ANNUAL GENERAL MEETING

ANNUAL GENERAL MEETING UNDER COMPANIES ACT, 2013

MEANING:

Annual General Meeting (AGM) is a meeting conducted by every Private Limited Company or Limited Company that provides an opportunity to the shareholders to meet every year and discuss matters relating to the Company. The AGM ensures the interest of the shareholders is protected.

PURPOSE FOR ANNUAL GENERAL MEETING

Annual General Meeting is conducted by the Shareholders and Directors of the Company. Financial Statements of the Company of the Company are considered and adopted. Other Business item in an AGM includes declaration of Dividend for Shareholders, appointment of director in place of director who retires by rotation, appointment of auditor and to answer any issue raised by shareholders.

FIRST ANNUAL GENERAL MEETING

The first annual general meeting of the company must be held within the period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year.

Further, if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation.

SUBSEQUENT ANNUAL GENERAL MEETING

Subsequent AGM should be held on the earliest of the following dates:

  • Within 15 months from the date of last annual general meeting.
  • 6 months from the date of close of the financial year.

EXTENSION OF TIME LIMIT FOR HOLDING OF AGM

The Registrar of Companies may, on an application made to it by way of filing of Form GNL-2 with certified true copy of the Board Resolution/General Meeting Resolution, extend the period for holding the Annual General meeting for a period not exceeding 3 months.The Companies are not allowed to make an application for extension of time for the First Annual General Meeting. And, therefore, the non-holding of 1st AGM will be a non-compliance of the Section 96 of the Companies Act, 2013 and the Company will be liable for penal provisions.

CONVENING OF A VALID GENERAL MEETING

The business at a meeting is said to have been “validly transacted” if the members of the organisation or body concerned, whether or not they were present, are bound by the decision made there at. They cannot be so bound unless the meeting is validly held. The essentials of a valid meeting are that the meeting should be:

Properly convened:

  • The meeting must be called by proper authority; and
  • Proper notice must be served in the manner specified under Section 101 and 102 of the Act.

Properly constituted:

  • Proper quorum must be present in the general meeting (Section 103 of the Act)
  • Proper chairman must preside the meeting (Section 104 of the Act)

Properly conducted:

  • The business must be validly transacted at the meeting i.e. resolutions must be properly moved and passed, and voting by show of hands and on poll.
  • Proper minutes of the meeting must be prepared. (Section 118 of the Act)

REQUISITES OF A VALID ANNUAL GENERAL MEETING

Notice for Annual General Meeting

The notice for annual general meeting must be sent to all the member, auditors and debenture trustees at least 21 days clear days before the meeting along with the annual report of the Company. It excludes:

  • The day of service of the notice;
  • The day on which the meeting is to be held.

Notice is deemed to have been received by the members at the expiration of 48 hours after the letter containing it is posted. In nut shell, a notice must be sent 25 days before the meeting to the effective.

Annual general meeting may be held with a shorter notice if it is so agreed by at least 95% the members entitled to vote in the meeting. The consent for a shorter notice may be obtained either before or after the meeting.

The notice shall state the meeting to be an annual general meeting specifically.

Quorum for Annual General Meeting

Quorum means the minimum number of persons who being entitled to attend a meeting must be present at the meeting so that the business of the meeting can be transacted validly

In case of public company

No of members as on the date of meeting Quorum
Not more than 1000 Five members
More than 1000 but upto 5000 Fifteen members
More than 5000 Thirty members

In case of private company

Two members should be personally present in the meeting

Moreover quorum needs to be present only at the commencement of General Meeting. The proxies cannot be counted for the purpose of quorum.

Business to be Transacted at Annual General Meeting

At every AGM, the following matters must be discussed and decided. Since such matters are discussed at every AGM, they are known as ordinary business. All other matters and business to be discussed at the AGM are special business.

The following matters constitute ordinary business at an AGM:-

  • Consideration of annual accounts, director’s report and the auditor’s report
  • Declaration of dividend
  • Appointment of directors in the place of those retiring
  • Appointment of and the fixing of the remuneration of the statutory auditors.

In case any other business (Special business) has to be discussed and decided upon, an explanatory statement of the special business must also accompany the notice calling the meeting. The notice must also give the nature and extent of the interest of the directors or manager in the special business, as also the extent of the shareholding interest in the company of every such person. In case approval of any document has to be done by the members at the meeting, the notice must also state that the document would be available for inspection at the Registered Office of the company during the specified dates and timings.

PROCEDURE FOR CONDUCTING ANNUAL GENERAL MEETING

The procedure for conducting the annual general meeting is explained in detail below:

Before the Meeting

  • Convene a board meeting after giving notice as soon as the financial statements are ready.
  • Discuss the report of the audit committee on the annual accounts.
  • Consider and approve Financial statement of the company and authorize Directors to sign on behalf of the Board.
  • Validate the draft of the board’s report in compliance with the provisions of Section 134 of the Companies Act, and authorize the chairman to sign the report on behalf of the board.
  • Consider the payment of dividend if it is to be declared in the annual general meeting.
  • Fix place, date and time for the annual general meeting and approve the draft notice. Also, authorize the secretary to issue the notice for the meeting.
  • To consider the closure of the members in the register and share transfer books of the company.
  • In the case of listed companies, a notice should be sent to the stock exchange within seven working days about the dates proposed for such closure.
  • If the directors decide for the publication in a newspaper should be arranged seven days before from the notice of closure of the register of members and the share transfer books.
  • To arrange for the printing of a notice of the general meeting, ensure the notice containing the following contents:
    • Time, date and place of the meeting
    • Matters to be transacted in the meeting
    • Procedure of e-voting, if any
    • Proxy form
    • Explanatory statement
    • Route Map

At the Meeting

  • As per the secretarial standard, arrange for the sitting arrangement to enable the directors and the company secretary to be seated by the chairman.
  • Arrange for the collection of admission slip to get the attendance register signed by the shareholders and make them comfortable in their seating.

Appointment of the Chairman

  • Ensure the chairman should be present within 15 minutes from the beginning of the meeting at the venue.
  • In case of absence of the chairman, ensure the directors present at the meeting elect among themselves as the chairman of the meeting.
  • Read the notice of the meeting and auditor report, if advised by the chairman.
  • Produce a copy of Memorandum and Articles of Association (AOA) of the company.
  • Give a brief about financial statements to shareholders and answer their queries if any and then consider annual accounts, director’s report and the auditor’s report.
  • Chairman to be informed any information required by the shareholders relating to accounts and other connected matters.
  • Ensure the chairman of the audit committee is present at the annual general meeting to give any clarifications related to audit and shareholders queries.
  • Declaration of Dividend, if any.
  • Consider and pass other resolutions as per notice of AGM.
 
     
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