Can a listed company ‘send’ or ‘supply’ its annual report to its shareholders electronically

The annual report of Infosys Technologies Limited for 2009- 10 carries the following note under the title “Green Innovation”:

“During the previous year, we started a sustainability initiative with specific focus on reducing the carbon footprint involving our Annual Reports. Toward this end, we had stated that commencing fiscal 2010, our printed copy of the Annual Report to shareholders would contain only the statutory details. Accordingly, the Annual Report for the year ended March 31, 2010, contains only those details that are statutorily required to be published in the Annual Report along with Abridged Standalone Financial Statements prepared in compliance with Section 219 of the Companies Act, 1956. Additional details are available on our website, www.infosys.com. Through this initiative, we propose to reduce consumption of paper by about 100 tonnes.”

This is consonant with the Ministry of Corporate Affairs’ call through Corporate Social Responsibility Voluntary Guidelines 2009 (CSR) which is as under:“5. Respect for Environment: Companies should take measures to check and prevent pollution; recycle, manage and reduce waste, should manage natural resources in a sustainable manner and ensure optimal use of resources like land and water, should proactively respond to the challenges of climate change by adopting cleaner production methods, promoting efficient use of energy and environment friendly technologies.”

The company has sent its members abridged annual accounts in Form No. 23AB prescribed in terms of clause (iv) of the proviso to section 219(1)(b) of the Companies Act 1956 (‘the Act’), considering the environmental and cost aspect involved in printing and circulation of full annual accounts, though clause 32 of the listing agreement entered into by the company with the stock exchanges specifically requires sending the shareholders full annual accounts. Has the company committed a non-compliance with the clause 32, is the question this article examines.

Companies Act requirement
According to section 219(1) of the Act, a copy of every balance sheet (including the profit and loss account, the auditors’ report and every other document required by law to be annexed or attached, as the case may be, to the balance sheet) which is to be laid before a company in general meeting shall, not less than twenty-one days before the date of the meeting, be sent to every member of the company. Collectively these documents are called ‘annual report’. Thus, every listed company must send its members a copy of the annual report in respect of every financial year.

However, according to clause (iv) of the proviso to section 219(1), in the case of a company whose shares are listed on a recognised stock exchange, if the copies of the documents aforesaid are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents aforesaid, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting, the listed company need not comply with the proviso to section 219(1).

Listing agreement requirement
Moreover, the company must also comply with the requirement of clause 32 regarding consolidated financial statement. The requirements of the listing agreement in this regard are in addition to those under the Act; hence every listed company has to comply with both the requirements. The facility of sending abridged annual report under clause (iv) of the proviso to section 219(1) has however been made ineffective by clause 32 of the listing agreement according to which the Issuer will supply a copy of the complete and full Balance Sheet, Profit and Loss Account and the Directors’ Report to each shareholder. The only exemption is what is stated in the second paragraph of clause 32. Clause 32 (to the extent relevant here), reads as follows:

“32. The Company will supply a copy of the complete and full Balance Sheet, Profit and Loss Account and the Directors’ Report, to each Shareholder and upon application to any member of the Exchange. However, the company may supply single copy of complete and full Balance Sheet and Profit & Loss Account and Directors’ report to shareholders residing in one household (i.e., having same address in the Books of Company/ Registrars/Share transfer agents). Provided that, the company on receipt of request shall supply the complete and full Balance Sheet and Profit & Loss Account and Directors report also to any shareholder residing in such household. Further, the company will supply abridged Balance sheet to all the shareholders in the same household.

The Company will also give a Cash Flow Statement along with Balance Sheet and Profit and Loss Account. The Cash Flow Statement will be prepared in accordance with the Accounting Standard on Cash Flow Statement (AS-3) issued by the Institute of Chartered Accountants of India, and the Cash Flow Statement shall be presented only under the Indirect Method as given in AS-3. The company will mandatorily publish Consolidated Financial Statements in its Annual Report in addition to the individual financial statements. The company will have to get its Consolidated Financial Statements audited by the statutory auditors of the company and file the same with the Stock Exchange.”

              Interpretation of ‘shall … be sent to every member’ and ‘supply … to each shareholder’

The words used in section 219(1) of the Act are a copy … shall be sent to every member of the company …. Thus, the verb ‘send’ is used which contemplates the act of ‘sending’ by the company to the members. Section 53(1) of the Act provides for the method of service of documents on members by a company. Its sub-section (1) states: 

“A document may be served by a company on any member thereof either personally, or by sending it by post to him to his registered address, or if he has no registered address in India, to the address, if any, within India supplied by him to the company for the giving of notices to him.” This provision also requires ‘sending’ of a document, but by ‘post’. However it also allows service of a document on a member ‘personally’.

As against these provisions of section 219, clause 32 of the listing agreement requires a listed company to supply a copy of the complete and full Balance Sheet, Profit and Loss Account and the Directors’ Report, to each Shareholder.1 

Thus while sections 219(1)(iv) and 53 use the word ‘send’, clause 32 of the listing agreement uses the word ‘supply’. The dictionary meaning of the word ‘send’ includes “to cause to be conveyed or transmitted to a destination” [see Random House Webster’s Unabridged Dictionary] or ‘to dispatch by a means of communication’ [Merriam Webster’s 11th Colligate Dictionary], and the word ‘supply’ includes ‘transmit, dispatch and send off/out’. The American Heritage Dictionary of the English Language gives the following meaning of the word ‘send’: “To dispatch, as by a communications medium: send a message by radio.” Thus both the words ‘send’ and ‘supply’ connote the act of conveying or transmitting something (a letter, document, etc).

Does annual report have to be ‘printed’?
Wherever the Legislature intended to provide that a document shall be in a printed form, it has used appropriate express wording to convey that intention. For example, the Act specifically provides in section 15 that a memorandum of association shall be ‘printed’. Section 30 provides likewise about articles of association. Sections 17(4) and 31(2A) also use the words ‘a printed copy’. Similarly, in section 241 it is provided that the inspector’s report shall be written or printed. Section 192 provides that a copy of every resolution or agreement to which this section applies shall, within thirty days after the passing or making thereof, be printed or typewritten and duly certified under the signature of an officer of the company and filed with the Registrar who shall record the same.

In contrast, neither of the sections 219 and 53 provides in express terms that the documents be sent or supplied should be in printed form. The words ‘send’ and ‘supply’ can be interpreted having regard to the modern means of communication and if so interpreted can be said to be including communication or dispatch of a document through email or internet (world wide web). Statutory interpretation vis-à-vis technological developments 

It is a well settled principle of statutory interpretation that law should keep pace with the changing environment; it should change constantly and not remain static. The legislature and the executive, the statute and administrative law-making bodies, are expected to change laws and rules to tone them with changes happening around. Courts are likewise expected to do so.

Maxwell on The Interpretation of Statutes, 12th edition deals with this fact of statutory interpretation at page 102 thus : “Extension to new things The language of a statute is generally extended to new things which were not known and could not have been contemplated when the Act was passed, when the Act deals with a genus and the thing which afterwards comes into existence was a species of it. Thus the provision of Magna Carta which exempted lords from the liability of having their carts taken for carriage was held to extend to degrees of nobility not known when it was made, such as dukes, marquises and viscounts. [2 Inst. 35]

So, the Engraving Copyright Act 1734, which imposed a penalty for piratically engraving, by etching or otherwise, or “in any other manner” copying prints and engravings, applied to copying by photography, though that process was not invented until more than a century after the Act was passed. [Gambart v. Ball (1863) 32 L.J.C.P. 166] And Edison’s telephone was held to be a “telegraph” within the meaning of the Telegraph Acts 1863 and 1869, even though it was unknown in 1869. [Att.-Gen, v. Edison Telephone Co. of London (Ltd.) (1880) 6 Q-B.D. 244]. Similarly, bicycles were held to be “carriages” within the provision of the Highway Act 1835 against furious driving, [Taylor v. Goodwin (1879) 4 Q.B.D. 228] and tricycles capable of being propelled by steam to be “locomotives” within the Locomotives Acts 1861 and 1865 [Parkyns v. Preist (1881) 7 Q.B.D. 313] though not invented when these Acts were passed.”

In G P Singh’s Principles of Statutory Interpretation, 9th edition, the principle is summarized at page 228 as follows: “It is possible that in some special cases a statute may have to be historically interpreted “as if one were interpreting it the day after it was passed.” But generally statutes are of the “always speaking variety” and the court is free to apply the current meaning of the statute to present day conditions. There are at least two strands covered by this principle. The first is that courts must apply a statute to the world as it exists today. The second strand is that the statute must be interpreted in the light of the legal system as it exists today.”

The Courts nowadays resort to what is called “creative interpretation of a statute”. Creative interpretation of the provisions of the statute demands that with the advance in science and technology, the Court should read the provisions of a statute in such a manner so as to give effect thereto.2

In State of Maharashtra v. Dr. Praful B .Desai3 court had opined that recording of evidence through Video Conferencing is permissible in terms of Section 273 of the Code of Criminal procedure. In State of Maharashtra v. Dr. Praful B. Desai AIR 2003 SC 2053; 2003 AIR SCW 1885, the Supreme Court held, with regard to section 273 of the Criminal Procedure Code 1974 (which provides that all evidence taken in the course of the trial or other proceeding shall be taken in the presence of the accused, or, when his personal attendance is dispensed with in the presence of his pleader), as to the question whether recording of evidence by video conferencing is permissible:

“Video conferencing has nothing to do with virtual reality. Advances in science and technology have now, so to say, shrunk the world. They now enable one to see and hear events, taking place far away, as they are actually talking place. Video conferencing is an advancement in science and technology which permits one to see, hear and talk with someone far away, with the same facility and ease as if he is present before you i.e. in your presence. In fact he/ she is present before you on a screen. Except for touching one can see, hear and observe as if the party is in the same room. In video conferencing both parties are in presence of each other. Recording of evidence by video conferencing also satisfies the object of providing, in section 273, that evidence be recorded in the presence of the accused. The accused and his pleader can see the witness as clearly as if the witness was actually sitting before them. … The advancement of science and technology is such that now it is possible to set up video conferencing equipment in the Court itself for recording the evidence through video conferencing.”

The superior courts must remember a well known principle of law that the court while construing an ongoing statute must take into consideration the changes in the societal condition. It would be a relevant fact. It must take into consideration the development in science and technology. For the purpose of giving an effective and meaningful construction of the provisions, the court is bound to take into consideration the situational change. The statute is an ongoing one. The Act must be interpreted differently as the court cannot ignore the ground realities.4

Bearing in mind that statutes are usually intended to operate for many years it would be most inconvenient if courts could never rely in difficult cases on the current meaning of statutes. Recognising the problem Lord Thring, the great Victorian draftsman of the second half of the last century, exhorted draftsmen to draft so that ‘An Act of Parliament should be deemed to be always speaking’ (see Practical Legislation 1902) p 83; see also Cross Statutory Interpretation (3rd edn, 1995) p 51 and Pearce and Geddes Statutory Interpretation in Australia (4th edn, 1996) pp 90–93). In cases where the problem arises it is a matter of interpretation whether a court must search for the historical or original meaning of a statute or whether it is free to apply the current meaning of the statute to present day conditions. Statutes dealing with a particular grievance or problem may
sometimes require to be historically interpreted.5

Francis Bennion in his ‘Statutory Interpretation’, 5th edition, has stressed the need to interpret a statute by giving “allowances for any relevant changes that have occurred, since the Act’s passing, in law, social conditions, technology, the meaning of words, and other matters.” He says at page 893: “In construing an ongoing Act, the interpreter is to presume that Parliament intended the Act to be applied at any future time in such a way as to give effect to the true original intention. Accordingly the interpreter is to make allowances for any relevant changes that have occurred, since the Act’s passing, in law, social conditions, technology, the meaning of words, and other matters. Just as the US Constitution is regarded as ‘a living Constitution,’ so an ongoing British Act is regarded as ‘a living Act.’ That today’s construction involves the supposition that Parliament was catering long ago for a state of affairs that did not then exist is no argument against that construction. Parliament, in the wording of an enactment, is expected to anticipate temporal developments. The drafter will try to foresee the future, and allow for it in the wording.................… An enactment of former days is thus to be read today, in the light of dynamic processing received over the years, with such modification of the current meaning of its language as will now give effect to the original legislative intention. The reality and effect of dynamic processing provides the gradual adjustment. It is constituted by judicial interpretation, year in and year out. It also comprises processing by executive officials.”

Again, at page 905, Bennion says:

“Developments in technology The nature of an ongoing Act requires the court to take into account changes in technology, and treat the statutory language as modified accordingly when this is needed to implement the legislative intention. Mann LJ relied upon this statement in holding that the reference to ‘any writing proved … to be genuine’ in the Criminal Procedure Act 1865 Section 8 (which permits comparison of a disputed writing with any such genuine writing) must now be taken to allow comparison with a photocopy of the genuine writing since the legislators of 1865 could not have foreseen ‘the facsimile reproductions which now we both suffer and enjoy’.”6

In Statutory Interpretation by Cross, 3rd edition, page 52 it is stated: 

“… the courts regularly apply a statutory provision to new developments in technology or society which come within its original purpose and wording. The former situation can be illustrated by Royal College of Nursing of the United Kingdom v. Department of Health and Social Security [1981] 1 All ER 545. The Abortion Act 1967 permitted the termination of a pregnancy ‘by a registered medical practitioner’ in certain circumstances. At the time, only surgical and intra-amniotic methods existed for terminating a pregnancy, and both required the continuous presence of a doctor. However, since 1971 a new, extra-amniotic method had become current, which involved inducing the abortion over a long period of up to 30 hours by the administration of a drug, prostaglandin. The Department of Health and Social Security advised that, as long as a doctor approved and initiated the process, a nurse could lawfully continue it, starting and regulating the actual supply of the drug. The Royal College of Nursing sought a declaration that this advice was incorrect, and that the Act did not protect the nurse in the application of extra-amniotic methods. The House of Lords upheld the view of the department, the majority reasoning that the new method came within the purpose of the Act, designed to liberalise legal abortions. The inclusion of a telephone within the notion of ‘telegraph’ in the Telegraph Act 1869 [A-G v. Edison Telephone Co (1880) 6 QBD 244], or a microfilm within that of ‘bankers books’ in the Bankers Books Evidence Act 1879 [Barker v. Wilson [1980] 2 All ER 82 are further examples of this process.”

The courts are alive to the need for forward-looking interpretation since ancient times. Thus, Communication by telephone was held to be a ‘telegraph’, within the meaning of Telegraphs Acts of 1863 and 1869, notwithstanding that the telephone had not been invented or contemplated when those Acts were passed. [Attorney General v. Edison Telephone Co Ltd [1880] 6 QBD 244.

In Barker v. Wilson [1980] 2 All ER 82, section 9 of the Bankers’ Books Evidence Act 1879, provided that “Expressions in this Act relating to “bankers’ books” include ledgers, day books, cash books, account books,  and all other books used in the ordinary business of the bank.’” It was held that For the purposes of section 9 of the Bankers’ Books Evidence Act 1879 ‘bankers’ books’ include a record of a customer’s transactions and details of cheques recorded by a bank on microfilm, and accordingly such microfilm may be used for the purpose of proving banking transactions in legal proceedings in accordance with the 1879 Act. Bridge J said:

“The Bankers’ Books Evidence Act 1879 was enacted with the practice of bankers in 1879 in mind. It must be construed in 1980 in relation to the practice of bankers as we now understand it. So construing the definition of ‘bankers’ books’ and the phrase ‘an entry in a banker’s book’, it seems to me that clearly both phrases are apt to include any form of permanent record kept by the bank of transactions relating to the bank’s business, made by any of the methods which modern technology makes available, including, in particular, microfilm.” [emphasis mine].

There are a few recent instances of courts adopted forwardlooking approach to interpretation of law. In SIL Import v. Exim Aides Silk Exporters 1999 AIR SCW 1218; (1999) 4 SCC 567; [1999] 97 Comp Cas 575 (SC), the Supreme Court has applied this canon to interpret the expression ‘notice in writing’ in section 138 of the Negotiable Instruments Act as including notice sent by fax. The court said: When the legislature contemplated that notice in writing should be given to the drawer of the cheque, the legislature must be presumed to have been aware of the modem devices and equipment already in vogue and also in store for future. If the court were to interpret the words “giving notice in writing” in the section as restricted to the customary mode of sending notice through postal service or even by personal delivery, the interpretative process would fail to cope up with the change of time.

Facsimile (or fax) is a way of sending handwritten or printed or typed material as well as pictures by wire or radio. In the West such mode of transmission came to wide use even way back in the late 1930s. By 1954 the International News Service began to use facsimile quite extensively. Technological advancement like facsimile, internet, e-mail etc. were in swift progress even before the Bill for the Amendment Act was discussed by Parliament. So when Parliament contemplated notice in writing to be given we cannot overlook the fact that Parliament was aware of modem devices and equipment already in vogue.

Francis Bennion in Statutory Interpretation has stressed the need to interpret a statute by making “allowances for any relevant changes that have occurred, since the Act’s passing, in law, social conditions, technology, the meaning of words, and other matters”.

For the need to update legislations, the courts have the duty to use interpretative process to the fullest extent permissible by the enactment. The following passage at p. 167 of the above book has been quoted with approval by a three-Judge Bench of this Court in State v. S. J. Choudhary ((1996) 2 SCC 428 : 1996 SCC (Cri) 336) :

“It is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law.”

So if the notice envisaged in clause (b) of the Proviso to Section 138 was transmitted by fax it would be in compliance with the legal requirement.

The above pragmatic and progressive interpretation of the expression “notice in writing” would be relevant in connection with the identical expression in section 286 of the Companies Act which provides that notice of every meeting of the Board of directors of a company shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.

As regards the holding of meetings of board of directors or shareholders, the Act does not define the word ‘meeting’. One of the canons of interpretation of statutes, as laid down by the courts in India in a number of cases, is that when a word is used but not defined in a statute, it should be interpreted by its ordinary meaning and in such a case dictionary is the guide. As such, the word ‘meeting’, in the context of the Act, ought to be interpreted in its ordinary meaning, i.e. the coming together of two or more persons face to face so as to be in other’s company. This implies that for there to be a meeting, everyone participating in the meeting must be in the same place, face to face; present bodily, conferring together, so that a meeting through audio or audio-visual links is no meeting to satisfy the law. It was held in an old English case that it is possible to show that the word “meeting” has a different meaning from the ordinary meaning, but where that is not shown, a meeting could no more be constituted by one person than a meeting could have been constituted if no shareholder at all had attended. [Sharp v. Dawes (1876) 2 QB 26]. Thus, for a meeting, there must be at least two persons. [Ibid]; see also Re Sanitary Carbon Co. (1877) WN 223; State of Kerala v. West Coast Planters Agencies Ltd (1958) 28 Comp Cas 13 Ker)].

However, a case which interpreted the word ‘meeting’ in the context of a shareholders’ meeting in a wider connotation in consonance with the technological advancement is the UK’s Court of Appeal’s decision in Byng v. London Life Associaiton Ltd (1989) 5 BCC 227 (CA): (1989) 2 CLA 16. The court said that the rationale behind the requirement for meetings in the Companies Act is that the members shall be able to attend in person so as to debate and vote on matters affecting the company. Until recently this could only be achieved by everyone being physically present in the same room face to face. Given modern technological advances, the same result can now be achieved without all the members coming face to face; without being physically, present in the same room they can be electronically in each other’s presence so as to hear and be heard and to see and be seen. The fact that such a meeting could not have be foreseen in the time the first statutory requirements for meetings were laid down, doesnot mean that such a meeting is not within the meaning of the word “meeting” in the Companies Act.

In Selvarajan & Co v Registrar (1987) 62 Comp Cas 220: (1986) 3 Comp LJ 725 (Mad), the Madras High Court interpreted the word ‘printed’ having regard to technological advancement and held that the word ‘printed’ in section 15 of the Act must be interpreted as including computer-printed documents.

“With the advancement of printing technology, computer printing fulfils every requirement of printing. … Law is
never static, but it is dynamic. Looked at from the point of view, the word “printing” cannot be so technically construed, as the Registrar would have it, to enable him to contend that this will water down the statutory requirements. If, as quoted above from Bouvier’s Law Dictionary printing is the art of impressing letter and it is a process of multiplying the copies of a composition by sheets, certainly, computer-printing clearly falls within the definition. Obstacles should not be thrown on the road to scientific progress by these orthodox representations, unmindful of the great changes taking place with scientific technological advancement. In this connection, I am tempted to quote Viscount Simon.

“Qui haeret in litera haeret in cortice. He who clings to the letter clings to the dry barren shell and misses the truth and substance of the matter.” [1952] AC 166, 183.7 

.”, the Court said.

It is also relevant to state that, the effect on the environment may also be considered to be a relevant factor in interpreting a law in the present context (which was not considered as seriously in the past as it is today). 

It is said that in interpreting a statutory provision the courts should take into account not only technological changes but also changes in the society which have occurred since the law was enacted. As noted earlier, In Statutory Interpretation by Cross, 3rd edition, page 52 it is stated that the courts regularly apply a statutory provision to new developments in technology or society which come within its original purpose and wording.

Information Technology Act Section 4 of the Information Technology Act, 2000, provides as under:

“4. Legal recognition of electronic records. – Where any law provides that information or any other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have satisfied if such information or matter is-
(a) rendered or made available in an electronic form; and
(b) accessible so as to be usable for a subsequent reference.”

In view of the words “notwithstanding anything contained in such law” section 4 of the Information Technology Act overrides the Companies Act and listing agreement. Hence if the unabridged annual report comprising full balance sheet, profit and loss account and the directors’ report and consolidated financial statements in addition to the individual financial statements) are made available in electronic form and the same is accessible so as to be usable for a subsequent reference, it will amount to necessary compliance with section 219 of the Act as well as clause 32 of the listing agreement. Thus ‘sending’ or ‘supplying’ unabridged annual report or even abridged one would comply with both the requirements.

SEBI’s proposal that is not yet implementd

In the circular SEBI/CFD/DIL/LA/2/2007/ 26/4 dated April 26, 2007 issued by the Securities and Exchange Board of India and contended that it has not been rescinded and that the Company has not come across any subsequent superseding circular rescinding this circular, the Securities and Exchange Board of India had declared its intention to amend clause 32 of the listing agreement, which, inter alia, stated:

“I. The extant Clause 32 of the Equity Listing Agreement requires listed companies to supply a copy of the complete and full Balance Sheet, Profit and Loss Account and Directors’ report to each shareholder and upon application to any member of the Exchange. This requirement was stipulated at a time when information dissemination was at the barest minimum and the Annual Report of the company containing the Balance Sheet and the Profit and Loss Account was the only means through which the shareholders of the company could keep themselves informed about the affairs of the company.

II. In the context of changes brought about in the market scenario, SEBI reviewed the existing provisions of Clause 32 of the Equity Listing Agreement, particularly in the light of (i) the need to contain rising cost of compliance and (ii) the measures taken to enhance disclosures which has enabled availability of information about listed companies in public domain such as the website of the company, of the stock exchanges, of the Common Filing Platform website jointly maintained by BSE and NSE i.e www.corpfiling.co.in etc.

III. Having regard to the above, SEBI has decided to amend Clause 32 of the Equity Listing Agreement to align it with the provisions of Section 219(iv) of the Companies Act i.e. to permit listed companies to send a statement containing the salient features of the (i) Balance Sheet, (ii) the Profit and Loss Account and (iii) the Auditors’ Report instead of sending full Balance Sheet and Annual Report.”

But this proposal seems to have not been implemented nor has the circular been withdrawn.

As per recent amendment to Clause 51 and 52 of the Listing Agreement (Refer to SEBI Circular Number CIR/CFD/ DCR/3/2010 dated April 16, 2010), even Stock Exchanges have directed the listed companies to submit annual report copy electronically to them so that they can upload same for dissemination to the investors, besides sending hard copy.


Notes:
1. Incidentally, it is now well settled by a series of decisions of Supreme Court and High Court that the terms ‘member’ and ‘shareholder’ are synonymous under the Companies Act. “In the case of a company limited by  shares, a member is a person holding shares in the company; there can be no membership, i.e. proprietary relationship to a company, otherwise than through the medium of shareholding. Consequently, the terms  “member” and “shareholder” are synonymous ….” [Palmer’s Company Law, 25th edition, para 7.001]. The expressions “member”, “shareholder” and “the holder of a share” are used in the Act in the same sense,  meaning persons holding shares in a company and registered as such in the register of members of the company. see Balkrishna Gupta v. Swadeshi Polytex Ltd. (1985) 58 Comp Cas 563 (SC); Howrah Trading Co Ltd v. CIT (1959) 29 Comp Cas 282 (SC); Hindustan Investment Corpn Ltd. v. CIT (1955) 25 Comp Cas 57 (Cal); Killick Nixon v. Bank of India (1985) 57 Comp Cas 831 (Bom).

2. Suresh Jindal v. BSES Rajdhani Power Limited and Ors. 2007 AIR SCW 6748.

3. (2003)4 SCC 601.

5. R v. Ireland [1997] 4 All ER 225 (HL).

6. Lockheed-Arabia Corpn v Owen [1993] QB 806 at 814; [1993] 3 All ER 641.

7. Qui haeret in litera haeret in cortice is a legal maxim meaning “He who considers merely letter of an instrument goes but skin-deep into its meaning.”

(Published in Chartered Secretary Dec 2010 - ICSI)
Author: Dr. K.R. Chandratre, FCS, Practising Company Secretary, Pune