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Rescind Cancellation of Board & General Meeting Resolutions

First of all, please note that there is no specific provisions regarding this under the Companies Act, 2013. But it is assumed that as and when such necessity arises the board of directors being responsible for it can take appropriate action as suggested hereunder.


Can a resolution be cancelled?

A resolution, which was passed at a meeting of the board of directors of a company; or
A resolution, which was passed at a meeting of the members/shareholders of a company;
can be rescinded or withdrawn if it is so decided by the board of directors or members.





How to cancel a resolution?

In case of a board resolution,
• by passing of a fresh resolution at any subsequent board meeting;
• to the effect that the earlier resolution is being cancelled herewith;
• mention reference of the earlier resolution clearly viz. item number, meeting date, etc.

In case of a general meeting resolution,
• at first the board of directors in their meeting will approve the cancellation at any subsequent board meeting;
• then the board of directors will call for a fresh general meeting where the cancellation of the earlier resolution will be considered;
• then at the general meeting the members will consider and approve/reject the cancellation of the earlier resolution;
• mention reference of the earlier resolution clearly viz. item number, meeting date, agenda details, etc.


Example

• Board resolution passed for Increase of the Authorised Share Capital;
• Extraordinary general meeting was called for by the board and held by the members;
• Shareholders passed the resolution approving the Increase of the Authorised Share Capital;
• Forms were filed with the RoC for registration of the resolutions passed at the meetings;
• Subsequently, the Board decided not to increase the authorised share capital for some reason;
• The Board in its meeting has to pass a fresh resolution to rescind its earlier resolution;
• The Board has to approve the calling of another general meeting for considering the cancellation;
• A fresh resolution was passed at the general meeting rescinding the earlier resolution;
• Forms have to be filed again with the RoC for registration of the resolution cancelling earlier resolution.





Resolution cannot be cancelled at all

Sometimes such passing of resolution and cancellation afterwards are done with an intention to defraud or such cancellation is done only to avoid certain compliances.

In such cases, the rescinding of the earlier resolution may not be allowed by the RoC or Tribunal on an application made by the concerned affected parties.

There is no clear provisions regarding this under the Companies Act.


Resolution cannot be cancelled at the same meeting

A resolution cannot be rescinded at the same board or general meeting.

In a meeting, after approving an item of business/ agenda, if any disagreement arises at a later point of time during that meeting on that agenda and most of the directors dissents to it, then in the minutes of the meeting the dissents will be noted for that agenda and the resolution will not be passed.


Retrospective Effect of Cancellation

The cancellation of the resolution cannot be given a retrospective effect from an earlier date. The cancellation will come into effect on the date of passing of the fresh rescinding resolution.

Hence, during the period from the passing of the original resolution till the date on which the fresh resolution for rescinding was passed, the earlier resolution will be deemed to be valid for that period and the company will be responsible for any action taken by it or others on the basis of the original resolution.


Resolutions Formats

Resolutions to be passed at a subsequent meeting for cancellation.

1. Rescinding Resolution passed in a Board Meeting

The Company Secretary informed the Board that in the ...th board meeting of the company held on ...(Date)..., a resolution by item no. ... was passed for approval of ......(describe)....

The management recommends that the same be rescinded as the earlier resolution was passed based on the decision and necessity to ......................., and which was later cancelled because of certain unforeseen circumstances.

The Board considered the same and upon motion duly passed and seconded, it was:

“RESOLVED THAT the resolution no. .... passed at the ...th meeting of the board of directors of the company held on ...(Date)... at (Venue) at (Time) be and is hereby rescinded.”


2. Rescinding Resolution passed in a General Meeting

“RESOLVED THAT the resolution no. ... passed at the extraordinary general Meeting / annual general meeting held on (date) at (venue) at (time) be and is hereby rescinded.”

Explanatory Notes

A resolution was passed at the ...th extraordinary general meeting of the members held on (Date) at (Venue) at (Time), which is reproduced hereunder:

“RESOLVED THAT .............................................................................”

The board of directors now recommends that the above resolution be withdrawn. Earlier the resolution was recommended to the members because the company was in the process of ................... and it was necessary for that purpose to obtain the approval of the members in advance. However, the earlier proposal is not under consideration anymore and has been cancelled in toto by other concerned parties.

Comments

  1. Thank you so much

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  2. Thank you for this information, but could you point out the exact articles of the Act according which these actions are taken? Thanks
    And if possible could you also provide information about invalidation (annul resolution) of General annual meeting resolutions? in pursuant which Act and article it s possible? or if there are not such laws then which regulations must be applied in that case?

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