The Annual General Meeting (AGM) is defined under section 96 of the Companies Act, 2013. It is a regular meeting of the company’s members conducted once a year to transact the company’s normal business.
Every company other than a One Person Company has to compulsorily conduct an Annual General Meeting in addition to any other meetings. Moreover, the notice of the AGM must be sent to all the members before the meeting.
In this Company Law note, you will learn more about the concept of the Annual General Meeting (AGM) as per the Companies Act, 2013.
Timeline for Holding AGM
The first Annual General Meeting of the company must be convened within nine months from the date of closing of the financial year. If a company has its first Annual General Meeting as described, the company will not be required to convene another Annual General Meeting in the year of incorporation.
Moreover, there are two requirements for subsequent AGMs:
- Every year, the company must have an Annual General Meeting. (Year refers to the calendar year, which runs from January to December.)
- The time between two AGMs must not exceed 15 months.
The AGM must be convened within six months from the date of closing of the financial year. Furthermore, for any special reason, the registrar may grant a 3-month extension of time for the conduct of the 2nd or subsequent AGM.
Date, Time, and Place for Holding AGM (Section 96(2))
The AGM must be held at any time during normal business hours on a day which is not a national holiday (9 am to 6 pm).
Note: Republic Day (January 26th), Independence Day (August 15th), Gandhi Jayanti (October 2nd) and any other day proclaimed as a national holiday by the central government are all examples of national holidays.
The meeting must be conducted at the registered office or another location within the same town, city, or village as the company’s registered office. Provided, however, that the Annual General Meeting of an unlisted company may be convened anywhere in India provided all members approve in writing or electronically in advance.
The central government may, subject to certain conditions, exclude any class of companies from the provisions of this subsection.
A public company or a private company that is a subsidiary of a public company may set the time for its AGM by its articles of association or by a resolution approved at a previous AGM.
A private company that is not a subsidiary of a public company may fix the date and location of its Annual General Meeting by its articles of association, by a resolution passed at a previous AGM, or by passing a resolution approved by all members. Such a location does not have to be in the same city, town, or village as the company’s registered office.
Power of Tribunal to Call AGM (Section 97)
On the application of any member of the company, the tribunal may convene or order the holding of an AGM of the company and provide such ancillary or consequential directives as the tribunal deems appropriate. (If the company makes any default in holding AGM according to the provisions of section 96.)
Note: Here, tribunal means the National Company Law Tribunal.
One of the directions may be that a quorum is defined as one person present in person or by proxy.
A general meeting called in accordance with sub-section (1) is assumed to constitute the company’s AGM.
Meeting Called by Tribunal (Section 98)
If a company is unable to hold a meeting of the company (other than an AGM), the tribunal may order a meeting of the company to be called, held, and conducted in the manner directed by the tribunal. The tribunal may issue the order at its own discretion or in response to a request by a director or member of the company. One of the instructions might be that a quorum is defined as one person present in person or by proxy. The power of tribunal given under section 98 is optional and not necessary or compulsory.
Penalty for Failing to Conduct AGM (Section 99)
If a company fails to conduct a meeting, the company and each officer who fails to hold a meeting shall be fined up to Rs. 1 lakh. Moreover, if the default persists, then the company or the officer in default has to pay Rs. 5,000 for each day till the time the default continues.
Notice of the Annual General Meeting (Section 101)
Now, after understanding the concept of AGM, let us dwell deep into the concept of notice of meeting, its rules, contents and the person entitled to get the notice of the meeting.
Rules of Notice
A company’s general meeting can be called by giving at least a clear 21 days notice, either in writing or by electronic means, in the prescribed manner. Moreover, the general meeting can be called at a shorter notice only if approval is given in writing or electronically by 95% of the members eligible to vote at an Annual General Meeting or by members of the company at any other general meeting.
Contents of Notice
Every notice of the meeting must include the place, date, day, and hour of the meeting, as well as a description of the matter to be discussed at the meeting.
Persons Entitled to Notice
The following persons are entitled to get the notice of the Annual General Meeting:
- Every member of the company.
- Any deceased family member’s legal representation.
- The assignee of an insolvent member.
- The auditors of the company.
- Every director of the company.
However, the non-receipt of notice or the unintentional omission to give notice to any member shall not invalidate the meeting’s proceedings.
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It can be concluded that an Annual General Meeting (AGM) is a gathering of a company’s interested shareholders that takes place once a year. The company’s directors submit an annual report to shareholders at an AGM, which includes information on the company’s performance and strategy.