AGM/EGM Provisions Under the Companies Act, 2013

In the corporate world, key decisions such as availing a loan from financial institutions or adopting financial statements are taken during meetings. According to the Companies Act, 2013, every company must hold an Annual General Meeting (AGM) once a year, among others. This article will delve into two pivotal types of corporate meetings, namely AGM and Extraordinary General Meeting (EGM).

Meetings are of various types such as:

• Board Meeting
• Class Meeting
• Annual General Meeting
• Extraordinary General Meeting etc.

There are primarily two types of meetings:

• Annual General Meeting (hereinafter referred to as AGM)
• Extraordinary General Meeting (hereinafter referred to as EGM)

Though there are other types of meetings like Class Meeting, Board Meeting etc., this article primarily focuses on AGM and EGM.

NOTICE OF MEETINGS (SECTION 101)

Before proceeding, let us understand the prerequisites of a meeting. According to section 101 of the Companies Act, 2013, a general meeting can be properly convened by giving a notice of at least 21 clear days before the meeting to those entitled to receive such notice. The list of individuals includes:

• Members of the company
• Legal representatives of any deceased member
• The assignee of an insolvent member
• The Auditors and the Directors of the company

21 clear days implies that the 21 days do not include the day on which the notice is served and the day of the meeting.

HOLDING OF ANNUAL GENERAL MEETING (AGM) [SECTION 96]

The AGM is a mandatory yearly gathering of a company’s interested shareholders.

According to sub-section (1) of section 96 of the Companies Act, 2013, every company, whether public or private, except One Person Company (OPC), shall hold an annual general meeting and the gap between two AGMs should not be more than 15 months.

Guidelines for holding an AGM:

• AGM should be held once every year
• AGM should be held within 6 months from the closing of the financial year, except for the first AGM
• First AGM should be held within 9 months from the closing of the first financial year
• The gap between two AGMs should not exceed 15 months

The AGM should be conducted during business hours i.e., 9 a.m. to 6 p.m. on any day except a national holiday. The AGM can be held at the registered office of the company or at some other place within the city, town, or village where the registered office of the company is situated. The AGM of an unlisted company may be held at any place in India with prior consent from all members of the company, in writing or by electronic mode.

Government Companies that have not defaulted in filing their financial statements under section 137 or annual return under section 92 with the registrar can hold the AGM at the registered office of the company, at some other place within the city, town, or village where the registered office of the company is situated, or such place as approved by the Central Government.

In case a company fails to hold the AGM within the prescribed time or period, the registrar, based on special reasons, may extend the time within which the AGM shall be held by a period not exceeding 3 months. No extension shall be allowed for holding the first AGM.

HOLDING OF EXTRAORDINARY GENERAL MEETING (EGM) [SECTION 100]

All general meetings other than Annual General Meetings (AGMs) are called Extraordinary General Meetings (EGMs).

The Board may, whenever it deems fit, call an EGM of the company or the Board may call an EGM on the requisition of the members. Members who can request an EGM include those who hold at least 1/10th of paid-up capital of the company in case of companies having share capital, or members who hold at least 1/10th of total voting power of all the members in case of companies not having share capital.

The Board must hold such EGM within 21 days from the receipt of a valid requisition. The meeting shall be held no later than 45 days from the date of receipt of the valid requisition. If the Board fails to call the meeting within the aforementioned period, the meeting may be called and held by the requisitionists themselves within 3 months from the date of requisition. The requisitionists are also entitled to receive a list of members along with their registered addresses and number of shares held if the meeting is not convened. The company is bound to provide this information before the expiry of 45 days from the date of receipt of a valid requisition.

POWER OF TRIBUNAL TO CALL ANNUAL GENERAL MEETING (AGM) OR MEETING OF MEMBERS ETC. [SECTION 97 & 98]

If a company makes any default in holding its AGM under section 96, the Tribunal may, on an application of any member of the company, call or direct the calling of, an AGM of the company. Such an AGM called or directed by the Tribunal shall be deemed to be an AGM of the company under the Companies Act, 2013.

In the case of meetings other than AGM, the Tribunal may, either suo motu or on an application of any director or member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such a manner as the Tribunal thinks fit. Such a meeting called, held, and conducted with any order, for all purposes, shall be deemed to be a meeting of the company duly called, held, and conducted.

DEFAULT IN COMPLYING WITH THE PROVISIONS OF SECTION 96 TO 98 OF THE COMPANIES ACT, 2013 [SECTION 99]

Where a company makes any default in holding a meeting of the company as AGM or on the order or directions issued by the Tribunal, then:

• The company and every officer of the company who is in default shall be punished with a fine, which may extend to Rs 100000; and
• In case of continuing default, with a further fine of Rs 5000 per day.

REPORT ON AGM [SECTION 121]

Every listed company shall prepare a report on each AGM including the confirmation to the effect that:

“The meeting was convened, held and conducted as per the provisions of the Companies Act, 2013 and the rules made thereunder.”

A copy of such a report shall be filed with the Registrar within 30 days from the conclusion of the AGM with the prescribed fee in form MGT 15, according to rule 31 of the Companies (Management and Administration) Rules, 2014.

Penalties for Contravention of Section 121:

If the company fails to file the report within 30 days of the conclusion of AGM, the company shall be liable to a penalty of Rs 1,00,000; and in case of continuing default, a further penalty of Rs 500 per day subject to a maximum of Rs 5,00,000; and every officer of the company who is in default shall be liable to a penalty of Rs 25,000; and in case of continuing default, a further penalty of Rs 500 per day subject to a maximum of Rs 1,00,000.

Conclusion: Understanding the dynamics of AGM and EGM is crucial for every corporate entity. These meetings not only offer a platform to discuss and decide significant company matters but also facilitate transparency and accountability. By comprehending these meetings in detail, one can effectively participate and navigate the corporate world. Abiding by the provisions of the Companies Act, 2013 regarding these meetings will ensure the smooth functioning of an organization and avoid legal complications.