General Meetings or meetings of the members/shareholders of a company may be of two types:
Annual General Meeting
What is an Annual General Meeting?
An Annual General Meeting (AGM) is a meeting of the members/shareholders that every company is mandatorily required to hold every financial year. An AGM is held every year to carry out certain annual appointments etc. and to inform the members of the previous and future activities of the company. It provides the shareholders and partners with an opportunity to receive copies of the company's accounts as well as reviewing fiscal information for the past year and enables them to know the directions the business will take in the future.
When is an Annual General Meeting held?
An AGM must be held by every type of company once a year and there shall not be a gap of more than 15 months between two AGMs. However, the first AGM of a company may be held at any time within 18 months from the date of its incorporation.
The AGM must be held on a working day during business hours. If any day is declared by the central government to be a public holiday after the issue of the notice convening such meeting, such a day will be treated as a working day.
Where is an Annual General Meeting held?
The AGM must be held 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.
What are the legal requirements for holding an Annual General Meeting?
A notice of at least 21 days before the meeting must be given to the members unless consent is accorded to a shorter notice by all the members entitled to vote thereat. The following documents needs to be sent along with the notice of the meeting:
- A copy of the annual accounts of the company;
- Director’s report on the position of the company for the year; and
- Auditor’s report on the annual accounts.
Companies having share capital should state in the notice that a member is entitled to attend and vote at the meeting and he is also entitled to appoint proxies in his absence. A proxy need not be a member of that company. A proxy form should be enclosed with the notice. The proxy forms are required to be submitted to the company at least 48 hours before the meeting.
A company may, by appropriate provisions in its articles, fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings.
What is the Quorum required for Annual General Meeting?
Unless the articles of the company provide for a larger number, the quorum for an AGM shall be as follows:
- In case of Public company: Minimum 5 members personally present; and
- In the case of any other company: Minimum 2 members must be personally present within half an hour from the time for holding the meeting.
What are the consequences of not holding an Annual General Meeting?
The Company Law Board (CLB) may, on the application of any member
- Call or direct the calling of a general meeting which shall be deemed to be an AGM of the company;
- Give such ancillary or consequential and fine which may extend to Rs. 5,000 for continuing default, a further fine of Rs. 250 per day.
What are the businesses carried out at an Annual General Meeting?
The Ordinary Business that is taken up at every AGM is as follows:
- Declaration of dividend.
- Consideration of annual accounts, director’s report and the auditor’s report.
- Appointment of and the fixing of the remuneration of the statutory auditors.
- Appointment of directors in the place of those retiring.
Any business apart from the above is referred to as a Special Business. In order to undertake any such matter in an AGM, prior notice is required to be served to the members. Therefore, the notice calling the AGM shall be accompanied by an explanatory statement for every special business proposed to be discussed at the meeting.