Q1.

X, who is not a shareholder in a company sent a notice to the company, sent a notice to the company of his candidature for the office of director in the place of a retiring director at the ensuring annual general meeting of the company. The same company received another notice from Y, a member, holding only one share signifying his intention to propose the candidate of Z for the office of director in place of retiring director. As a secretary of the company how will you deal with this notice? Can any member present at meeting propose the aforementioned proposals for the consideration at the meeting?
Considering the changes in a firm for: a. change in the duration of a firm b. change in the nature of business or undertakings c. change in the constitution of a firm

For X who is not the shareholder of the company has certain rights & liabilities which have to be followed & can be enjoyed. This is in accordance with s.196 of the Indian contract act, 1872, which provides that for the purpose of the rectification of agency, the principal must be in existence at the time when the act was done Conditions: 1. X cannot be introduced into a firm without the consent of all the existing partners & if such a partnership exists then every partner enjoys all the rights as are conferred upon him by the Act and by the contract between him & the existing partners. 2. The liability of X commences from the date when he is admitted as a partner, unless he agrees to be a liable for obligations incurred by the firm prior to that date. But such an agreement is binding only on the partners & does not give the right to any creditor of the firm to sue the new partner for past debts of the firm. This is because there is no privets of the contract between the creditor & the new partner. At the same time, the acts of the old partners cannot be ratified by the new partner.. The new partner, however, would be liable for the acts of the old firm only if 1. The reconstituted firm after his admission assumes the liabilities of the old firm 2. The creditors accept the new firm as their debtor and discharge the old firm from its liability. Being the secretary of the company consideration of rights for the shareholder have also to be considered which are as: -

1. The provisions of the small shareholders director are applicable to public companies having paid-up share capital of Rs 5crores or more having 1000 or smaller shareholders. In case the company is fulfilling both these conditions, then only its shareholders shall be eligible to proceed in the direction of appointing Z as the small shareholder director. 2. Small shareholders for this purpose means a shareholder holding shares of nominal value of Rs20, 000 /- or less.

3. Small shareholders who intend to propose Mr. Z as a small shareholders director have to leave a notice of their intention with the company at least 14 days before the meeting and such notice has to be signed by at least 100 small shareholders. 4. According to the rules, the person whose name is to be proposed for the post of small shareholders director should himself be a small shareholder. Since Mr Y is holding shares of nominal value of Rs 10, 000/- only, which is less than Rs 20, 000, he is eligible to be nominated as such. 5. The said notice shall contain the name, address, number of shares held, of Mr Y whose name is to be proposed as a small shareholders director and also that of other shareholders proposing Mr Y. 6. Before the meeting Mr Y has to sign and file with the company, his consent in writing to act as a director. 7. Since the company is listed with the Bombay stock exchange, it shall elect small shareholders nominee through the postal ballot. 8. On scrutinizing the postal ballot, if Mr Y secure the requisite number of votes, he will elected as a director for a team of 3 yrs and on expiry of the term shall be eligible to be re-appointed if small shareholders so wish at that time. However, he need not have to retire by rotation. After comparing and calculating the rights and liabilities of the shareholder & other party, being the secretary decision has to be given in the favour of the Mr Yi .e Mr Z has to appointed as the new Director of the company, and Mr X has first to be given a small share in the company with the agreement from all the shareholder and then he can compete for the post of Director. Members present at the meeting can also give the proposal only when the situation arises like: a. Where a change occurs in the constitution of a firm b. Where a firm constituted for a fixed term continues to carry on business after the expiry of
that term c. Where a firm constituted to carry out one or more adventures carries out other adventures.