All about Annual General Meeting (AGM)

An Annual General Meeting (AGM) is an official gathering of management and the shareholders of the company. Annual General Meeting is required to be held to discuss the financial status, annual growth and operations viability and such other businesses that are mandatorily required under The Companies Act, 2013 i.e. "the act".

Section 96 of the act mandates the following: (Annual General Meeting)

1. Applicability: Every company other than a One Person Company shall hold in addition to any other meetings, an Annual general meeting and not more than 15 months shall elapse between two annual general meetings.

2. Time Limit;

• In case of First Annual General meeting, it shall be held within a period of nine months from the date of closure of the first financial year of the company;
• In any other case, within six months from the closure of the financial year.

EXAMPLE;

For a newly incorporated company;

• A Company that is incorporated on or before December 31^st, 2021 it has to close its Annual Accounts on March 31^st, 2022 and first AGM is required to be held on or before December 31^st, 2022 of the coming financial year;
• A Company that is incorporated on or after January 1^st, 2022 it can close its Annual Accounts on the next March 31^st, 2023 and first AGM is required to be held on or before December 31^st, 2023 of the coming financial year.

For already incorporated company;

• A company is required to close its Annual Accounts on March 31^st and AGM is required to be held on or before September 30^th.

3. Extension: Registrar of companies may, for any special reason, extend the time to hold Annual General Meeting, other than the first annual general meeting, by a period not exceeding three months via Form GNL-1 (NOTE: Application for extension has to be successfully made on or before due date of AGM, i.e. September 30^th).

4. Time of Meeting: Every annual general meeting shall be called during business hours, i.e. between 9 a.m. to 6 p.m. on any day other than National Holiday (i.e. a day declared as National Holiday by the Central Government).

5. Place of Meeting:

• Annual General Meetings shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.
• However an unlisted company may hold Annual general meeting at any place in India if consent is given in writing or by electronic mode by all the members in advance.
• The Central Government may exempt any company from these provisions subject to such conditions as it may impose.

Section 101 of the act mandates the following: (Notice of Meeting)

1. Time Limit; A general meeting of a company may be called by giving notice of not less than 21 clear days, in writing or via e-mode.
2. Shorter Notice; a general meeting may be called after giving shorter notice if consent is given in writing or by electronic mode by not less than 95 % of the members entitled to vote.
3. Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall contain a statement of the business to be transacted at such meeting.
4. The notice of every meeting of the company shall be given to-

(a) every member of the company, legal representative of any deceased member or the assignee of an insolvent member;

(b) the auditor or auditors of the company; and

(c) every director of the company.

Section 102 of the act mandates the following: (Statement to be Annexed to Notice i.e. Explanatory Statement)

1. A statement setting out material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting.

2. In the case of an annual general meeting, following businesses shall be ordinary businesses:-

• the consideration of financial statements and the reports of the Board of Directors and auditors;
• the declaration of any dividend;
• the appointment of directors in place of those retiring; and
• the appointment of, and the fixing of the remuneration of, the auditors;

3. In the case of businesses other than above mentioned 4 businesses, all business shall be deemed to be special.

Section 103 of the Act mandates the following: (Quorum)

Quorum means the minimum number of members required to be present at General Meeting, unless the articles of the company provides for a larger number;

1. In case of a Public Company:-

• 5 members personally present if the number of members as on the date of meeting is not more than 1,000;
• 15 members personally present if the number of members as on the date of meeting is more than 1,000 but up to 5,000;
• 30 members personally present if the number of members as on the date of the meeting exceeds 5,000;

2. In case of a Private Company, 2 members personally present, shall be the quorum for a meeting of the company.

3. Adjournment of AGM; If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company-

(a) the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or,

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

4. However in case of an adjourned meeting or of a change of day, time or place of meeting, the company shall give a notice of not less than 3 days to the members, either individually or by publishing an advertisement in the newspapers (one in English and one in regional language) which is in circulation at the place where the registered office of the company is situated.

5. If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.

Section 104: (Chairman of Meetings)

Appointment of Chairman: The members personally present at the meeting shall elect one of themselves to be the Chairman by show of hands.

Section 105: (Proxies of Meetings)

1. Appointment of Proxy: Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf:
2. Voting by Proxy: Proxy shall not have the right to speak at such meeting and shall not be entitled to vote except on a poll
3. Timeline to submit Proxy application: The Proxy, to be effective should be deposited at the Registered Office of the Company not less than forty-eight hours before the commencement of the Meeting.
4. Proxy Membership: A Proxy need not be a member of the Company.
5. Joint Holders: In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote of the other joint holders. Seniority shall be determined by the order in which the names stand in the Register of Members.
6. Attending AGM by Member: The submission by a member of this form of proxy will not preclude such member from attending in person and voting at the Meeting.
7. Validity: An instrument of Proxy duly filled, stamped and signed, is valid only for the Meeting to which it relates including any adjournment thereof.
8. Invalidity: An instrument of Proxy is valid only if it is properly stamped. Unstamped or inadequately stamped Proxies or Proxies upon which the stamps have not been cancelled are invalid.
9. Identification by Proxy: The Proxy-holder should prove his identity at the time of attending the meeting.
10. Discrepancies in Proxy Form: A proxy form which does not state the name of the Proxy and Proxies which does not have date should be considered invalid.
11. Multiple Proxies: If a company receives multiple Proxies for the same holdings of a Member, the proxy which is dated last is considered valid; if they are not dated or bear the same date without specific mention of time, all such multiple Proxies should be treated as invalid.

Section 97 of the act mandates the following; (Power of Tribunal to Call Annual General Meeting)

• If any default is made in holding the annual general meeting of a company under Section 96, the Tribunal may, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such directions as the Tribunal thinks expedient, however, such directions may include a that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

PENALTY: Section 102(5) of the act mandates that;

In case of failure to conduct AGM as per prescribed provisions;

Every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to a penalty of;
Rs. 50,000/- OR 5 times the amount of benefit to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is higher.

Section 441 of the act mandates the following; (Compounding of certain offences)

• In case where a company has made default in complying with the provision for conducting of Annual General Meeting (AGM), the company has to go for compounding of the same;
• Regional Director and National Company Law Tribunal.

It is depend upon the amount of fine that who will initiate the application of compounding.

• If Total fine is upto 25 Lakh, then matter goes to Regional Director.
• If total fine exceed 25 Lakh, then matter goes to National Company law Tribunal.

FAQ's

1. I'm a director of a One Person Company, am I required to mandatorily hold an AGM?

Answer: - No, provisions of AGM are not applicable on OPC. (Section 96)

2. We the directors of ABC Private Limited are supposed to make a delay in holding AGM, can they apply for extension, if yes for how many months we can be allowed to extend the AGM, and to whom we can apply for?

Answer: - Yes, You can apply Extension of AGM except first AGM with valid reason to concerned ROC. Application should be made in Form GNL-1 which can be granted for maximum of 3 months and the application should be made on or before due date of AGM. (Section 96)

3. All of the stakeholders of the company want to conduct the AGM on Gandhi Jayanti (i.e. 2^nd of October), Can AGM be conducted thereon?

Answer: - No, AGM cannot be conducted on a National Holiday and Gandhi Jayanti is declared as a National Holiday by Government (Section 96)

4. Majority of the shareholders of the company are Foreign Residents, thus they are proposing to hold AGM of the company thereat, can a Indian company hold its AGM outside of India?

Answer: - Generally, a company can hold it's AGM at some other place within city, town, or village in which registered office of company is situated (Proviso to Section 96), also, Only if the Central Government allows any company to hold AGM outside of India, it can do so, subject to such conditions as it may impose (Proviso to Section 96(2)).

5. Will the accidental omission to provide Notice to any member or the non-receipt of such notice by, any member invalidate the AGM?

Answer: No.

6. AGM of our company could not be held due to absence of quorum, and adjourned AGM is falling on a national holiday, whether an adjourned AGM can be held on a National Holiday?

Answer: - No, provisions of AGM applies mutatis mutandis on adjourned AGM, thus a company cannot hold it's AGM on a national holiday.

7. There has been a delay in initiation of AGM and the time on which company is starting the AGM is 07:00 P.M., does that invalidate the AGM, also what is the time limit to conclude an AGM?

Answer: - The AGM should start anywhere between 9 A.M. to 6 P.M., however there are no restrictions as to when an AGM should end.

8. When is a General Meeting adjourned?

Answer: If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company, the general meeting stands adjourned.

9. What is the time period of Notice in case of an adjourned meeting?

Answer: In case of an adjourned meeting or of a change of day, time or place of meeting, the company shall give a notice of not less than 3 days to the members, either individually or by publishing an advertisement in the newspapers (one in English and one in regional language) which is in circulation at the place where the registered office of the company is situated.

10. Where the AGM of Govt. Company shall be held?

Answer: The Govt. Company shall call AGM at such other place within the city, town or village in which the registered office of the company is situate or such other place as the Central Government may approve in this behalf.

11. When Notice of AGM of Govt. Company shall be sent?

Answer: In case of Govt. Company, general meeting of a company may be called by giving not less than clear Fourteen days either in writing or through electronic mode.

12. How Proxy vote in a meeting?

Answer: proxy shall not have the right to speak at meeting and shall not be entitled to vote except on a poll.

13. Proxy act on behalf of how many members?

Answer: Person appointed as proxy shall act on behalf of such member or number of members not exceeding fifty.