A Company is a separate legal entity different from its members. So, its affairs are generally done by Board of Directors. The Board of directors provides a road map within its limited power for the progress of a Company. Certain powers are controlled by the boards after getting consent of the company at their general meeting. The shareholders as the owner of the company control over the proceeding of the meeting. The Annual General Meeting gives them opportunity to know the condition of the company and also make suggestion for its improvement and progress.
Annual General Meeting:-
As per Section 96 of the Companies Act , 2013,
- Every Company other than One person Company must hold a general meeting in each year apart from other meetings as Annual General Meeting (AGM).
- Every Company has to set up a managing Committee to run its smooth working of managerial works.
- Every Company , apart from One person Company ( OPC ) must have to hold in addition to other meetings, by giving a notice about the meeting, not more than 15 months in between the date of AGM to the next. A Company may hold its first AGM within the period of 9 months from closing of its first financial year otherwise in other cases within the period of 6 months. [Section 96(1) of the Companies Act,2013]
As per the above , if a company hold its meeting, then it has no need to call an AGM in the year of its incorporation.
However , the registrar may extend the period within any AGM ( not being the first AGM) shall be held, not exceeding 3 months under section 96(1).
- Every AGM shall be called during business hours ( i.e. 9 a.m. to 6 p.m.) on any day not a national day declared by the Central Government , and also held I the registered office or in any place within the city ,village, or town in which the registered office is situated.
- According to Section 129(2), at every AGM board of directors of the company shall lay before the meeting financial statement for the financial year.
- Moreover, Section 129(3) says, where the company has one or more subsidiaries, then they have to prepare in addition to the statement under section 129(2) a consolidated financial statement and of all subsidiaries in same format and also present before the AGM of the Company with the prescribed statement under section 129(2).
- There is no provision for extension of 1st AGM but in other cases it can be extended for period of three months by ROC.[ Second proviso to Section 96 of the Companies Act,2013]. However , if such first AGM is not held, NCLT can order holding of General Meeting under section 97 of the Act. Application for extension of time should be submitted electronically in e-form no. 61.
- After the ending of the financial year i.e. 31st March, all the auditing processes must be completed within three-four months. But the AGM must be held within six months from the closing date of financial year. A notice of 21 days has to be sent to all members. So, the audited accounts, directors report has to be closed on 31st March and been posted by first week of September.
- Business to be transacted:-
As per section 102(2) of the Companies Act, 2013,the following business es may be transacted during AGM:-
1) Ordinary Business [Section 102(2)], i.e.
a. Consideration of financial Statements and reports of board of directors and Auditors.
b. Declaration of any Dividend
c. Appointment of directors in place of retiring one
d. Appointment of and Fixation of the remuneration of the auditors.
2) Special Business [Section 102(b)], : Apart from the above businesses , the rest are deemed to be a Special business , transacted during the AGM.
Annual General Meeting is compulsory if,
- Business of the Company was taken over by Government.
- Company did not function.
- Accounts of the Company are not ready.
Defaulting in holding Annual General Meeting:
If a Company not holding an Annual General Meeting as per Section 166 , or not complying with any direction of the Central Government, then the Company and its every officer come in the Category under section 168 of the Company Act ,2013 and punishable with fine which may extend to Rs. 50000 and for regular basis it may extend to Rs.2500 for every day .[ Section 168]
Further , as per section 167 of The Companies Act ,1956 provides for the power of the Company Law Board (CLB) to call AGM in the following circumstances:
- As per section 94, if Company fails to hold Annual General Meeting, any member of the company can request to NCLT (powered with CLB) for calling AGM.[ Section 97(1)]
- The CLB can give any ancillary or consequential directions which are expedient in relation to the calling, holding and conducting the meeting. [ Section 167(1)]
- Apart from the above, CLB also directs that one member of the company present in person or by proxy, which shall be deemed to constitute a meeting.
- A general meeting held as per the direction of the CLB, deemed to a n annual general meeting of the company.
(Author is a student of Institute of Chartered Accountants of India and can be reached at [email protected]
or on 95479-61025)