An Annual General Meeting (AGM) is held to have an interaction between the management and the shareholders of the company. The Companies Act, 2013 makes it compulsory to hold an annual general meeting to discuss the yearly results, auditor’s appointment and so on. A company should follow the procedures under the Companies Act, 2013 to conduct the AGM.
1. Special Procedure For The Year 2020
Update as on 5th May 2020:
Companies are allowed to hold Annual General Meeting via Video Conferencing (VC) or Other Audio-Visual Means (OAVM) in the year 2020. The procedure is as given below:
|Points||With E-voting||Without E-voting|
|Content of Notice||The notice must include the framework laid down by the circular. As per General Circular no 17/2020 dated 13th April 2020, the following matters must also be stated while publishing the notice as per 20(4)(v) of the rules
1) A statement that the EGM has been convened as per the Act and provisions of the General circular no 14/2020.
|Mode of issuing Notice||In the current circumstances, the notices can be sent via e-mails registered with the company or depository participants. Before sending out notices together with the financial statements, company must publish atleast once in a vernacular newspaper in the district in which the registered office of the company is situated and one english newspaper also preferably having electronic editions.|
|Access to Auditor’s Report||Due to the difficulty in sending out physical copy of the financial statements (including Board’s report, Auditor’s report, or other documents), these can be sent out via e-mail to the members, trustees and the persons entitled.|
|Dividend dispatch measures||The companies can make adequate arrangements to allow the mermbers
to give their mandate for receiving dividends directly in their bank accounts
through the ECS or any other means.
For shareholders not have not shared bank accounts details may receive the dividend warrant/cheque by post.
|Matters considered in the AGM||Only the items of special business, considered to be unavoidable by the Board, may be transacted, apart form ordinary business.|
|Mode of conducting a meeting||The meeting must be conducted through Video Conferencing or other audio-visual means (OAVM).|
|Place of conducting AGM||At any other place in the district where the registered office of the company is located taking cautionary steps as stipulated. It can also hold meeting virtually with some members physically present and providing the facility of VC or OAVM, for allowing other members of the company to participate in such meeting.|
|Quorum of the AGM||All the members physically present in the meeting and those attending the meeting through the.facility of VC or
OAVM shall be taken together for arriving at the quorum under section 103 of the Act.
|How is voting done?||All resolutions will continue to be passed via the facility of e-voting system.||—|
2. Which Companies Are Required to Hold an AGM?
All companies except one person company (OPC) should hold an AGM after the end of each financial year. A company must hold its AGM within a period of six months from the end of the financial year. However, in the case of a first annual general meeting, the company can hold the AGM in less than nine months from the end of the first financial year. In such cases where the first AGM is already held, there is no need to hold any AGM in the year of incorporation. Do note that the time gap between two annual general meetings should not exceed 15 months.
3. What is the Procedure to Hold an AGM?
The company must give a clear 21 days’ notice to its members for calling the AGM. The notice should mention the place, the date and day of the meeting, the hour at which the meeting is scheduled. The notice should also mention the business to be conducted at the AGM.
A company should send the notice of the AGM to:
– All members of the company including their legal representative of a deceased member and assignee of an insolvent member.
– The statutory auditor(s) of the company.
– All director(s) of the company.
The notice may be given in writing through speed post or registered post or via electronic mode. The notice should be sent to the address of the member as per the records of the company. In the case of electronic communication, the notice should be sent to the e-mail address of the member as per the records of the company. The notice can be text typed in an email or an attachment to an email.
The notice of the AGM should be placed on the website of the company or any other website as may be mentioned by the government.
An AGM can be called at a notice period shorter than 21 days’ if at least 95% of the members entitled to vote in the meeting agree to the shorter notice. The consent may be given in writing or through electronic mode.
4. Matters Discussed in an AGM or Agenda for an AGM
The matters discussed or business transacted in an AGM consists of:
– Consideration and adoption of the audited financial statements
– Consideration of the Director’s report and auditor’s report
– Dividend declaration to shareholders
– Appointment of directors to replace the retiring directors
– Appointment of auditors and deciding the auditor’s remuneration
– Apart from the above ordinary business, any other business may be conducted as a special business of the company.
The ordinary business of the company will be passed by an ordinary resolution where the votes cast in favour are more than the votes cast against the resolution. However, in case of special business transactions, the resolution may be passed as an ordinary resolution or a special resolution, depending on the applicable legal provisions. A special resolution requires at least 75% votes in favour of the resolution.
An AGM should be conducted during the business hours between 9 a.m. and 6 p.m. only. The meeting can be conducted on any day, which is not a national holiday, including holidays declared by the Central Government. The meeting can be held at any place which is within the limits of the city or town or village in which the registered office is situated. A government company can also hold its AGM at any other place as the Central Government may approve. An unlisted company can hold an AGM at any place in India after obtaining consent from its members in writing or in electronic mode.
In the case of a Section 8 company, the Board decides the date, time and place of the AGM as per the directions given in a general meeting of the company.
5. What is the Quorum for an AGM?
In the case of a private company, two members present at the meeting shall be the quorum for the AGM.
In the case of a public company, the quorum is:
– Five members present at the meeting if the number of members is within one thousand.
– Fifteen members present at the meeting if the number of members is more than one thousand but within five thousand.
– Thirty members present at the meeting if the number of members is more than five thousand.
In case the quorum for the meeting is not present within half an hour from the scheduled time, the meeting will be adjourned to the same day in the following week for the same time and at the same place.
6. Members’ Rights in an AGM
The members (including shareholders) of the company are entitled to attend and vote at the AGM. Members can cast their votes by a physical ballot or postal ballot or through e-voting. Members can appoint proxies to attend an AGM and vote on their behalf. The proxy should be appointed in writing, and the proxy form should be signed by the member. In case the proxy is appointed by a corporate shareholder, the proxy form should be signed and sealed by an authorised signatory of the corporate.
The members can elect one among themselves as the chairman of the meeting. However, if the articles of association of the company provide for a chairman, such person shall chair the AGM of the company.
7. Extension of Time for Holding an AGM
The Registrar of Companies can extend the time available to hold an AGM by three months. The company should apply for an extension through e form GNL-1 specifying the reasons for the extension and the period for which company requires an extension. The RoC will record the reasons for giving the extension. However, no extension is available to hold the first annual general meeting.
8. Reporting of the AGM in Form MGT-15
After the conduct of AGM, every listed company has to file a report on the AGM in form MGT-15 within a period of 30 days from the conclusion of the AGM.
9. Consequences and Penalty for Default in Holding an AGM
In case a company fails to hold an AGM within the stipulated time or extension obtained by it, the Tribunal may itself or on an application made by any director or member order an AGM to be conducted as per its directions.
If the company further defaults in holding a meeting in accordance with the directions of the Tribunal, the company and every officer of the company who commit the default shall be punishable with a fine of up to Rs 1 lakh. In case of continuing default, a fine of Rs 5,000 per day is levied for each day during which the default continues.
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