Introduction
Corporate governance often involves decision-making through meetings of shareholders and creditors. However, corporations themselves cannot physically attend such meetings and therefore a natural person is required. Section 113 of the Companies Act, 2013 addresses this practical challenge by allowing body corporates to appoint representatives who can exercise their rights at these meetings. This provision ensures smooth participation of corporate entities in the democratic process of company administration.
Statutory Provision
Section 113 states:
1. Authorization by Resolution
A body corporate, whether a company under this Act or not, may:
-
- If it is a member of a company, authorize any person by a resolution of its Board of Directors or governing body to act as its representative at any meeting of the company or any class of members.
- If it is a creditor (including a debenture holder), authorize any person by a similar resolution to act as its representative at any meeting of creditors held under the Act, rules, or provisions of any debenture or trust deed.
2. Rights of Authorized Representative
The authorized person shall have the same rights and powers—including voting by proxy and postal ballot—as the corporation itself would have if it were an individual member or creditor.
Key Features
- Who can authorize?
The Board of Directors or other governing body of the corporation. - Scope of Representation:
- Meetings of the company or any class of members.
- Meetings of creditors, including those convened under insolvency or restructuring provisions.
- Voting Rights:
The representative can vote by proxy and postal ballot, ensuring full participation. - Continuity of Authorization:
A fresh resolution is not required for every meeting unless revoked or amended. - Multiple Representation:
One individual can represent multiple corporations, but for quorum purposes, they are counted separately for each entity.
Practical Implications for Directors & Management
- Board Resolution:
Companies must pass a formal resolution authorizing the representative. This resolution should be properly documented and certified. - Verification:
The chairman of the meeting must verify the authenticity of the authorization. - Compliance:
Ensure the resolution complies with Section 113 and is presented before or at the meeting.
Benefits
- Ease of Participation:
Corporations can actively participate without physical presence of directors. - Legal Certainty:
Provides a clear statutory mechanism for representation. - Flexibility:
Representatives can exercise all rights, including voting and signing documents.
Best Practices
- Draft a clear board resolution (Sample Resolution is annexed at the end) specifying:
- Name of the representative.
- Scope of authority.
- Validity period.
- Maintain proper records for compliance and audit purposes.
Conclusion
Section 113 is a vital provision that facilitates corporate representation in meetings, ensuring that companies and creditors can exercise their rights effectively. For students, it illustrates principles of corporate governance; for professionals and directors, it provides a compliance roadmap; and for management, it ensures operational flexibility.
Draft Board Resolution
Sample 1
APPOINTMENT OF AUTHORIZED REPRESENTATIVE TO ATTEND AND VOTE AT THE EXTRA-ORDINARY / ANNUAL GENERAL MEETING OF ————–
“RESOLVED THAT pursuant to the provisions of Section 113 of the Companies Act, 2013 and other applicable laws, the consent of the Board be and is hereby accorded to appoint Mr./Ms. —————- or in his/her absence / unavailability, Mr./Ms. —————- (hereinafter collectively referred to as the “Authorized Representative”) as the Authorized Representative of the Company to attend and vote on behalf of the Company at any meetings of the members or any meeting of the class of members or creditors thereof of ————— Private Limited/Limited, and exercise any rights and powers (including the right to vote by proxy) in the same manner as the company could exercise as a member of the company.
RESOLVED FURTHER THAT the authorized representative is authorized to attend in physical mode or through Audio-Visual Means (AVM), all the meetings or at any adjournment thereof.
RESOLVED FURTHER THAT the Authorized Representative be and is hereby also authorized on behalf of the company to give consent for holding of general meetings on shorter notice pursuant to Section 101 of the Companies Act, 2013 of which the company is a shareholder.
RESOLVED FURTHER THAT the authority granted under the foregoing resolution shall remain in force, for each of the above-mentioned authorised representatives as long as they are associated with the company, or until the time the Board passes another resolution superseding the foregoing resolution which shall be conveyed to ———————- (Name of the Company for which authorisation is given) from time to time.
RESOLVED FURTHER THAT any Directors of the Company, be and is hereby authorized to issue a letter of authorization in favor of Mr./Ms. ————— and to do all such acts, deeds, and things as may be necessary to give effect to this resolution.”
RESOLVED LASTLY THAT a Certified True Copy of the resolution shall be furnished to the Company mentioned above and that any Director and Company Secretary of the Company be and are hereby severally authorised to sign the same on behalf of the Company.”
Sample 2 (authorizing financial year wise)
“RESOLVED THAT pursuant to provisions of Section 113 of the Companies Act 2013, the consent of the Board be and is hereby accorded to authorize Mr./Ms. ——— to attend and vote on behalf of the Company as an Corporate Representative/proxy, for any meetings of the members or any meeting of the class of members or creditors thereof of ————— Private Limited/Limited for the Financial Year ——- of the following Companies;
1. ———-
2. ———-
3. ———-
RESOLVED FURTHER THAT, any of the aforementioned authorized person may attend and vote on behalf of the Company and be counted for the Quorum of Extra-Ordinary/Annual General Meetings for the above-mentioned Companies.
RESOLVED FURTHER THAT the authorized person be and is hereby also authorized on behalf of the company to give consent for holding of general meetings on shorter notice pursuant to Section 101 of the Companies Act, 2013 of which the company is a shareholder. Limited/Limited is a shareholder.
RESOLVED FURTHER THAT the authority granted under the foregoing resolution shall remain in force, for each of the above-mentioned authorised representatives as long as they are associated with the company, or until the time the Board passes another resolution superseding the foregoing resolution which shall be conveyed to ———————- (Name of the Company for which authorisation is given) from time to time.
RESOLVED LASTLY THAT a Certified True Copy of the resolution shall be furnished to the Company mentioned above and that any Director and Company Secretary of the Company be and are hereby severally authorized to issue a letter of authorization in favor of Mr./Ms. ————– and sign the same on behalf of the Company.”
Draft Letter of Authorization
Date: ———
To,
The Board of Directors
—————— Private Limited / Limited
(address)
Dear Sir/s / Madam,
Subject: Appointment of Authorized Representative to attend Extra-Ordinary / Annual General Meeting of the Company.
I, -—————, Director of ————- Private Limited / Limited, the Company holding -——– (no. of shares) (in words) Equity Shares of Rs. —/- (-— Only) each in ————- Private Limited / Limited, we hereby appoint Mr. / Ms. -—————– as our authorized representative to attend and vote at the Extraordinary General / Annual General Meeting of the Company to be held on (day), (date), (year) at (time) at registered office of the Company at (venue) or any adjournment of the meeting thereof.
Thanking You,
Yours Faithfully,
For and on behalf of -———- Private Limited / Limited
___________
Director
DIN: ——–
Add:
Author Bio
