Introduction:

Under the Companies Act 2013, an Annual General Meeting is a key compliance obligation for businesses. It serves as a formal forum where the board of directors and shareholders can debate and make decisions on significant issues related to the governance, financials, and performance of the business. AGM encourages transparency, accountability, and shareholder democracy in business operations.

The company should follow all the applicable sections, provisions, Rules, and Secretarial Standards (SS-2) while conducting an AGM.

Applicability of AGM:

The Companies Act 2013, section 96 mandates that an AGM be held for;

  1. All companies other than one-person companies (OPC).
  2. Primarily, the private limited and public limited companies must comply, unless specifically exempted.
  3. AGMs were not required for the One Person Companies or the government agencies.

FIRST AGM

For businesses that have just been started;

  1. The first AGM should be held within 9 months of the end of the first financial year.
  2. If the first meeting is held within the time period, then the company does not need to have another AGM in the same year.

Example: If a company is incorporated on 1st January 2024 and its financial year ends on 31st March 2025, it can hold its first AGM anytime up to 31st December 2025.

Subsequent AGM:

It means that for every financial year after the first;

  1. The Company should convene an AGM once in every calendar year.
  2. The gap between two AGMs should not exceed more than 15 months.
  3. Within six months of the financial year's conclusion, the AGM should take place.

Example: If a company’s financial year ends on 31st March 2025, the AGM must be held by 30th September 2025.

Extension of AGM:

If a company is not able to hold the subsequent AGM within the stipulated time period, then such a company can request for extension of AGM (max for 3 months from the due date) before the due date of AGM. The company has to file the respective forms along with fees with a genuine cause for delay in AGM.

Note:

Extension is not allowed for the 1st AGM.

When can it be held?

AGM should be held on business days and in business hours (between 9 a.m. and 6 p.m.), but cannot be held on a National Holiday.

Notice of AGM:

The Company must send a 21-day clear notice to;

  1. All shareholders
  2. Directors
  3. Auditors
  4. The Notice Should Contain the following things;
  5. Date, time, and venue (or online meeting link)
  6. Agenda of the meeting
  7. Proxy form
  8. Explanatory statements for special business

The Notice can be sent via;

  1. Hand delivery
  2. Post
  3. Electronic mode (email)

Notice must carry the Date, Place, Time, and location of AGM.

Business Transacted at AGM:

Main matters were discussed or approved during the meetings.

  1. Acceptance of Financial Statement
  2. A dividend declaration
  3. Appointment or reappointment of directors
  4. Appointment or reappointment of auditors and fixing their remuneration.

Any other unique business

  1. Depending on the decision nature the resolution might be passed with an ordinary or special resolution.

Method of Holding the AGM:

AGMs can be held in;

  1. Physically at the registered office or any other place which is approved by shareholders.
  2. Virtually via video conferencing or other visual means, as these were allowed under the MCA circulars in the wake of post-COVID-19.
  3. Hybrid mode, which comprises online as well as in-person involvement.
  4. By using any method, companies want every shareholder can participate and vote effectively.

Filling with ROC:

Certain resolutions passed at the AGM must be filed with the Registrar of Companies by using prescribed forms.

  1. MGT-7: Annual return within 60 days of AGM
  2. AOC-4: Financial Statements within 30 days of AGM
  3. ADT-1: Auditor appointment within 15 days of AGM

Consequences of Non-Compliance:

There are some penalty provisions for not holding the AGM:

  1. The company and its officers may be fined up to 100000 rupees, and under section 99 further fine of 5000 for continuing default.
  2. In this case, Shareholders may lose the right to receive the dividends or raise grievances in formal forums if AGMs are not held.

Conclusion:

The Annual General Meeting is an essential governance tool that guarantees transparency and protects the shareholders' interests. It not only fulfills statutory obligations but also strengthens the trust between the company and its investors.