GENERAL MEETING: A general meeting is a formal gathering of a company's shareholders or members to discuss and make decisions on important matters related to the organization. These meetings provide a platform for stakeholders to express their views, vote on resolutions, and participate in the company's decision-making process.
There are two types of general meetings:
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Annual General Meeting
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Extraordinary General Meeting
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A shareholder’s meeting that is held once a year, as per the rules and provisions laid down under Section 96 of the Companies Act, 2013, is known as the Annual General Meeting (AGM).
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An additional shareholder’s meeting, other than the Annual General Meeting, is referred to as an Extraordinary General Meeting (EGM). This meeting is convened to discuss special business matters, in accordance with the rules and provisions laid down under Section 100 of the Companies Act, 2013.
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Well, here's a discussion about the AGM:
Annual General Meeting: An annual general meeting is a yearly gathering of a company's shareholders or members, mandated by the Companies Act, 2013, in India. The primary purpose of an AGM is to provide a platform for shareholders to review and discuss the company's financial performance and other critical matters.
The annual general meeting is conducted between the management of the company and its shareholders on an annual basis. Usually, the board of directors and shareholders and investors meet, and the company's annual report containing the records of performance, strategies, and financial reports is presented to the shareholders and investors. The company's performance is analyzed and discussed in the meeting. An Annual General Meeting provides the shareholders with an opportunity to seek answers for unsatisfactory performance. An annual general meeting is important, as it promotes transparency between the company and its shareholders and investors. Additionally. Shareholders with voting rights vote on the company's current issues and decisions.
Main Objective: To Discuss Ordinary Business
- Financial Statement
- Declaration of Dividend
- Appointment Directors
- Appointment Auditors
In all the ordinary business there is no need for an explanatory statement.
Additionally, we can also discuss special business.
Special business can also be discussed and approved in the annual general meeting, like changes in authorized capital, etc. For such a special business, an explanatory statement under section 102 of the Companies Act Act 2013 must be attached to the notice of the company, stating the detailed overview of the speciality.
Holding an Annual General Meeting (AGM) each year is a mandatory requirement for all companies except a One Person Company (OPC).
Exemptions: Section 122 of the Companies Act 2013 gives exemptions for One Person Company (OPC).
First Annual General Meeting:
- Must be held within 9 months from the end of the first financial year.
- If the first AGM is held within this period, there is no requirement to hold another AGM in the year of incorporation.
- Must be held within 6 months from the end of the financial year, which is 30th September of every financial year.
- The interval between two AGMs must not exceed 15 months, meaningng that the time gap between two AGMs should not exceed 15 months.
Conducting the Annual General Meeting:
- AGMs must be conducted during business hours, i.e., between 9 a.m. and 6 p.m.
- AGMs cannot be held on National holidays, Sundays
Venue:
- General Companies: AGMs can be held at the registered office of the company or another location within the same city, town, or village where the registered office is situated.
- Unlisted Companies: AGMs may be held at any location in India, provided all members give their written or electronic consent in advance.
The ANNUAL GENERAL MEETING under the Companies Act 2013 is here with awith awith a step-by-step guide:
Notice of Meeting: Notice for the annual general meeting should be served with the clear 21 days to all the shareholders, directors, and auditors of the company. The notice should have the following information:
Preparation of Agenda: Common agenda items include:
- Approval of financial statements.
- Declaration of dividends.
- Appointment or reappointment of directors and auditors.
- Discussion of the director's and auditor's reports.
Quorum: Ensure the minimum required quorum is present. The quorum depends on the number of members in the company. In a private limited company, the required quorum is two members personally present; on the other hand, for a public company, the required quorum depends on the total number of members present in the company.
For Public company:
- If a company has not more than 1000 members, then the minimum quorum will be 5 members present personally
- If a company has more than 1000 but less than 5000 members, then the minimum quorum will be 15 members present personally.
- If the company has 5000 or more members, then the minimum quorum will be 30 members present personally.
If the quorum is not present within half an hour from the commencement of the meeting, then that meeting is automatically adjourned to next week at the same time and at the same place, and if such adjourned day is a holiday, then the meeting is adjourned to the next day of such holiday.
Chairperson: The meeting is presided over by the chairperson of the board or another appointed individual.
Voting: Resolutions are passed through voting, which can be done by show of hands, electronically, or by poll.
Minutes of Meeting: Record the minutes of the meeting, which should be signed by the chairperson and maintained as part of the company’s records.
Filing with Registrar: Certain resolutions passed in the AGM may need to be filed with the Registrar of Companies (ROC).
The companies must follow the Secretarial Standard 2 for calling the general meetings.