Organising an annual general meeting without any chaos is quit a challenging task considering the importance of such meetings of board members along with the shareholders. They are the ones who are responsible for managing the business process and ensuring that the company has goals to achieve in the future.
What is an Annual General Meeting?
- An yearly meeting that involves the participation of an organization’s shareholders along with their leaders to talk about the work done round the year, make strategies for the future, select new directors, and resolve issues that have been hindering growth for the organization.
- According to the Companies Act 2013, in addition to other meetings throughout the entire year, an annual general meeting must be conducted with a maximum of 15-months of gap between two other meetings.
Under the section 96 of the Companies Act, 2013, the provisions for AGMs have been extensively stated.
| Note: In case of urgency between two Annual General Meetings, an Extraordinary General Meeting (EGM) may be scheduled after getting the approval from the Members and Shareholders. |
Chairman of AGM
The chairman of the AGM is elected amongst the members by voting through raising hands. The Chairman is usually set out by the articles of the company that mentions the name of the person who is going to chair the AGMs.
When to Host AGMs?
- As per the Companies Act, 2013, AGMs should take place each year with a specific time gap between two meetings.
- The first Annual General Meeting should be organised withing a period of nine months from the closing date of first financial year of any company.
- Thereafter, it is imperative to organise within a span of six months from the end of financial year.
AGM Notice
The AGM Notice should be given 21 days in advance. The notice should comprise of place, day, date, and time at which the meeting is scheduled. The agendas and issues should also be explicitly mentioned in the notice.
| 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 taken into account that AGMs should not be conducted on National Holidays and should take place during business hours, between 9am to 6pm.
The AGM notice shall be sent to the following:
- All members of the company that also comprise of assignees of insolvent members and representatives of deceased members.
- Company’s statutory auditor(s).
- All the Directors of the company.
The AGM notice is sent via speed post or registered post at the address registered with the company, in their hands or online through emails shared with the company to the above-mentioned individuals.
AGM Quorum
Private Limited Company
- Attendance of two members at the meeting.
Public Limited Company
- In case the members are under 5000 but above 1000, fifteen members must be present for the meeting.
- In case the total members are within 1000, a minimum of five members must be there at the time of the meeting.
- Minimum thirty members should be there in the meeting if the company has more than 5000 members.
| 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
There is no fixed place to conduct an AGM. If the members are physically present at a particular place at the same time, then the AGM can be conducted at that place itself.
Video Conferencing/Other Audio-Visual Mode
In some cases, AGMs can also be organised through audio-visual means or video conferencing. It should be ensured that the platform used for the meeting should involve two-way communication.
Business Conducted in AGMs
The ordinary businesses of an AGM are:
- Discussion of financial statements and reports of the auditors and directors of the company.
- Declaration of dividends.
- Appointment of new Directors.
- Appointing as well as determining the payment of the auditors.
| Note: Any business conducted apart from the ones mentioned above is known as ‘Special Business’. |
Minutes of AGM
Every company must prepare minutes of AGM. It mentions the past events and the resolutions passed in the AGM.
- It is a written sequential record of the meeting proceedings.
- The Minutes Book is created digitally or in physical form to record minutes of meetings. The minutes must be documented, signed and entered in the Minutes Book in a span of 30 days of the AGM.
- This book is kept at the registered office of the company or any other place that is approved by the Board.
Extension of Holding AGM
The time of another AGM can be extended by the Registrar of Companies (ROC) by three months. This can be done by applying for an extension through an e-form GNL-1 by mentioning the reasons for extension request and the time period of extension that is requested. The reasons are recorded by the ROC for allowing the extension.
| Note: No extension is available for companies to hold the first annual general meeting. |
Repercussions for Defaulters in Holding AGM
- In case the company is still unable to organise a meeting as per the Tribunal’s directions, the company and every member that are defaulters shall be penalised with a fine of up to 1 lakh.
Conclusion
Organising an annual general meeting is tedious task if the plan is not made beforehand. Considering the need for discussion issues in such yearly meetings it is crucial that all the major points mentioned in the AGM notice and recording of Minutes are taken care with utmost attention.
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