Navigating Corporate Decision-Making: AGM/EGM Provisions Under the Companies Act, 2013

Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) are a way of communication and decision-making between a company’s shareholders and their leadership. Make sure that the business operations coordinate with the shareholder’s interests. In this article, we explore the AGM/ EGM provisions under the Companies Act, 2013.  In this article we’ll discuss about corporate Decision-Making: AGM/EGM.

Table of Content

Short Note on Annual General Meeting

An Annual General Meeting is a compulsory yearly gathering of shareholders of the Company. The main motive of the AGM is to give a shareholder’s forum. It plays a crucial role in corporate governance, giving shareholders to raise their concerns, be involved in the management company, and engage their voting rights. These meetings will ensure accountability and transparency in the company, developing trust and practising responsible business within a company. Corporate Decision-Making: AGM/EGM.

The main motive of an AGM is to permit shareholders to appoint and reappoint auditors, establish dividend distribution policies, approve the financial statements of the company, and discuss the significant matters going on in the company. Corporate Decision-Making: AGM/EGM.

AGM is held in a year, mainly within a particular period as the company’s financial year. The first AGM will be held within 9 months of the FY ending, and other meetings can be held within six months of the FY ending. Corporate Decision-Making: AGM/EGM.

Brief about Extraordinary General Meeting

An Extraordinary General Meeting (EGM) is a special kind of meeting held by a company outside of its regular Annual General Meeting. In these meetings, members of the company can address anything about the company. Such as sensitive matters, and also make decisions apart from the regular schedule of the AGM. They play a significant role by making sure that the company can choose and react to changing situations, and any issues that may arise in future. 

The main purpose of the EGMs is for particulars and significant cases, which cannot be waited till the next AGM. These cases mainly involve important decisions or amendments in the performances of the company, its governance or its structure. 

The EGM is meant for the specific resolutions or cases that can involve changes in the company’s capital, articles of association, mergers & acquisitions, and other immediate attention to the company. Resolutions are passed can be ordinary or special, based on the matter discussed. 

Annual General Meeting provisions under the Companies Act, 2013

There are certain provisions for the Annual General Meeting Companies Act, 2013. Here are the legal provisions regarding Annual general meeting mentioned herein: 

• Frequency of AGM: In each company, an AGM meeting is held every year, whether it is private or public. 
• Notice Period: A notice of Annual General meeting of private company issued at least 21 days must be given to shareholders before the AGM. However, certain special resolutions may require a longer notice period.
• Business at AGM: Various matters are transacted at the AGM, including but not limited to:
• Approval of the financial statements, including the balance sheet and profit and loss account.
• Declaration of dividends.
• Appointment or reappointment of auditors.
• Election of directors.
• Consideration of shareholder proposals and resolutions.
• Quorum: The quorum for an AGM is the minimum number of members (shareholders) required to be present to conduct the meeting. The quorum requirements depend on the type of company.
• Proxy Voting: Shareholders who cannot attend the AGM in person have the option to appoint a proxy to attend and vote on their behalf. Proxy forms must be submitted within the stipulated time frame.
• Electronic Voting: The Companies Act, 2013 allows for electronic voting at AGMs, especially for special resolutions. This facilitates remote participation by shareholders.
• Resolutions: Resolutions proposed and passed at AGMs can be either ordinary or special. Special resolutions require a higher majority for approval compared to ordinary resolutions.
• Minutes: Accurate minutes of the proceedings of the AGM must be kept and maintained by the company. These minutes should record discussions, decisions, and resolutions passed during the meeting.
• Requirements of filing: After the meeting, the company needs to file several documents like annual returns, financial statements, and resolutions with the Registrar of Companies.

Extraordinary General Meeting provisions under the Companies Act, 2013

Here are key provisions related to EGMs under the Companies Act, 2013:

• Frequency and Purpose of EGMs: EGMs can be convened at any time during the year, whenever there is a need to address specific and important matters. EGMs are typically called to discuss and pass specific resolutions that are not part of the routine business conducted at AGMs.
• Notice Period: In EGM notice period is generally shorter than in AGM as depends on the nature of the business. The notice must mention the venue, time and date of the meeting and give details regarding the resolutions to be taken.
• Business at EGMs: EGMs are meant to discuss and pass specific resolutions or matters that are not part of the standard AGM agenda. This can include changes to the company’s articles of association, capital reorganization, mergers, acquisitions, and other significant decisions. The notice for an EGM must specify the exact resolutions or matters to be considered.
• Quorum: The quorum for an EGM is usually determined by the company’s articles of association. If the articles are silent on this matter, the default quorum is generally the same as that for an AGM.
• Proxy Voting: Shareholders who cannot attend an EGM in person have the option to appoint a proxy to attend and vote on their behalf. Proxy lists must be submitted within the prescribed period.
• Electronic Voting: The Companies Act, 2013 allows for electronic voting at EGMs, especially for special resolutions. This enables remote participation by shareholders.
• Resolutions: The resolutions passed at an EGM can be either ordinary or special, depending on the nature of the matter being discussed. Special resolutions require a higher majority for approval compared to ordinary resolutions.
• Minutes: Accurate minutes of the proceedings of the EGM must be kept and maintained by the company. These minutes should record discussions, decisions, and resolutions passed during the meeting.
• Filing Requirements: After an EGM, the company is required to file various documents, including resolutions, with the Registrar of Companies. The filings should reflect the outcomes of the meeting.

Final Words

Through the article, it can be concluded that both meetings provide a platform for shareholders to be actively involved in the company’s business, exercise their voting rights, and raise their concerns towards the company. On the other hand, provisions have been given for the annual general meeting Companies Act, 2013, emphasising the significance of due procedure, the need for the quorum, and notice periods.