We know that a Company is a separate legal entity different from its members and its affairs are generally done by Board of Directors of the Company. It is Board of the Company who provides a road map within its limited power for the progress of a Company. Under the Companies Act, 2013, certain powers are controlled by the Boards after getting consent of the Company at its general meeting. The shareholders are the owner of the company therefore, control over the proceeding of the general meeting. The Annual General Meeting (AGM) gives them opportunity to know the exact condition of the Company.
Annual General Meeting:-
As per Section 96 of the Companies Act , 2013 (the Act, 2013),
“Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its Annual General Meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one AGM of a company and that of the next:
Provided that in case of the First Annual General Meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year:
Provided further that if a company holds its first Annual General Meeting as aforesaid, it shall not be necessary for the company to hold any Annual General Meeting in the year of its incorporation:
Provided also that the Registrar may, for any special reason, extend the time within which any Annual General Meeting, other than the first Annual General Meeting, shall be held, by a period not exceeding three months.”
Crux of the Provisions of Section 96(1) of the Act, 2013.
1. Every company (other than OPC) shall in each year hold a general meeting namely Annual General Meeting.
2. Gap between two AGM should not be more than 15 months.
3. First AGM should be held within a period of nine months from the date of closing of the first financial year.
4. Subsequent AGM should be held within a period of six months from the date of closing of the financial year.
5. No extension is granted for companies conducting their AGM due date for the first time for the new company.
6. Extension granted in other case can be maximum for a period of 3 months.
Adjournment of Annual General Meeting.
With the word adjournment, many questions come into mind, intentionally or without intentionally, with planning or without planning, which should be resolved with the statutory provisions of the Act, 2013.
Whether the Companies Act, 2013 permits to adjourn the AGM?
Section 103(2) of the Act, 2013 provides the situation wherein a general meeting be adjourned automatically. The said provisions says that –
“(2) If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company—
(a) the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or
(b) the meeting, if called by requisitionists under section 100, shall stand cancelled.”
It clearly mentions that if the quorum of general meeting is not present than the meeting shall stand adjourned. Further, if we analyse the later part of clause (a) than, it empowers the Board to determine the suitable date, time and place.
It is pertinent to note that there is no other provision under the Act, 2013 which provides any circumstances under which AGM should be adjourned. However, in practical, there may be more situations for which AGM can be adjourned.
Section 129(2) of the Act, 2013 makes it mandatory, on the part of the Board of Directors of the Company, to lay the financial statements of the Company for the financial year before at every AGM and adopt the same in the that AGM as per Section 137(1) of the Act, 2013. There may be a situation for a company to adjourn its AGM in case of its financial statements are not-ready.
Therefore, it is mention that the Section 103(2) of the Act, 2013 provides the situation wherein a general meeting be adjourned automatically i.e. due to lack of quorum. Further, the Board may also adjourn AGM to conduct the necessary business.
Now the question is arising herein whether the empowerment to the Board [by Section 103(2)(a) of the Act, 2013] can be read as the absolute power in the hand of them? Or whether the adjournment can be done beyond the stipulated time where, accounts are ready but quorum is not present?
It is pertinent to mention that the said automatic adjournment due to lack of quorum and/or empowerment to the Board shall not be superseding other provisions of the Act. The Act shall be read in the strict manner and the view point(s) provided in the case of Bejoy Kumar Karnani v. Assistant Registrar of Companies will be influencing in the present situation. The power of the Board shall not be read in the destructive manner to the Act.
Whether adjournment of AGM after the maximum time-limit allowed by this section 96 (e.g., 30 September each year) is default of Section 96 of Companies Act, 2013 or not?
By the reading of language of Section 96 of the Act, 2013, as mentioned above, it is clear that Section 96 of the Act, 2013 talks about only the time period of holding of AGM. This section does not state about provisions relating to adjournment of AGM. It only stipulates that AGM shall be held within the prescribed time, it does not stipulate that the meeting shall also get completed within the prescribed time.
The adjourned AGM should be held within the maximum time-limit allowed by this Section 96. Otherwise adjournment of AGM after the maximum time-limit allowed by this Section 96 is default of Section 96 of Act, 2013.
In support of above contention, we would like to refer the following circulars/case laws regarding adjournment of AGM as under-
CLB CIRCULAR LETTER NO. 35/9/72-C. L.III DATED FEBRUARY 2, 1974-
Relevant portion of the said circular is as under- “In case the annual accounts are not ready for laying at the appropriate AGM, it is open for the company concerned to adjourn the said AGM to a subsequent date when the annual accounts are expected to be ready for laying. This may be done by suitable resolution adjourning the said AGM to a specified date or to a date to be specified later on.”
‘M.D. MUNDHRA AND ORS. V. ASSISTANT REGISTRAR OF COMPANIES- 01 DECEMBER, 1978’
In this case, the Assistance Registrar of Companies has prosecuted the Company and its director for not placing the Balance Sheet before the AGM, and the counsel appearing on behalf of Assistant Registrar of Companies, alleged that the said CLB Circular shall be read in conformity to the Act. On the other hand, the view point of the Counsel appearing on behalf of the petitioner(s) i.e. Directors of the Company was that, they have acted on the circular of CLB and that shall not be construed as the violation of the respective provisions of 1956 Act.
In the aforesaid matter, after hearing to both the parties, the Calcutta High Court has made the judgement that, if the Company had acted in accordance to the circular issued by CLB, than that shall not be construed as the violation of the provisions stipulated and it is not open for the Assistant Registrar of Companies to initiate prosecution against the Company.
BEJOY KUMAR KARNANI VS. ASSISTANT REGISTRAR OF COMPANIES [13TH SEPTEMBER, 1984]
In this case the Hon’ble High Court has reversed the earlier judgement passed by it. The Hon’ble Court did not accept the contention that an AGM could be adjourned beyond the statutory period limits as laid down in sections 96 of the Act, 2013.
The Hon’ble High Court has also taken the view that if the said circular will be read as the tool for overriding the act, than what will be the significance of the discretionary power of Registrar of Companies to provide extension to AGM.
What is the effective date of resolution passed in adjourned AGM?
Where a resolution is passed at an adjourned meeting of a company, the resolution shall be treated as passed on the day it was actually passed and not an any earlier date.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.