Annual General Meeting

Annual General Meeting is a mandatory annual meeting of shareholders, which is required to be held by every company as per the prescribed law and guidelines in order to be a valid meeting.

What is Annual General Meeting?

Annual general meeting is a mandatory meeting of the shareholders with membership associations and companies which are conducted yearly.

The annual general meeting is held to discuss the affairs of the company and conduct the business.

There are two types of business that are transacted at the meeting; ordinary business and special business like the appointment of directors, dividend distribution, auditor’s appointment, etc.

Purpose of Annual General Meeting

Every company except One Person Company are under an obligation to conduct an annual general meeting in each year. Holding the annual general meetings is the requirement of law. Public company or private company whether limited by shares or not or limited by guarantee or not or unlimited company is required to hold an annual general meeting for the following purposes:

  • Annual general meetings are held to conduct the business on behalf of the company.
  • To take important decisions regarding the company.
  • To inform the shareholders about the previous and future activities of the company.
  • To give the overall status of the organisation by the chairman of the company.
  • To fulfil the statutory requirement of the company by conducting a meeting annually.
  • To approve the audited accounts of the company.

Necessities for a valid AGM

Notice

In order to be a valid annual general meeting, the notice should be given by the authorised person to every shareholder, director, auditor and debenture holder of the company. Although no specified form has been prescribed for notice, but the following points must be kept in mind while drafting a notice:

  • The notice must be in writing. Any oral intimation cannot consider as a notice.
  • The day, date, time and complete address of the venue of the meeting shall be specified in the notice.
  • Nature of the meeting must be clearly specified in the notice.
  • The notice must be served at least 21 clear days in advance of the meeting unless a longer notice period is not specified in the articles of the company.
  • Every notice must be accompanied by an explanatory statement.
  • A valid notice should state that any member entitled to attend and vote, can appoint another person as a proxy.

No business shall be transacted at a meeting other than specified in the notice. If any meeting held and the resolution passed at such meeting without a valid notice, will be invalid.

Quorum

For a valid general meeting and the business be validly transacted, a proper quorum must be present. The quorum must be present not only at the beginning but throughout the meeting. To constitute a quorum for a valid general meeting, it is necessary to personally present in the meeting.

The quorum for an annual general meeting shall be unless the articles of the company provided a larger number for a quorum:

Company

Number of members as on the date of the meeting

Quorum

Public company

Up to 1000 members

5 members

Public company

1001-5000 members

15 members

Public company

5001 or more members

30 members

Private company

-

2 members

If the quorum is not present at the meeting as per the law or as per articles of the company the meeting is not considered as a valid meeting. Consequently, the businesses transacted in such meeting become void.

Annual General Meeting Due Date

For every company registered with MCA except One Person Company, it is mandatory to hold an annual general meeting in every calendar year. The following table will explain you the related provisions regarding the frequency of the annual general meetings:

 

Time limit for holding first AGM

Within a period of 9 months from the date of  closing of the first financial year

Time limit for holding second and subsequent AGM

Within a period of 6 months from the closing of the financial year

Maximum interval between AGMs

A maximum gap of 15 months can be allowed between two consequent AGMs

Maximum extension allowed of the time limit

On request, ROC may extend the time period for holding the AGM for a maximum period of 3 months

 

Minutes of the meeting

Minutes are the official written recording of the events of the meeting and the business transacted at the meeting. A meeting deemed to be called and held if minutes kept in the prescribed manner. The following points must be kept in mind while maintaining the minutes:

  • Minutes must be maintained in accordance with the provisions of the act.
  • Separate minute book shall be maintained for each type of meeting.
  • If minutes are maintained in electronic form then it shall be maintained with a timestamp.
  • The minutes book must be maintained consistently, any change in the form of maintenance must be authorised by the board of directors.
  • If minutes of the meeting maintained in the loose leaf then that shall be bound periodically and pages should be consequently numbered.
  • Minute book must be kept at the registered office of the company.