Annual General Meetings (AGM) in India

Conducting an annual general meeting successfully is quite a crucial task considering the vital importance of such get-togethers of a company’s Board members and shareholders. These people are basically the ones managing all the business processes and making sure the company has a vision and certain goals for the future.

What is an Annual General Meeting?

• An Annual General Meeting (AGM) is a yearly meeting of an organization’s leaders and shareholders to discuss the work done throughout the year, strategize for the future, select new directors, and resolve issues that have been hindering growth for the organization.
• As per the Companies Act 2013, apart from other meetings throughout the year, an annual general meeting shall be organized with no more than 15-months of gap between two such meetings.

All the provisions for AGMs have been stated in Section 96 of the Companies Act, 2013.

Chairman of AGM

Unless the Article of the companies states otherwise, the members personally present for the meeting shall elect amongst themselves to be the Chairman by voting through a show of hands.

When to Host AGMs?

• AGMs must be organized every year with only a certain gap between two meetings as stated in the Companies Act, 2013.
• The first AGM must be organized within nine months from the closing date of the first financial year of the company.
• Subsequently, AGM must be held within six months from the closing of the financial year.

 

AGM Notice

An AGM shall only be called after issuing a notice 21 days in advance. The notice should include crucial details like the place, date, day, and time at which the meeting is scheduled. It should also include the agenda and issues that have to be discussed at the meeting.

Note: An AGM may be organized on a shorter notice if 95% of the voting members agree to conduct the meeting early.

It should be kept in mind that AGMs shall only be organized on days that are not a National Holiday and during business hours, between 9am to 6pm.

The AGM notice shall be sent to the following:

• All members of the company, including the legal representatives of deceased members and assignees of insolvent members.
• Company’s statutory auditor(s).
• All the Directors of the company.

The AGM notice shall be sent to the above-mentioned individuals only through speed post or registered post at the address registered with the company, given in hand, or via electronic means like email as per the company records.

AGM Quorum

Private Limited Company

• Attendance of two members at the meeting.

Public Limited Company

• If the number of members is within 1000, five members must be present for the meeting.
• If the number of members is more than 1000 but less than 5000, fifteen members should be present for the meeting.
• If the number of members is more than 5000, thirty members should be present for the meeting.

Note: If the quorum for the meeting is not present within half an hour of the scheduled time, the meeting shall be adjourned and postponed to the same day and time of the next week at the same place.

Mode of Conducting AGM

Physical

AGM shall be organized at any place if the members are physically present at a common venue at a specific time.

 

Video Conferencing/Other Audio-Visual Mode

If unavoidable, AGMs shall be conducted through video conferencing or other audio-visual means. In such instances, the company must ensure that the platform used for the meeting supports two-way communication, also known as tele-conferencing.

Business Conducted in AGMs

The ordinary businesses of an AGM are:

• Discussing the details of financial statements and reports of the Board of Directors and auditors.
• Declaration of dividends.
• Appointment of new Directors.
• Appointing and determining the renumeration of the auditors.

Note: Any business conducted apart from the ones mentioned above is known as ‘Special Business’.

Minutes of AGM

• Minutes constitute a formal written physical or electronic record of the proceedings of a meeting.
• It is compulsory for companies to prepare and record minutes of AGMs.
• Minutes basically means a written sequential record of the meeting proceedings and the resolutions passed in it.
• The Company Secretary or any other person authorized by the Board or Chairman is responsible for recording the proceedings of the AGMs.
• The minutes should be recorded, signed and entered in the Minutes Book within 30 days of the AGM.
• The ‘Minutes Book’ is a book maintained specifically in physical or electronic form to record minutes of meetings. It is to be kept at the Registered Office of the company or any such place approved by the Board.
• Any member of the company or shareholder may inspect the Minutes of an AGM after paying a certain fee.

 

Extension of Holding AGM

The Registrar of Companies (ROC) may extend the time before another AGM is held by three months. Companies can apply for an extension through an e-form GNL-1 while specifying the reasons for extension request and the period for which the extension has been requested. The ROC shall record the reasons behind allowing the extension.

Note: No extension is available for companies to hold the first annual general meeting.

Consequences and Penalty for Defaulters in Holding AGM

• In case a company fails to hold an AGM within the stipulated time or before the extension expires, the Tribunal may itself or on the application of any member or director order an AGM to be held under their guidance.
• In case the company still fails to hold a meeting as per the Tribunal’s directions, the company and every member that has been defaulting shall be punishable with a fine of up to INR 1 lakh.
• In case the default continues, a fine of INR 5,000 per day shall be charged until the default continues.

 

Conclusion

Conducting an annual general meeting is a significantly complex task if you do not adequately prepare beforehand. Considering the importance of issues that are discussed in such yearly meetings, it is imperative to make sure all aspects – from the notice for AGM and the details mentioned in the notice to the proceedings and recording of minutes – are carried out with utmost accuracy and attention.