Your Advocate
This week Your Advocate is Barrister Tanjib-ul Alam Advocate, Supreme Court of Bangladesh. He is the head of the chamber of a renowned law firm, namely, 'Tanjib-ul Alam and Associates ',which has expertise mainly in commercial law, corporate law, admiralty, employment and labor law, land law, banking law, constitutional law, telecom law, energy law, Alternative Dispute Resolution, Intellectual Property Rights and in conducting litigations before courts of different hierarchies.
Query
Dear sir, on behalf of Mr.X(averse to disclose his name) I am sending you this problem which raised in a specified company. Mr. X is one of the directors of Y Company, entered into a contract for the supply of goods and materials with the company which requires the sanction of the Board of Directors according to its Articles. In the Meeting of the Board of Directors, with other resolutions company gave the validity of the contract of Mr. X. Among the 7 directors of the company, 3 directors challenge the validity of the meeting before a competent court on the ground of non-service of notice of the meeting on them. In this circumstance, is there any legal consequence of resolutions taken by the Board of Directors in that meeting? And is there any necessity to call a fresh meeting now?
Motijheel,Dhaka
Response
Thank you for your query. The above situation gives rise to two issues, (a) validity of the meeting of the Board of Directors and (b) the process of entering into a contract by the company with one of its Directors.
With regard to the first issue, as a matter of general principle, a meeting held without the requisite notice to the Directors is a nullity in the eye of law as such void. However, section 89 of the Companies Act, 1994 provides that any Minutes of a Meeting of a Company duly signed by the Chairman of the Meeting shall be treated as prima facie evidence of the transaction that took place including the holding the meeting itself. Therefore, unless there is contrary finding from the Court the Meeting will be deemed to have been held in compliance with law. As such the Company can continue to act in accordance with the Agreement with the Director until the Court declares that the meeting was illegal and without any legal effect.
With regard to the issue of executing contracts with the Directors, it is known as "related party transaction". A Director is under an obligation to disclose his interest in the transaction and he is not allowed to participate in the decision making process concerning his interest and his presence will not be counted for the calculatio of quorum. From your query, it is not clear if the interested Directors casted his vote. Given the fact that three of the Directors objected to the holding of the meeting and the interested Director is not allowed to participate in the decision making process, in the absence of any other mitigating factor, it appears that the votes are equally divided. In such a case, the decision cannot be proceeded upon. If the Chairman has a casting vote and he is not the interested person, then the Chairman's casting vote will become deciding factor.
As far as the need for holding fresh meeting is concerned, the Company is always free to hold a fresh meeting with notice to all the Directors in compliance with section 95 of the Companies Act, 1994. This would probably help the company to avoid litigation amongst the Directors.
For detailed query contact: info@tanjibalam.com
World press freedom day
3 May 2011 -- In 1993, the United Nations General Assembly established the Day "to celebrate the fundamental principles of press freedom, to evaluate press freedom around the world, to defend the media from attacks on their independence and to pay tribute to journalists who have lost their lives in the exercise of their profession".
Press freedom is considered to be a cornerstone of human rights and a guarantee of other freedoms. Freedom of expression is essential to enable public participation in decision-making. Citizens cannot effectively exercise their right to vote or take part in public debate if they do not have free access to information and ideas and are not able to freely express their views.
On the occasion of the World Press Freedom Day, 3 May, the Director-General of UNESCO, Irina Bokova, appealed to all governments to uphold their commitments in protecting and promoting freedom of expression and freedom of the press, which are the foundations of all democratic societies. Particular responsibility remains with the governments of the countries in the Middle East and North Africa to meet the aspirations of their people, notably for freedom of expression, a basic human right already largely reclaimed by the citizens of Egypt and Tunisia.The Director-General also expressed deep concern over reoccurring attacks on journalists reporting on conflicts and social movements in the Middle East and Northern Africa.
Source: Hrea.org
