandum and Articles of Association subscribed to shares of 2,200 shares of Taka 1,000 each, i.e. the total subscribed share capital of the respondent No.1 Company on incorporation was Taka 22,00,000; that since incorporation, the respondent No.1 Company made no further issue and allotment of shares until a meeting of the Board of Directors held on 5-6-2016 pursuant to notice dated 26-5-2016 in which the respondent No.1 decided, inter alia, to issue further shares totaling Taka 61,00,000 comprising 6,100 shares to new and existing shareholders. It may be noted, however, that return of allotment with respect to the said issue and allotment of shares has not been filed with the respondent No. 3's office in accordance with Section 151(1) of the Companies Act, 1994, due to inadvertence; the petitioner, who as the General Secretary of the respondent No. 1 Company is its Chief Executive under Article 20Ga of the Articles of Association, is filing a separate application for condoning the delay in filing the said return (Annexure-"B" and "B-1"); that it may be noted that the respondent No.1 Company has held its Annual-General Meetings until the calendar year of 2011 and has filed necessary returns with the respondent No.3. However, since 2011, respondent No.1 Company has not held its Annual-General Meetings in accordance with Article 21 of Articles Association of the respondent No.1 Company due to inadvertence resulting in continuing default of Section - 81(1) of the Companies Act, 1994 which provides that a company shall hold in every calendar year a General Meeting as its Annual-General Meeting and not more than 15 months shall elapse between the date of one Annual-General Meeting of the company and that of the next; that the Board of Directors of the respondent No.1 Company in its meeting held on 5-6-2016 also resolved to take necessary steps to condone the delay in holding and conducting the Annual-General Meeting; that it may be noted that the auditors of the respondent No. 1 Company have, in the meantime, audited the accounts of the respondent No.1 Company for the years 2012, 2013, 2014, 2015, 2016 and 2017 (Annexure-"C Series" that following incorporation of the respondent No.1 Company, it has taken over the affairs and undertakings of Chittagong  Abahoni Krira Chakra and Abahoni Junior and, as a club, it is participating regularly in regional, national and international sporting events, including the premier football competition of Bangladesh, the Bangladesh Premier League. However, inasmuch that the respondent No. 1 Company is a sporting association, and its shareholders and Directors are involved in it out of altruism, there has been some neglect in ensuring due compliance with the provisions of the Companies Act, 1994. Such non-compliance has not been deliberate or willful, but rather inadvertent. The petitioner begs the Court's kind consideration in this regard; that, as mentioned above the provision of Section 81(1) of the 1994 Act provides that a company shall hold in every calendar year a General Meeting as its Annual-General Meeting and not more than 15 months shall elapse between the date of one Annual-General Meeting of the company and that of the next; and Section 81(2) provides that if a company defaults in complying with the provision of sub-Section (1) the High Court Division may on the application of any member of that company, call or direct holding of a General Meeting of the Company and give such ancillary and consequential direction as the court thinks expedient in relation to the calling, holding and conducting such Meeting. In the premises, this application is being filed bona fide in the interests of justice to condone the delay in holding the Annual-General Meetings since 2012. Hence, the petition.
3. Learned Advocate Mr Mustafizur Rahman Khan appeared for the petitioner. Having placed the petition and drawn my attention to the statements made in the petition, he mainly submits that in order to organize and participate in the premier football competition in Bangladesh. He also submits that some laches in holding regular AGM of this company for the years 2012, 2013, 2014, 2015, 2016 and 2017 has taken place and these laches were not intentional on the part of the company or of its board of directors. The learned Advocate further submits that the company is performing its function as a sporting club without any break. However, he further submits that, it is indeed a matter of statutory duty of the Company to hold the Annual-General Meeting (AGM) and allowing this application would enable the company to comply with its statutory duties, while it will prejudice nobody. In these circumstances, the company may be allowed to hold its AGM by condoning the delay that has occurred in the meantime.
4. None appeared to oppose the application.
5. Heard the learned Advocate, perused the application along with document annexed.
6. I have considered the statements made in the petition and also the submissions of the learned Advocate for the petitioner.
7. It appears that the company has prepared its audit report for the period ended on 30th June, 2017, Annexure-C series. It is true that it is a matter of statutory duty of the company to hold the Annual-General Meeting (AGM) and allowing this application would enable the company to comply with the statutory requirements, while it will prejudice nobody. In these circumstances, the respondent company should be allowed to hold its AGM by condoning the delay that has occurred in the meantime. The case of the petitioner is proved by the documents annexed to the petition.
8. Accordingly I find merit in this application and consider it just and proper to condone the delay occurred in holding the AGM for the calendar years 2012, 2013, 2014, 2015, 2016 and 2017.
9.  In the result, the petition is allowed.
10. The entire period of delay that has occurred in holding the AGM of the company for the calendar years 2012, 2013, 2014, 2015, 2016 and 2017 is hereby condoned on condition that only the person who was member of the club before 5-6-2016 shall be entitled to receive notice, attend the meeting and to vote in the AGMs. In other words, the board decision dated  5-6-2016, to issue further 61,000 shares of Taka 100 each before holding the aforesaid outstanding application should remain out of consideration in calling and holding the said AGMs for the years 2012, 2013, 2014, 2015, 2016 and 2017.
11. The company is permitted, subject to the prohibitions above said, to hold its Annual-General Meetings for the calendar years 2012, 2013, 2014, 2015, 2016 and 2017 within 90 days from the date of drawing up of this judgment and order.
12. The question of issue of further shares shall be considered by the board of directors to be elected pursuant to this judgment.
13. The petitioner company is directed to donate Taka 1,00,000 (One lac) through Pay Order to the Department of Law, Dhaka University (in the name of the Chairman of the Said Department) account No. 34025808, Sonali Bank, Dhaka University Branch, Dhaka within 2 (two) weeks from receiving copy of this judgment and order, since they have volunteered, for purchasing Computers and other equipments etc. for the law department, Dhaka University, Dhaka, and to submit an affidavit of compliance within 1 (one) week thereafter.
Cost will be borne by the company.

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