Annual General Meeting (AGM) Under Companies Act, 2013

The Annual General Meeting (AGM) is held to facilitate cooperation between the management and the shareholders of the company. It is compulsory under the Companies Act, 2013 to hold an annual general meeting (AGM) to discuss the annual results, the appointment of an auditor, and other discussions. The Company must follow the procedures under the Companies Act, 2013 to conduct an AGM. This article provides an insight into the Annual General Meeting (AGM) under the Companies Act, 2013. 

Companies to hold an AGM

All companies except one person company (OPC) must hold an AGM at the end of each financial year. The company must hold its AGM within six months from the end of the financial year.

However, in the case of the first general meeting of the year, the company may hold an AGM less than nine months from the end of the first financial year. In such cases where the first AGM has already been held, there is no need to hold any AGM in the year of establishment. It is important to note that the time gap between the two annual general meetings should not be more than 15 months.

Procedure for an AGM

The company must give a clear 21-day notice to its members for convening an AGM. The notice must state the place, date of the meeting, and the time the meeting is scheduled. The notice must also specify the business to be conducted at the AGM. The company must send the AGM notice to:

• All members of the company include their legal representative of the deceased member and assignee of an insolvent member.
• The company’s official auditor.
• All directors of the company.

The notice may be given in writing by express mail or by registered mail or in electronic mode. The notice must be sent to the member’s address according to company records.

In the case of electronic communication, notice must be sent to the member’s email address according to company records. The notification can be written via email or email attachment. Notice of AGM should be posted on the company website or any other website as the government may specify. An AGM may be convened during the short notice period rather than 21 days if at least 95% of the members have the right to vote at a meeting in favor of the short notice. Permission can be granted in writing or electronic mode.

What is the AGM Agenda?

Topics discussed or businesses at the AGM contain:

• Consideration and acceptance of audited financial statements.
• Review the Director’s and auditor’s reports.
• Dividend declaration to shareholders.
• Appointment of directors to replace retired directors.
• Auditors’ appointment and remuneration determination.
• Apart from the above common business, any other business can be operated as a specialized corporate business.

The general business of the company will be passed by a general decision when the votes are cast in favor of more votes against the decision.

However, in the event of a special business, the decision may be passed as a general decision or a special decision, depending on the applicable legal provisions. A special resolution requires at least 75% of the votes in favor of the decision.

The AGM should be held during business hours between 9 a.m. and 6 p.m. only. The meeting can be held on any day, other than a national holiday, including holidays declared by the Central Government. The meeting may be held at any place within the limits of the city or town or village where the registered office is located.

A state-owned company may also hold its AGM at any other location as the Central Government may approve. An unlisted company can hold an AGM anywhere in India after obtaining approval from its members in writing or electronic mode. In the case of a Section 8 company, the Board determines the date, time, and place of the AGM by the instructions given at the company’s general meeting.

Quorum of AGM 

In the case of a private company, the AGM quorum comprises: 

• Two members at the meeting to be present. 

In the case of a public company, the AGM quorum says: 

• Five members are present at a meeting if the number of members is within one thousand. 
• Fifteen members are present at the meeting when the number of members exceeds 1,000 but only between 5,000. 
• Thirty members are present at the meeting when the number of members exceeds 5,000. 

If the meeting number is not within half an hour from the scheduled time, the meeting will be postponed to the same day of the following week at the same time and place.

AGM Minutes 

Minutes means an official written record, physical or electronic form of the proceedings of a Meeting. Minutes Book means a book kept in electronic or physical format for recording Minutes. 

The minutes of the AGM must be prepared by every company compulsory. Minutes of the AGM constitute a written record of the proceedings of the consecutive meeting and resolutions passed at the AGM. The Company Secretary or any other person duly authorized by the Board or Chairman shall record the proceedings of the AGM. Minutes must be initiated and signed and entered in the minutes register within 30 days from the AGM. The Minutes Book will be kept at the Company Registration Office or another place approved by the Board. Any member/shareholder of the company, if requested to do so by the company, may inspect the AGM Minute Book at a fixed fee.

Consequences and failure to hold an AGM 

If a company fails to hold an AGM within a specified period or extension received by it, the Tribunal itself or at the request of any director or member shall direct the AGM to comply with its directives. If a company continues to fail to hold a meeting following Tribunal directives, each company and every company official who commits an offense will be fined up to Rs 1 lakh. In the case of a default, a fine of Rs 5,000 per day is charged each day where the default continues.

Final words

The Registrar of Companies may extend the current period of holding the AGM by three months. The company must apply for an extension on the form GNL-1 stating the reasons for the expansion and when the company needs to be expanded. The RoC will record the reasons for the extension. However, there is no extension of time available to hold the first annual convention.

The annual general meeting is mandatory compliance with Indian companies. In addition, companies that do not hold or maintain an AGM are liable for legal action against them. In addition, at least five members of the Public Limited Company and two members of the Private Limited Company must personally attend the AGM. Also, the Companies Act specifies the time to hold an AGM during working hours and on a day other than a National Holiday.