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What is an Annual General Meeting?

Introduction

An annually conducted meeting is what we name as an annual general meeting (AGM) that is mandatory to be conducted by every company during every calendar year. The importance of annual general meeting arises out of the nature of the business transacted at this meeting. There are two types of businesses that are discussed during the annual general meeting held, namely- Ordinary Business and Special Business.

Ordinary Business includes consideration of financial statements & consolidated financial statements, reports of the Board of Directors and the auditors, declaration of dividends, appointment of Directors in place of those retiring and approval of the appointment of the Auditors and fixing their remuneration.

Under Special Business, any other item of business is referred to as Special Business and may also be transacted at an Annual General Meeting.

What is annual general meeting in company law?

In order to offer the members of the company with an opportunity to discuss upon the affairs of the company, an annual general meeting is conducted. Also, to ensure that all the shareholders of the company are properly informed about the company’s operation and financial condition. The main objective of an annual general meeting is to allow an interaction between the management and the shareholders of the company so that easy processing can be done in a company.

Generally, there are two types of meetings conducted in a company one is annual general meeting on which we are discussing and second is extraordinary general meeting. Where there occurs a need for transacting Special or Urgent business that may arise in between two Annual General Meetings is termed as an “Extraordinary General meeting” (EGM). All kinds of special businesses are discussed in the meeting.

The provision of annual general meeting is applicable to all private and small companies except One Person Companies (OPC) and companies licensed under Section 8 of the Companies Act 2013. It is also applicable to Banking Companies, Insurance Companies, companies engaged in the generation or supply of electricity, companies governed by any special act, if incorporated under the Companies Act.

Due date for holding AGM

As per the provision mentioned under the Companies Act 2013, AGM is required to be conducted every year and not more than 15 months shall elapse between two annual general meetings. Moreover, an AGM shall be held within a period of six months from the date of closing of the financial year.

Time and place for AGM

All companies are legally bound to hold an annual general meeting which must be conducted during business hours (9a.m to 6 p.m) on any day that is not a National Holiday. And the place of AGM shall be either the registered office of the company or the same other places within the city, town or village in which the registered office of the company is situated.

*National Holiday means a day declared as National Holiday by the Central Government. And it includes Republic Day, Independence Day, Gandhi Jayanti and such other days as may be declared as National Holiday by the Central Government.

Annual General Meeting Notice

To conduct a meeting in a company, it must be primarily communicated to every shareholder and director of the company. And for the same, notice is to be prepared which should be in writing, though no form has been prescribed for AGM. Therefore, every time an AGM or any other meeting is conducted in a company, notice shall be prepared.

Persons entitled to AGM Notice

The notice for every annual general meeting should be given to –

  1. every member of the company, legal representative of any deceased member or the assignee of an insolvent member.
  2. an auditor or auditors of the company
  3. every director of the company

Consequences of holding AGM after due date

Where companies does not adhere to the provision stating the due date of holding an AGM are liable to pay fine under Section 99 of the Companies Act 2013. All the companies registered under the Companies Act are bound to hold an AGM whether or not their accounts are ready to be presented at the meeting. No matter what, the AGM is necessary to be conducted.

Section 99 of the Companies Act states the punishment for non-conducting an AGM. So, where a company does not hold a meeting then the company and every officer of the company who is in default shall be punishable with a fine which may extend to one lakh rupees and where it is a continuing default, a further fine shall be chargeable which may extend to five thousand rupees for every day during which such default continues.

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