Members of a company have been conferred rights by the Companies Act. Broadly, these are:
(1) Right of access to Documents and Books:
Members of a company has the right to obtain copies of Memorandum of Association; Articles of Association; Annual Report including Director’ Report; and Balance Sheet and Profit and Loss Account.
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Members have been given right by the Companies Act to inspect Register of Members; Register of Debenture-holders; Register of Charges; Register of Investments; Minute Books of general meetings; Proxies lodged for the general meeting; and all returns filed by the company.
(2) Right to make Fundamental Corporate Decisions:
Certain fundamental corporate decisions are the exclusive power of the meetings of the members of the company wherein decisions are made by the members by passing of resolution (ordinary or special as the case may be): changing registered office; authorizing capital increases; waiving preemptive rights; buying back shares; amending articles of association; delisting; acquisitions, disposals, mergers and takeovers; changes to company’s business or objectives; making loans and investments beyond prescribed limits; authorizing the board to: sell or lease major assets; borrow money in excess of paid-up capital and free reserves, and appoint sole selling agents and apply to the court for the winding up of the company.
(3) Right of Participation in General Meeting:
Members have the right to receive the notice of the general meetings specifying the meeting place and time and the agenda of the meeting.
They have the right to attend the general meeting in person or through proxy. Members can speak at the meeting, vote by show of hands or demand a poll. They have the right to vote in case of voting by poll. The Companies Act gives right of postal voting for certain fundamental decisions.
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Any member may apply to the Company Law Board (CLB) to call an AGM if the company has defaulted in conducting an AGM. Shareholders may also demand calling of Extra-ordinary General Meeting (EGM) for discussing any emergent item. The requisition for an EGM must be signed by shareholders holding at least 10 percent of the paid up voting capital.
(4) Right to Appoint Directors:
Members have the right to appoint the directors (at least two third of directors of a public company is required to be appointed by members of the company). They also have the right to remove the director(s).
(5) Right as to Accounts and Audit:
Members have the right to appoint the auditor and fix his remuneration. Auditors can be removed by the members of the company by passing a resolution at the general meeting. The annual accounts of the company are required to be passed at the annual general meeting of the company.
(6) Right to Participate in the Profits of the Company:
The dividend to be paid is required to be approved by the members of the company at the annual general meeting of the company. Members have the right to receive the dividend within 30 days of the declaration.
(7) Shareholding Rights:
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Members have the right to receive share certificate (in case shares are held in physical form); to transfer shares; to receive right offer of shares (in case of a public company); and to receive bonus shares.
(8) Right against Oppression and mis-management:
The Companies Act confers rights to shareholders in matters of mismanagement or oppression by the majority. The lesser of 100 shareholders or those holding 10 percent of voting rights can apply to the Company Law Board (the Tribunal once it is constituted) for redress.
Companies Law Board can terminate or modify agreements entered into by the company or remove/appoint directors to the board. Members can ask for investigation in the affairs of the company. They can also file petition to the Court (the Tribunal) for winding up of the company.