AGM vs EGM – Provisions, Penalties and Examples Under Companies Act

Explore the provisions, penalties, and examples under the Companies Act for Annual General Meetings (AGM) and Extraordinary General Meetings (EGM). Learn about the timelines, extension possibilities, consequences of non-compliance, and the reporting requirements for listed public companies. Stay informed about the regulations governing general meetings in India for transparent and accountable corporate governance.

Introduction: This article covers the provisions relating AGM and EGM and also prescribes the relevant provisions for penalties etc. The Act prescribes two types of general meetings that are held within the company – Annual General Meeting as mentioned in section 96 and Extra- Ordinary General Meeting as per section 100.

SECTION 96: ANNUAL GENERAL MEETING (AGM)

• Section 96(1) of the Companies Act, 2013 states that every company, whether public or private, except One Person Company, shall hold an annual general meeting every year and that the gap between two AGMs shall not be more than 15 months.
• The company shall specify the meeting as such [i.e. as AGM] in the notices calling it.
• Holding of annual general meeting:
• Annual general meeting should be held once every year.
• First annual general meeting of the company should be held within 9 months from the closing of the first financial year. Hence it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation.
• Subsequent annual general meeting of the company should be held within 6 months from the closing of the financial year.
• The gap between two annual general meetings should not exceed 15 months.

EXTENSION OF VALIDITY PERIOD OF AGM:

In case, it is not possible for a company to hold an annual general meeting within the prescribed time, the Registrar may, for any special reason, extend the time within which any annual general meeting shall be held. Such extension can be for a period not exceeding 3 months. No such extension of time can be granted by the Registrar for the holding of the first annual general meeting.

Example 1:

Renuka Private Limited closed its financial year on 31st March 2023. According to section 96(1) of the Act, the Company should hold its annual general meeting for the year 2022-23 by 30th September 2023 unless an extension is granted by ROC on special reasons.

Bhakti Limited was incorporated on 11th December 2022. When should the company hold its AGM?

Ans: According to section 96(1), the company’s financial year will close on 31st March 2023. The company may hold its first AGM by 31st December 2024, i.e. within 9 months of the close of its financial year.

TIME AND PLACE FOR HOLDING AN ANNUAL GENERAL MEETING:

• Section 96(2) states that every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.

• Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance. The Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose.

• Explanation: For the purposes of this sub-section, “National Holiday” means and includes a day declared as National Holiday by the Central Government.

EXEMPTION TO SECTION 8 COMPANIES: 

• In case of Section 8 company- In Sub-section (2) of Section 96 after the proviso and before the explanation the following proviso shall be inserted;

• Provided further that the time, date and place of each annual general meeting are decided upon before-hand by the board of directors having regard to the directions, if any, given in this regard by the company in its general meeting. – Notification dated 5th, June 2015.

• The above mentioned exception shall be applicable to a section 8 company which has not committed a default in filing of its financial statements under section 137 or annual return under section 92 with the Registrar. Notification dated 13th June, 2017.

EXEMPTION TO GOVERNMENT COMPANIES:

• In case of Government Company, section 96(2) shall be read as: ‘Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at such other place within the city, town or village in which the registered office of the company is situated or such other place as the Central Government may approve in this behalf. Notification dated 5th June, 2015 read with Notification Dated 13th June, 2017.

• The above mentioned exception/ modification/ adaptation shall be applicable to Government Company which has not committed a default in filing of its financial statements under section 137 or annual return under section 92 with the Registrar.

SECTION 97: POWER OF TRIBUNAL TO CALL ANNUAL GENERAL MEETING:

If any default is made in holding the annual general meeting of a company under section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the Company and give such ancillary or consequential directions as the Tribunal thinks expedient.

Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act.

SECTION 98: POWER OF TRIBUNAL TO CALL MEETINGS OF MEMBERS, ETC: 

1. If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company, the Tribunal may, either suo-motu or on the application of any director or member of the company who would be entitled to vote at the meeting :-

i. Order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and

ii. Give such ancillary or consequential directions as the Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company.

Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

2. Any meeting called, held and conducted in accordance with any order made under sub-section (1) shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.

SECTION 99: PUNISHMENT FOR DEFAULT IN COMPLYING WITH THE PROVISIONS OF SECTION 96 TO 98:

This section lists out the punishment for contravention of section 96 to 98, i.e. default in holding a meeting of the company as AGM or on the directions issued by the Tribunal. It states that the company and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 1,00,000 and in the case of a continuing default, with a further fine which may extend to Rs. 5,000 for every day during which the default continues.

SECTION 121: REPORT ON ANNUAL GENERAL MEETING: 

According to Section 121, every listed public company shall prepare a report on each annual general meeting including the confirmation to the effect that the meeting was convened held and conducted as per the provisions of the Act and the rules made thereunder. A copy of the report is to be filed with the Registrar in Form No. MGT. 15 within thirty days of the conclusion of AGM along with the prescribed fee. According to Rule 31 of the Companies (Management and Administration) Rules, 2014, the report shall be prepared in the following manner:

• the report under this section shall be prepared in addition to the minutes of the general meeting;
• the report shall be signed and dated by the Chairman of the meeting or in case of his inability to sign, by any two directors of the company, one of whom shall be the Managing director, if there is one and company secretary of the company;
• the report shall contain the details in respect of the following, namely:-
• the day, date, hour and venue of the AGM;
• confirmation with respect to appointment of Chairman of the meeting;
• number of members attending the meeting;
• confirmation of quorum;
• confirmation with respect to compliance of the Act and the Rules, secretarial standards made there under with respect to calling, convening and conducting the meeting;
• business transacted at the meeting and result thereof;
• particulars with respect to any adjournment, postponement of meeting, change in venue; and
• any other points relevant for inclusion in the report

Penalty for default : If the company fails to file the report within 30 days of conclusion of AGM, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable to a penalty which shall not be less than twenty-five thousand rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees.

SECTION 100: EXTRA-ORDINARY GENERAL MEETINGS: 

All general meetings other than annual general meetings are called extraordinary general meetings.

Who can call an EGM?

Ans: The Board may, whenever it deems fit, call an extraordinary general meeting of the company.

Provided that an extraordinary general meeting of the company, other than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India.

The Board shall on the requisition of – 

i. In the case of company having a share capital, such number of members who hold, on the date of receipt of requisition, at least 1/10th of such paid- up capital of the company as on that date carries the right of voting;

ii. In the case of company not having a share capital, such number of members who hold, on the date of receipt of requisition, at least 1/10th of total voting power of all the members having on the said date a right to vote.

• The requisition shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company. The Board must, within 21 days from the date of receipt of a valid requisition, proceed to call a meeting on a day not later than 45 days from the date of receipt of such requisition.
• By Requisitionists: If the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty- five days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition. [Sub section (4)]

• A meeting under sub-section (4) by the requisitionists shall be called and held in the same manner in which the meeting is called and held by the Board.
• Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (4) shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuneration under section 197 payable to such of the directors who were in default in calling the meeting.

Rule 17 of the Companies (Management and Administration) Rules, 2014

Rule 17 Provides as under with regard to calling of EGM by requisitionists:

2. The members may requisition convening of an extraordinary general meeting in accordance with sub-section (4) of section 100, by providing such requisition in writing or through electronic mode at least clear twenty-one days prior to the proposed date of such extraordinary general meeting.

2. The notice shall specify the place, date, day and hour of the meeting and shall contain the business to be transacted at the meeting.

Explanation. – For the purposes of this sub-rule, it is here by clarified that requistionists should convene meeting at Registered office or in the same city or town where Registered office is situated and such meeting should be convened on any day except national holiday.

3. If the resolution is to be proposed as a special resolution, the notice shall be given as required by sub-section (2) of section 114.

4. The notice shall be signed by all the requistionists or by a requistionists duly authorised in writing by all other requistionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.

5. No explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requistionists and the requistionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

6. The notice of the meeting shall be given to those members whose names appear in the Register of members of the company within three days on which the requistionists deposit with the Company a valid requisition for calling an extraordinary general meeting.

7. Where the meeting is not convened, the requistionists shall have a right to receive list of members together with their registered address and number of shares held and the company concerned is bound to give a list of members together with their registered address made as on twenty first day from the date of receipt of valid requisition together with such changes, if any, before the expiry of the forty-five days from the date of receipt of a valid requisition.

8. The notice of the meeting shall be given by speed post or registered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting.

Example 2: The Board of directors of Ankush Private Limited, a company registered in New Delhi, has decided to call an EGM in California, USA on 2nd October 2022. Discuss whether the general meeting can be convened on the said date?

Ans: No, the meeting cannot be convened in the manner as stated in the facts of the question. As per Rule 17(2) of the Companies (Management and Administration) Rules, 2014, the requisitionists should hold the meeting in the registered office of the company or in the same city or town in which the registered office is situated and it should be a working day.

Example 3: The members of the Prem Private Limited, holding 1/10th voting power of the company, requisitioned a meeting on 14th August, 2022 to the Board of Directors. However, the directors did not pay any heed to such a requisition and did not call an extra-ordinary meeting. Discuss the consequences of the contravention of the same in accordance with the Companies Act, 2013.

Where the Board, after the receipt of the requisition, does not within 21 days call for a meeting within 45 days of the date of requisition, then the requisitionists may themselves call and convene the meeting.

SECTION 122: APPLICABILITY OF THIS CHAPTER TO ONE PERSON COMPANY: 

1. The section states that the provisions of section 98 and section 100 to 111 shall not apply to One Person Company.

2. The ordinary businesses as mentioned under section 102(2)(a), which a company is required to transact at an AGM, shall be transacted in the case of One Person Company, as provided in Sub-section (3).

3. For the purposes of section 114, any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordinary or special resolution, it shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.

4. Notwithstanding anything in this Act, where there is only one director on the Board of Director of a One Person Company, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by such director is entered in the minutes book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all the purposes under this Act.

CONCLUSIONS: 

1. The Act prescribes two types of general meetings that are held within the company – Annual General Meeting as mentioned in section 96 and Extra- Ordinary General Meeting as per section 100.

2. Section 96 discusses about the annual general meeting to be held in a company every year and prescribes that the AGM shall be held within 6 months from the date of the closing of the financial year and that the gap between two AGM shall not exceed 15 months.

3. The AGM shall be held within the business hours and on a working day, i.e. other than National Holidays.

4. Listed public companies shall file a report on AGM with the ROC in MGT–15 within 30 days of the AGM.

5. Section 100 prescribes the provisions for holding the EGM and states that either the board of directors, or a requisition made to Board by a specific number of members, are authorised to call an EGM.

6. Further the chapter discusses about the notice to be sent to members and others for calling the meeting and sets out the length of the notice.

7. Also, the Act describes the Chairman to be appointed for the meetings and the proxies to be appointed by the member of the meeting.

8. Section 121 of the Act requires a listed public company to issue a report on the AGM to be filed with the ROC within 30 days of the conclusion of the AGM.