Annual General Meeting (AGM) is an important annual event where Shareholders get an opportunity to deliberate about the activities of the company. An AGM is the only meeting in which Shareholders can interact with the Management or Board of Directors of their Company. It provides members with an opportunity to collectively discuss the affairs of the company and to exercise their ultimate control over the management of the company. AGM is not only inevitable for Companies but also for Universities, Schools, Charities, Unions and other corporate and institutions owned and controlled by the stakeholders are also required to hold an AGM to discuss the future prospects of the concerned organization.

Three colored stickers with the text AGM Annual General Meeting on a light blue wooden background

Due Date of AGM

As per the provisions of Section 96 of the Companies Act, 2013 (“Act”), every Company other than One Person Company shall in each calendar year, hold a General Meeting as its Annual General Meeting (“AGM”). Every Company shall hold its first AGM within nine months from the date of closing of the first financial year of the Company and thereafter in each year within six months from the closure of the financial year, such that the time gap shall not be more than fifteen months between two successive AGMs.

Section 96 requires that the subsequent AGM should be held on the earliest of the following dates:

(a) fifteen months from the date of the last AGM; or

(b) six months from the closure of the financial year.

The Due Date of AGM shall be within 15 months from the date of last AGM or 6 months from the closure of the financial year, whichever is earlier.

The Registrar of Companies (“ROC”) may extend the time for holding the AGM, other than the first AGM, “for any special reason” by a period not exceeding three months, if it cannot be held within the prescribed time limit.

For detailed discussion on due date of AGM, please find link of our article:

Due Date of Annual General Meeting

If a company holds its first AGM as aforesaid, it shall not be necessary for the company to hold any AGM in the year of its incorporation.

Hence, for a company incorporated on 01.01.2015, the first financial year should be closed on 31.03.2016 as provided in clause (41) of section 2. The annual general meeting in such case shall be required to be convened on or before 31.12.2016. The said meeting shall be treated as the annual general meeting for the year 2015 and 2016. However, for a company incorporated on 31.12.2014, the first financial year shall be closed on 31.03.2015 and annual general meeting shall be convened on or before 31.12.2015.

Further, as per Regulation 44(5) of SEBI (LODR) Regulation, 2015, the top 100 listed entities by market capitalization, determined as on March 31st of every financial year, shall hold their AGM within a period of five months from the date of closing of the financial year.

Therefore, in case of top 100 listed Companies, the Due Date of AGM shall be within 15 months from the date of last AGM or 5 months from the closure of the financial year, whichever is earlier.

Time and Place of AGM

Every AGM shall be called during business hours on any day that is not a National Holiday. The business hours are prescribed to mean the time period between 9 a.m. and 6 p.m. The venue of the meeting shall be either the registered office of the company or some other place within the city, town or village in which the registered office of the company is situated.

It is to be noted that the meeting needs to be called during business hours. It may extend and conclude beyond business hours.

“National Holiday” means Republic Day, i.e., 26th January, Independence Day, i.e., 15th August, Gandhi Jayanti, i.e., 2nd October.

According to a clarification issued by circular no. 1/1/80 CL – 5 dated 16.02.1981 under the previous Act, the ministry has clarified that postal or municipal limits, whichever is wider is permissible for the conduct of Annual general meeting. Ministry further clarified that postal limit may be construed to mean city postal delivery area officially accepted by the postal authority. This clarification though issued by ministry under the earlier Act, may be considered for this relevant provision also until a fresh clarification issued by the ministry under this Act.

Note:

“AGM 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.”

Exemption to One Person Company (OPC)

One Person Company (OPC) is a Company that has only one member. It is a type of Private Company but it has only one member. Since the OPC has only one member, it is not practical to hold any general meeting of members. As provided in sub-section (1) of section 96, one person company is not required to hold AGM. The manner of passing resolutions required to be passed is contained in section 122 of the Act.

Any business which is required to be transacted at an AGM of a OPC through an ordinary or special resolution shall be sufficient if 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 Companies Act. It means that it is sufficient for the OPC to enter in the minutes-book the decision of the member with sign and date by the member and such date shall be deemed to be the date of the meeting for all the purposes under the Companies Act.

Compliance of provisions of Secretarial Standard-2

With effect from 01.07.2015, Secretarial Standard – 2 issued by ICSI is applicable to all types of General Meetings of all companies except One Person Company (OPC) and class or classes of companies which are exempted by the Central Government through notification.

Consequences of holding AGM after due date

The Companies which are not holding their annual general meeting with in stipulated period as laid down in the act are contravening the requirements of section 96 of the Act and liable to pay fine specified under section 99 of the Companies Act, 2013. The offence under this section is a continuing offence till the compliance is made.

It is well settled that the AGM must be called, whether or not the financial statements are ready for consideration at the meeting. “There is a clear statutory duty on the directors to call the meeting whether or not the accounts the consideration of which is only one of the matters to be dealt with at an AGM are ready or not.

The consequence of default in holding AGM, even where there is such a default is only liability for penalty and for payment of fine as prescribed by the statute and the further consequence is that the meeting, if held by the company beyond time, cannot be said to be void or illegal.

Extension of Time Limit for Conducting AGM through VC/OAVM

There are no provisions in the Companies Act, 2013 for conducting General Meeting through video conferencing/other audio visual means (VC/OAVM).

Due to COVID-19 pandemic, MCA vide its Circular dated 5th May, 2020 allowed the Companies to conduct their AGM through VC/OAVM till 31st December, 2020. Further, MCA vide its Circular dated 13th January, 2021 extended this date and allowed Companies to conduct their AGM till 31st December, 2021.

This has to be noted that the extension has been granted to the Companies to conduct their AGM via VC/OAVM till December 31,2021 and this in return can not be considered as the extended due date for convening of AGM. The Companies are still required to conduct their AGM according to the due dates as stipulated in the Companies Act, 2013

There is no mandatory requirement to convene AGM through VC/OAVM as per Companies Act, 2013. The Companies can convene their AGM through physical also.

Matters to be considered while preparing Notice of Annual General Meeting

Ordinary Business:
Sl. No. Matter Remarks
1. Adoption of Audited Standalone Financial Statements for the Financial Year ended 31st March, 2021 including the Reports of Board of Directors and Auditors thereon.
2. Adoption of Audited Consolidated Financial Statements for the Financial Year ended 31st March, 2021 including the Report of Auditors thereon. If Company is required to prepare the consolidated Financial statements under the Companies Act.
3. Declaration of Dividend on Preference Shares for the Financial Year ended 31st March, 2021. If Company is having Preference Shares.
4. Confirmation of payment of Interim Dividend for the Financial Year ended 31st March, 2021. If Board has declared any Interim Dividend during the financial year 2020-2021. Although there is no legal requirement for confirmation of payment of Interim Dividend in AGM but it’s a good practice followed by Corporates.
5. Declaration of Final Dividend for the Financial Year ended 31st March, 2021. If Board has recommended Final Dividend.
6. Appointment of Directors in place of those retiring. Applicable only on Public Companies.
7. Appointment and fixing of remuneration of the Statutory Auditors. If Company is required to appoint auditor due to expiry of terms or casual vacancy.
Special Business:
8. Regularisation of Additional Director appointed after the date of previous AGM. If Board has appointed Additional Directors after the date of previous AGM.
9. Ratification of Remuneration payable to Cost Auditor. If Company has appointed Cost Auditor.
10. Approval/Ratification of related party transactions. If Company is having transactions with related parties and the approval/ratification of Shareholders is required.
11. Appointment/Re-appointment of Independent Directors (IDs) If Company is required to appoint/ re-appoint IDs
12. Appointment/Re-appointment of Managing Director/Whole Time Director/Manager If Company is required to appoint/re-appoint managerial personnel.
13. Approval for appointment/Continuation of Non-Executive Director who has attained the age of Seventy Five Years Regulation 17(1A) of LODR, No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.
14. Payment of Commission to Non-Executive Directors
15. Any other matters requiring Shareholders’ approval.

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(Written by CS Brajesh Kumar and edited by CS Rahul Das can be contacted at [email protected] and [email protected] for any kind of query and assistance)

DISCLAIMER: The information given in this document has been made on the basis of the provisions of the Companies Act, 2013 and Rules made thereunder. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not a legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.

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