Chapter – 10 Corporate Administration

1. Company Administration: Corporate administration means the management of a

company’s legal, statutory, and governance affairs to ensure the company complies with
the law and operates in an organized manner.
Corporate administration = handling the official, legal, and compliance side of a
company.
2. Company Secretary: company secretary is an officer of the company with
administrative and statutory responsibilities, whose acts within actual or implied
authority may bind the company, but who generally lacks authority to enter into
commercial contracts or borrow money. A company secretary is appointed and removed
by the directors. The secretary must meet at least ONE of the following qualification
requirements:
i. Must be qualified, OR
ii. Must have worked as a company secretary in a public limited company (PLC)
for at least 3 years within the last 5 years, either on a full-time or part-time
basis, OR
iii. Must be a professional qualification holder, such as: Advocate,ACCA,CA
iv. Must be a person who is capable of carrying out the duties honestly and in
good faith, similar to a person holding such position or qualification
v. At least one of the above conditions must be satisfied.
A sole director cannot be appointed as the company secretary.
Duties of Company Secretary: The company secretary is generally responsible for
carrying out the work assigned by the Board of Directors and other general duties
expected from a person holding such position, including:
a. Checking whether company documentation is in proper order
b. Filing statutory returns with the Registrar
c. Keeping and maintaining statutory registers
d. Issuing notices of meetings
e. Recording and maintaining minutes of meetings
f. Checking and countersigning documents on which the company seal is affixed
Powers of Company Secretary
A company secretary has the authority to enter into contracts under:
Actual authority – authority expressly given by the Board of Directors
Implied authority – authority arising from the usual administrative role of a company
secretary
P.T.R : If a company secretary acts on their own, without express approval, the act
may still bind the company if: The act falls within the usual authority of a company
secretary, or A person holding the same position would normally be expected to have
such authority However, a company secretary does NOT usually have authority to:
Borrow money, or Enter into contracts of a commercial or trading nature
3. The auditors: Auditors are independent professionals authorized to examine company
accounts, appointed mainly by shareholders, with directors appointing the first auditor, and
the Secretary of State intervening where appointment fails.
Qualifications Auditors must:
a. Be a member of a recognized accountancy body or a recognized supervisory
body, OR
b. Be eligible to conduct audits under the rules and regulations of such bodies, AND
c. Be authorized by the Department for Business, Energy and Industrial Strategy
(BEIS).
Independence of auditors: Auditors must be independent, therefore:
a. They must not be employees of the company
b. They must not be partners of the audited company
However, auditors are allowed to:
a. Run their own business
b. Act as a partner in a partnership firm
c. Act individually or as a sole practitioner
Appointment of Auditors
A. Private Company
Auditors are generally appointed by shareholders by passing an ordinary resolution.
a. The first auditor is appointed by the directors.
b. Directors may also appoint auditors to fill casual vacancies.
Reappointment
After appointment:
Auditors are generally reappointed automatically after the expiry of their term, unless:
a. They were originally appointed by directors, OR
b. The articles of association provide otherwise, OR
c. Members holding at least 5% of voting rights give notice before the end of the
financial year regarding auditor appointment, OR
d. The directors decide that audit is not required, which is generally not possible
unless the company is exempt from audit.
Failure to appoint auditor
If the company fails to appoint an auditor:
a. The company must inform the Secretary of State within 28 days of circulation of
the annual accounts, and
B. Request the Secretary of State to appoint an auditor on behalf of the company or in
the best interest of the company.
B. Public Company
Auditors are generally appointed by shareholders through an ordinary resolution at
the general meeting where accounts are laid. The first auditor is appointed by the
directors of the company.
Term of office
Auditors hold office until the end of the meeting at which the final accounts are
placed, unless reappointed.
Change of auditors
When auditors are changed: The new auditor cannot take office until the previous
auditor’s term ends. In simple terms, the new auditor’s term begins after the meeting
where final accounts are placed.
 Failure to appoint auditor
If a public company fails to appoint auditors: The Secretary of State must be informed
within 28 days of such failure, and the company may request the Secretary of State to
appoint an auditor on its behalf or in the best interest of the company.
4. Audit exemption: P.L.C, Banking or Insurance companies or those subject to the
government regulation comes outside the boundary of exemption they must get their
books audited doesn’t matter what the circumstances is until otherwise stated. However
private companies can entertain the facilities of exemption if the Turnover is below
10.2m and net assets of the company is below 5.1m or employer employees less than 50
employees within the organization. (For exemption any two of the above criteria must
be satisfied)
5. Resignation and Removal of Auditors: Auditors may resign by written notice or be
removed by ordinary resolution in a general meeting, subject to notice, circulation,
explanation rights, and registrar notification requirements.
Resignation and Removal of Auditors
A. Resignation of Auditors
An auditor may resign at any time by giving written notice to the company.
For the resignation to be effective, the auditor must submit:
o A statement of compliance, and
o A statement of circumstances explaining the reasons for resignation
(mandatory for listed companies).
For non-listed companies:
a. The statement of compliance must be submitted, but
b. The statement of circumstances may or may not be submitted.
c. The auditor may simply state that there are no circumstances to report.
Circulation of resignation notice
a. The company must circulate the resignation notice to all shareholders and
stakeholders within 14 days of receiving it.
b. If the company does not wish to circulate the notice, it may apply to the court for an
order stating that circulation is not necessary.
Auditor’s right to explanation
A resigning auditor may request the directors to call a general meeting to explain the
reasons for resignation.
Directors must:
o Send notice of the meeting within 21 days of the request, and
o Hold the meeting within 28 days of issuing the notice.
Notification to registrar
The company must notify the registrar within 14 days of:
o Auditor’s resignation, or
o Auditor’s removal.
B. Removal of Auditors
An auditor may be removed at any time by passing an ordinary resolution. The
resolution must be passed in a general meeting.
Written resolution is NOT permitted for removal of an auditor.
Special notice requirement
 A special notice of 28 days is required for the removal of an auditor.
The notice must be:
o Sent to the auditor being removed, and
o The auditor must be given an opportunity to:
▪ Present their case, and
▪ Submit a statement of compliance.
The auditor’s statement must:
o Be circulated to the board/shareholders, or
o Be read aloud at the meeting if circulation is not possible.
6. Duties of an Auditor: Auditors are responsible for expressing an independent opinion on
financial statements, reporting misstatements, exercising statutory rights, and may incur
criminal liability for knowingly misleading reports, subject to limited liability agreements
for negligence.
Purpose of Audit
The main duty of an auditor is to give a true, fair, and independent view of the
company’s financial statements and to ensure that:
a. The accounts are prepared in accordance with the Companies Act and the relevant
financial reporting framework
b. Proper books of accounting records have been kept
c. Proper documents and information have been received for verification (including
records of branches, if any)
d. The books and returns agree with the information reported
e. The information given in the directors’ report is consistent with the accounts
Audit Reporting
If the auditor is not satisfied with the findings, they must:
o Qualify the audit report, and
o Report any misstatements found in the financial statements
The auditor’s report must include:
o The name of the auditor
o The name of the audit firm
o The report must be signed by the most senior auditor of the firm on behalf of
the firm
False or Misleading Audit Report
If an audit report is found to be knowingly manipulated or misleading, it is considered
a criminal offence. The punishment for this offence is an unlimited fine. Both auditors
and company directors are responsible for any liability arising from false or
misleading statements.
However:
Auditors and the company may enter into a service agreement to limit the auditor’s
liability for negligence.
Rights of Auditors
Auditors have the right to: Attend general meetings, speak at meetings, Access the
company’s books and records at all times, carry out any work they consider necessary
for accounting or auditing purposes, it is considered a criminal offence if the company
fails to provide documents or information required by the auditor.
7. Annual General Meeting (AGM): A PLC must hold an AGM within six months of the
financial year end, while private companies are exempt; proper notice is required,
members with 5% voting rights can propose resolutions, and failure to hold an AGM
attracts penalties.
Public Limited Company (PLC)
• Every public limited company (PLC) must hold an AGM within 6 months after the
end of the financial year.
• If the AGM is not held on time:
o The company and the responsible officers are liable to a fine.
• If the AGM is not conducted at all:
o Any member of the company may apply to the Department for Business,
Innovation and Skills to call or conduct the meeting.
Private Company: A private company is not required to hold an AGM.
Notice of AGM
• To conduct an AGM, at least 21 days’ notice must be given to all shareholders.
• However, the AGM may be held with shorter notice if all members agree to it.
General / Usual Business of an AGM
The usual business conducted at an AGM includes:
• Considering and approving the accounts
• Appointing or reappointing auditors
• Electing or re-electing directors
• Declaring dividends
• Reviewing and planning matters for verification and approval
Members’ Rights (5% Voting Rights)
• Members holding at least 5% of the total voting rights have the right to:
o Propose agenda items for the AGM
o Circulate details of proposed resolutions to all members
Circulation of Resolutions and Documents
• If members request the company to circulate resolutions or documents to shareholders
within the same financial year:
o Members are not required to bear the cost personally.
• However, if the request is made late, members may be required to pay additional
expenses caused by the delay.
8. General Meeting (G.M): A General Meeting (GM) is a meeting of company members that is
held whenever required.
When GM is compulsory (PLC)
In a public limited company (PLC), a general meeting must be held when:
a. The net assets fall to half or less than the called-up share capital, or
b. A serious loss of capital has occurred.
Notice of General Meeting
To conduct a general meeting, at least 14 days’ notice must be given to the members.
Agenda of the General Meeting
The person who calls or requests the meeting normally sets the agenda for the
meeting.
9. Class meeting (Right to vote, dividend, participate): A Class Meeting is a meeting
held for a particular class of shareholders (for example, equity shareholders or preference
shareholders).
Purpose of a Class Meeting
A class meeting is called to consider and decide on a variation of class rights, such as:
• Right to vote
• Right to dividend
• Right to participate in surplus assets or profits
Procedure
• A class meeting is conducted following the same procedures as a General Meeting
(GM).
• This includes requirements relating to:
o Notice
o Quorum
o Voting
o Resolutions
Simple example
If a company wants to change the dividend rights of preference shareholders, a class
meeting of preference shareholders must be called to approve that change.
10. Quorum: Quorum means the minimum number of members who must be present at a
meeting to make the proceedings of that meeting valid.
Requirement
A meeting is valid only if:
a. The minimum number of members is present, OR
b. Members present represent at least one-third (1/3) of the nominal value of the
issued share capital.
Presence by proxy
Members may be present personally or through a proxy. A proxy (substitute) counts
for the purpose of quorum, if properly appointed.
Simple example
If a company has issued shares worth Rs. 3,000,000, members present (personally or by
proxy) must represent at least Rs. 1,000,000 (1/3) in nominal value for the meeting to
proceed validly.
11. Calling Meeting: Meetings are generally called by directors, but members with requisite
voting rights, resigning auditors, or the court may call meetings, subject to statutory
notice requirements and procedures.
General Rule
The power to call meetings is generally given to the directors, unless restricted by the
articles of association.
a. Members’ Right to Call a General Meeting (GM)
b. Members holding at least 5% of the voting rights of the paid-up share
capital may require the directors to call a General Meeting.
Once such a request is made:
o Directors must call the meeting within 21 days, and
 o The meeting must be held within 28 days of circulating the notice.
Failure of Directors to Call the Meeting
• If directors fail to call the meeting:
o The requesting members holding more than 50% of the voting rights may call
the meeting themselves.
o The meeting must be held within 3 months of the original request.
o Members may recover the expenses incurred in calling the meeting from the
company.
Auditor’s Right to Call a Meeting
• A resigning auditor may also call a meeting:
o To explain the reasons for resignation, or
o To discuss issues and possible solutions.
Court’s Power to Call a Meeting
• The court may call a meeting on the application of a director or a member.
• If it is impracticable to call or conduct a meeting in the usual manner:
o The court will examine the matter, and
o If found serious or genuine, it may order a meeting to be held as requested.
Notice of Meeting
• Notice of the meeting must be sent to all directors and members/shareholders.
Notice Period
• AGM: 21 days’ notice
• GM: 14 days’ notice
Shorter Notice
• AGM: A shorter notice period is allowed if all members entitled to vote agree.
• GM:
o 95% majority (by voting rights) can shorten notice in a PLC
o 90% majority can shorten notice in a private company
Failure to Give Notice
• Failure to give notice to one or more persons does NOT invalidate the meeting.
Contents of Notice
• The notice must state:
o Date
o Time
o Agenda of the meeting (if practicable)
Special Notice
• Where special notice is required, 28 days’ notice must be given.
Notice for Requisitioned Resolutions
• Where members hold sufficient voting rights to requisition a resolution at a general
meeting:
o A 6-week prior notice must be given to the company.
o The notice must be provided in advance of the meeting.
12. Resolution: A resolution is a decision of a firm or company taken by its members to do
or not to do something
 Ordinary
Basis Special Resolution Written Resolution
Resolution

Decision passed for Decision passed for

Decision passed without
Meaning general or routine important or fundamental
holding a meeting
matters matters

51% majority (or 75% where

Majority 51% (simple
75% majority law requires special
required majority)
resolution)

Notice Normal meeting 15 days’ notice for the Circulated to members; no

period notice meeting meeting

Meeting No (written circulation

Yes Yes
required only)

Companies
All companies All companies Private companies only
allowed

Time limit to Must be passed within 28

No specific limit Passed at the meeting
pass days of circulation

May or may not be filed;

May or may not be
Filing with Must be filed with generally filed in practice,
filed (depends on
registrar registrar within 15 days especially if 75% majority is
country law)
required

Used wherever Change company name,

Typical Alter articles, vary class rights,
required for routine wind up company, alter
purposes change company name
matters articles, reduce share capital

Removal of
Allowed Not applicable Not allowed
director

Removal of
Allowed Not applicable Not allowed
auditor

Special Resolution Requires 75% majority to pass & 15 days’ notice is required for a
meeting at which a special resolution is to be voted on and must provide information to
registrar within 15 days. the usual purpose of this resolution is to alter name, wind up
company, alter articles, reduce share capital. Ordinary resolution requires 51% of
majority to pass may or may not be submitted to registrar (depending upon law of the
country) and can be used wherever required .Written resolution required majority of
51% and may or may not be submitted to registrar but in practice found to be submitted
 to registrar or in case 75% is required then may submitted to registrar and can be passed
only by private companies and must be passed within 28 days from its circulation.
13. Voting process: The voting process in company meetings can be carried out in two ways:
a. Show of Hands b. Poll
A. Show of Hands: This is the general and default method of voting, unless a poll is demanded.
Under a show of hands: One member = one vote, the number of shares held does not matter, it
reflects the number of members, not their shareholding.
B. Poll: A poll may be demanded by members holding at least 10% of the voting rights. Under a
poll: One share = one vote, the result of the poll overrides and replaces the result of the show of
hands.
Effect of Poll: A poll gives more weight to shareholding, not number of members. As a result,
minority shareholders’ votes may be overridden, which may create bias in favor of majority
shareholders.
Proxy (Substitute) Voting
A member may appoint a proxy (substitute) to:
a. Attend the meeting
b. Speak
c. Vote on behalf of the member
Listed Companies – Disclosure Requirement
A listed company must:
a. Publish details of the meeting and poll results
b. Make them available on the company’s website or publicly