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King without a crown -- II

N. R. Moorthy

IN THE absence of any specific provision in the statute -- mandating the appointment of chairman by a company -- the duties to be performed by the chairman, unless he has executive powers, are purely administrative and ministerial. Some of the duties are enshrined in the AoAs of companies and/or in Table A of the Companies Act. The functions of a chairman are generally as follows:

i) Buckley's Company Law refers to chairman as ``a person whose duty it is to preserve order, conduct the proceedings regularly and take care that the sense of the meeting is properly ascertained with regard to any question before it and he has no power to adjourn it at will.''

ii) Table A in its chapter dealing with proceedings at general meetings says, inter alia, ``The chairman may, with the consent of any meeting at which a quorum is not present, and shall, if so directed by the meeting, adjourn the meeting from time to tim e and from place to place.

iii) Regulation 54 reads, ``In the case of equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which voting by show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vo te.'' Regulation 74(1) contains an identical provision for meetings of the board.

iv) Reg 60 deals with the right of the chairman to decide on objections raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given/tendered, and every vote not disallowed at such meeting sha ll be valid for all purposes. Any such objection made in due time shall be referred to the chairman of the meeting whose decision shall be final and conclusive.

v) Section 178 of the Act casts a responsibility on the chairman to declare the result of the voting. It is further provided that a declaration by the chairman in pursuance of Section 177 -- that on a show of hands a resolution has or has not been carrie d, either unanimously or with particular majority, and an entry to that effect in the book containing the minutes of the proceedings -- shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favour or aga inst any such resolution.

vi) Under Section 179 of the Act, the chairman is conferred with the right to demand or order a poll on any resolution either before or on declaration of the results of the voting on any resolution on a show of hands or on his own motion, subject to the conditionalities contained in the said section being met.

vii) Section 184 states that where a poll is to be taken, the chairman of the meeting shall appoint two scrutineers to scrutinise the votes given on the poll with directions to submit the report to him. Sub-section (2) of the said section says, ``The cha irman shall have the power, at any time before the result of the poll is declared, to remove a scrutineer from office of scrutineer and appoint another scrutineer arising from such removal or from any other cause.''

viii) Section 185 empowers the chairman to regulate the manner in which a poll shall be taken and that the result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken. It is also the responsibility o f the chairman to give his ruling on any points or irregularities in proxies as may be raised by the scrutineers.

ix) Section 193 of the Act lays down that it is the duty of the chairman to decide on inclusion or otherwise in the minutes of any such meeting of any matter which in the opinion of the chairman: a) is or could reasonably be regarded as defamatory of an y person; b) is irrelevant or immaterial to the proceedings; or c) is detrimental to the interests of the company, and the chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter on the ground specified he rein.

x) Under Section 217 (4), the chairman has the authority, if so authorised by the board, to sign the report of the board of directors to the members and any addendum thereto.

xi) In the absence of a definition of the term `chairman', one can only rely on other authorities.

Shackleton, in Law and Practices of Meeting, deals with various aspects of the roles and responsibilities of the chairman which, briefly, are as follows:

Responsibility for the conduct of a meeting rests particularly on the chairman. He will invite the speakers, regulate the length of speeches, deal with points of order and control the arrangements for any vote that may be taken;

If there is heckling, it rests on the chairman to decide to what extent to allow the speaker to deal with interruption and whether or not to intervene from the chair. He can order a member to leave the meeting. He should also ensure that each speaker is allowed a fair hearing; in this he will usually be supported by the majority of the audience. The chairman will be on more difficult ground if he has to deal with organised interruption by groups, whose purpose may be to ruin the meeting or at least att ract damaging publicity. Here, the chairman should, if he has the chance, prepare his response carefully. He may attempt to position the disruptive elements where they are more isolated, and the stewards should be forewarned of possible trouble and given clear instructions. Control of the microphone and its decibels, is an important factor. He must combine fairness with tact. An element of humor may assist in avoiding matters getting out of hand.

The qualifications required of a chairman are hard to define. A pleasing presence and a good voice, while desirable, are not essential. But self-confidence, fair mindedness, and the ability to arrive at correct decisions on the spur of the moment are ne cessary. While he should possess the power to express with facility and discretion the mind of the meeting on the particular question under discussion, he must avoid both garrulousness and secretiveness.

He must be ready to guide the meeting into decisions that will make for a successful result, he must at the same time be careful to subordinate his own views to those of the meeting, both of the majority and the minority.

The tips provided by Shackleton assume greater significance now, as general meetings these days are turning out to be more and more turbulent.

Considering the pathetic situation in which a chairman is expected to assume a leading role -- and that too without any legal sanction -- certain amendments to the Act are required to make the chairman a personagrata.

the chairman should be elected by the shareholders to hold office until the conclusion of the next annual general meeting.

the duties, functions and responsibilities of the chairman so elected should be clearly specified so that he is not required to play second-fiddle to the other directors.

the chairman should be a person with experience and sound knowledge of corporate management -- preferably corporate laws.

he cannot be removed unless by a special resolution.

in the event of conflicts of views between the chairman and the chief executive, the matter can only be resolved by the entire board whose decision should be binding on both.

the chairman should be paid remuneration commensurate with his responsibility and such remuneration may or may not fall within the ceiling on overall managerial remuneration.

between meetings of the board, the chairman, in consultation with the CEO, should be permitted to take a decision subject to ratification by the board at a later meeting.

Thus, it is time that the Act was amended to protect the office of the chairman.

(Concluded)

(The author is a Pune-based company secretary.)