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CS Executive · Company Law and Practice · General Meetings

After holding an EGM themselves because the Board defaulted, the requisitionists of Lotus Pharma Ltd incurred reasonable expenses of ₹80,000. What is the correct treatment?

The company must reimburse the requisitionists' reasonable expenses, and the amount is deducted from any fee or remuneration under section 197 payable to the directors who defaulted in calling the meeting. Neither members nor the Registrar bear it.

  1. AThe company reimburses them, and the sum is deducted from fees or remuneration payable to the directors who were in defaultCorrect
  2. BThe requisitionists bear the cost themselves as they chose to call the meeting
  3. CThe company reimburses them, recovering the sum equally from all members
  4. DThe Registrar reimburses them from the Investor Education fund

Explanation

Reasonable expenses of the requisitionists in calling the meeting are reimbursed by the company. The amount is then deducted from the fee or other remuneration under section 197 payable to the directors who were in default in calling the meeting. It is not recovered from members.

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