Annual General Meeting (AGM) Under Companies Act, 2013

Background:

An Annual General Meeting (AGM) is an interaction between the management and the shareholders of the Company.

The Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 deals with the convening of Annual General Meeting. It makes it compulsory to hold an Annual General Company to discuss the yearly results, Auditor’s appointment and others. 

Annual General Meeting (AGM) Requirement:

  • All the companies are required to convene Annual General Meeting in every year except One Person Company.
  • The very First Annual General Meeting should be held within a period of nine (9) months from the end of first Financial Year after its incorporation.
  • Subsequent all Annual General Meeting after first AGM should be held within a period of Six months from the end of Financial Year.
  • Every Annual General Meeting should be held during business hours on any day except national holiday.
  • Annual General Meeting should be held either at the registered office or any place within the city, town or village where such registered office is situated
  • In case of unlisted company Annual General Meeting in any place other than in India if consent of all the members is given to company in advance either by written or through electronic mode.

Procedure to Hold an Annual General Meeting:

The company must give a clear 21 days notice to its members for calling the AGM. Such notice should mention the place, the date and day of the meeting, time scheduled for meeting and place of meeting.

Notice of AGM should be send to:

  • All the members of the company (including their legal representatives of a deceased members and assignee of an insolvent member).
  • All Directors of the Company.
  • The Statutory auditor(s) of the Company.

The notice of AGM may be given in writing through speed post or registered post or via electronic mode to the address of the member as per records of the company. In case of electronic communication, the notice should be send to the e-mail id address of the member.

  • The notice of AGM should also be placed on the website of the company.

Calling of AGM on Shorter Notice:

An AGM can be called at a notice period shorter than 21 days if at least 95% of the members entitled to vote in the meeting give their approval for the shorter notice, such consent can be given in writing or through electronic mode.

  • Quorum of an AGM:

In case of a Private Company, two members present at the meeting shall be the quorum for the AGM.

In case of Public Company, the quorum is:

  • Five members present at the meeting if the number of members is within one thousand.
  • Fifteen members present at the meeting if the number of members is more than one thousand but within five thousand.
  • Thirty members present at the meeting if the number of members is more than Five thousand.

Note: In case the quorum for the meeting is not present within the half an hour from the scheduled time, meeting will be adjourned to the same day in the following week for the same time and at the same place.

  • Matters of Discussion in an Annual General Meeting (Agenda of AGM):

Various matters or Agenda of discussion at AGM are:

  • Consideration and Adoption of the Audited Financial Statements.
  • Consideration of the Director’s Report and Auditor’s Report.
  • Dividend declaration to shareholders.
  • Appointment of Directors /replacement of retiring Directors.
  • Appointment of Auditors and deciding the Auditor’s Remuneration.
  • Apart from the above ordinary business, any other business may be conducted as a special business of the Company.

Note:

Ordinary business of the Company will be passed by an ordinary resolution where the votes cast in favor are more than the votes cast against the resolution, in case of special business transactions, the resolution may be passed as ordinary or special resolution depending on the applicable legal provisions. A special resolution requires at least 75% votes in favor of the Resolution.

Conducting Annual General Meeting:

  • An AGM should be conducted during the Business hours only. The meeting can be conducted on any day, which is not a national holiday, or any holiday declared by the Central Government.
  • The meeting can be held at any place which is within the limits of the city or town or village in which the registered office is situated.
  • A government company can also holds its AGM at any other place as the Central Government may approve.
  • An unlisted Company can hold its AGM at any place in India obtaining consent from its members in writing or in electronic mode.

Penalty for default in holding an AGM:

In any case a Company fails to hold an AGM within the stipulated time or extension obtained by it, the Tribunal may itself or on an application made by any Director or member order an AGM to be conducted as per its directions.

Where company further defaults in holding a meeting in accordance with the directions of the tribunal, the company and every officer of the company who commits the default shall be punishable with a fine of up to Rs.1lakh. In case of continuing default, a fine of Rs. 5,000 per day is levied for each day during which the default continues.

Annual General Meeting Extension:

The registrar of Companies can extend the time available to hold an AGM by three months. The Company should apply for an extension in e- form GNL-1 specifying the reasons for the extension and the period for which company requires an extension. The ROC will record the reasons for giving the extension.

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Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

Author- CS Aakansha Negi and can be contacted at csaakanshanegi@gmail.com

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