Annual General Meeting
Annual General Meeting (AGM) is the meeting of the members of the company held annually in order to discuss the affairs of the company. The affairs of the company are generally carried out by the Board of Directors after the consent is provided by the shareholders at the general meeting. The Board discuss on the progress of working of the company with the shareholders in the AGM. The shareholders being the owner thus get a control over the affairs of the company.
Every company must hold an Annual General Meeting (AGM) in each calendar year. AGM should be held at the registered office of the company or at any other place within the local limits of the city, town or village at which the registered office of the company is situated. It should be held on a working day, and during business hours.
The Annual General Meeting provides an opportunity to the shareholders to meet every year and to know about the status of affairs of the company. Conducting of AGM also helps them in giving suggestion for improvement and progress of the company. Annual General Meeting ensures the interests of the shareholders are protected. It also helps the board of directors to provide transparency on the working of the company to all the stakeholders. Hence, to safeguard the interest of stakeholders, Certain provisions have been mandated regarding convening of Annual General Meeting every year under section 96 of The Companies Act, 2013 for all Limited companies in India.
Notice of AGM
As per Companies Act, an Annual General Meeting should be convened by sending 21 clear days notice (excluding date of notice and date of the meeting) in either writing or electronic mode to:
- All the members of the company, legal representative of any deceased member or the assignee of an insolvent member;
- Statutory Auditor of the company
- All the directors of the company
A private limited company can specify a shorter time duration for calling AGM in its articles.
Every notice shall specify the place, date, day and the hour of the meeting and a statement of the business to be transacted at such meeting. Also, a copy of Directors Report, Audited Financial Accounts and Auditors Report, Proxy Form, etc. shall have to be sent along with the notice.
Calling AGM at a Shorter Notice
Generally, Annual General Meeting is convened by 21 days’ notice or a shorter time duration as specified in the articles of the Company. In case the time duration for calling AGM is shorter the required time, the company can convene the AGM by a shorter notice after obtaining consent from 95% of the members entitled to attend and vote at such meeting.
Time and Place of AGM
Every AGM should be conducted during business hours (between 9 a.m. and 6 p.m.), on any day except National Holiday. It shall be held either at the registered office of the company or any other place within the city/ town/ village in which the registered office is situated.
However, AGM of an unlisted company can be held at any place in India if all the members give consent in writing or by electronic mode by in advance.
Timeline for AGM
The first AGM of a Company shall be conducted within 9 months of the closure of first financial year and shall not be required to hold any AGM in its year of incorporation if conducted as aforesaid. All subsequent AGM’s shall be convened within 6 months of the closure of financial year. However, the gap between two AGM’s should not exceed 15 months.
Businesses to be transacted at AGM
There are certain regular businesses transactions named as ordinary business which are to be dealt only at an AGM. The ordinary business transactions to be dealt in an AGM are:
- Adoption of Financial Statements, Board’s Report, Auditor’s Report
- Declaration of Dividend
- Appointment of directors in place of those retiring
- Appointment and fixing the remuneration of statutory auditors
All transactions other than ordinary business shall be meant to be Special Business and an explanatory statement detailing the need for such transactions should be annexed with notice for such special transactions
Quorum for AGM
Quorum means the minimum number of members to be present to make the proceeding of the meeting valid.
1. For Public Company the Quorum shall be:
- 5 members personally present; if the company has members less than 1000
- 15 members personally present; if the company has members in between 1000 to 5000
- 30 members personally present; if the company has members more than 5000
2. For Private Company the Quorum shall be 2 members personally present.
Adjournment of AGM
If the quorum is not present within half an hour from the time scheduled for meeting, the meeting shall be adjourned to same day in the next week at the same time and place.
If the Boards want to change day, time or place of such adjourned meeting, then the company may do so by giving not less than 3 days notice to the members. The notice can be given either individually or by publishing an advertisement in the newspapers (English and vernacular language) which is being circulated at the place where the registered office of the company is situated.
Further, if the quorum is not present adjourned meeting also, the members present shall constitute the quorum.
Penalty for default in convening AGM
If any default is made in holding AGM of the company, then the company and every officer in default shall be punishable with fine of up to 1,00,000 rupees and in case of continuing default, with a further fine which may extend to 5000 rupees for every day till such default continues.