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Annual General Meeting

Annual General Meeting

 

General Provisions- Sec 166-167

 

The Annual General Meeting must be held by every type of company whether  public or private, limited by shares or by guarantee, with or without share capital or unlimited company, once a year. Every company must in each year hold an annual general meeting. Not more than 15 months must elapse between two annual general meetings. However, a company may hold its first annual general meeting within 18 months from the date of its incorporation. In such a case, it need not hold any annual general meeting in the year of its incorporation as well as in the following year. Annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.

 

In the case there is any difficulty in holding any annual general meeting (except the first annual meeting), the Registrar may, for any special reasons shown, grant an extension of time for holding the meeting by a period not exceeding 3 months provided the application for the purpose is made before the due date of the annual general meeting. However, generally delay in the completion of the audit of the annual accounts of the company is not treated as "special reason" for granting extension of time for holding its annual general meeting. Generally, in such circumstances, an AGM is convened and held at the proper time. All matters other than the accounts are discussed. All other resolutions are passed and the meeting is adjourned to a later date for discussing the final accounts of the company. However, the adjourned meeting must be held before the last day of holding the AGM.

 

The AGM must be held on a working day during business hours at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. The Central Government may, however, exempt any class of companies from the above provisions. If any day declared by the Central government to be a public holiday after the issue of the notice convening such meeting, such a day will be treated as a working day.

 

A company may, by appropriate provisions in its articles of association, fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings.

 

 

Default in holding an annual general meeting, the following consequences will arise:-

 

1. Power of the Central Government- If default is made in holding an annual general meeting in accordance with section 166, the Central Government may, on an application by any member of the company call, or direct the calling of, a general meeting of the company and may give such ancillary or consequential directions as the Central Government thinks expedient in relation to the calling, holding and conducting of the meeting. Such a meeting so called/held will be deemed to be the AGM. The Company Law Board may direct that one member present in person or by proxy shall be deemed to constitute the meeting.

 

An application by a member of the company for this purpose must be made to the concerned Regional Bench of the Company Law Board by way of petition in Form No. 1 in Annexure II to the CLB Regulations with a fee of rupees fifty accompanied by (i) affidavit verifying the petition, (ii) bank draft for payment of application fee.

 

2. Penalty in case of default- Sec 168

If default is made in holding a meeting of the company in accordance with section 166, or in compliance with any directions of the Tribunal or the Central Government, u/s 167, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to.50,000 rupees. Continuing default, with a further fine that may extend to 2,500 rupees for every day during which such default continues.

 

 

Notice- Sec 171-172

 

A notice of at least 21 days before the meeting must be given to members unless consent is accorded to a shorter notice by members, holding not less than 95% of voting rights in the company. The notice must state that the meeting is an annual general meeting. The time, date and place of the meeting must be mentioned in the notice. Any accidental omission to give notice to, or the non-receipt of notice by, any member or other person to whom it should be given shall not invalidate the proceedings at the meeting.

 

Annexed statements with notice:

 

The notice of the meeting must be accompanied by a copy of the annual accounts of the company, director’s report on the position of the company for the year and auditor’s report on the accounts.

 

Business transacted deemed special:

In case of an annual general meeting, all business to be transacted at the meeting shall be deemed special, with the exemption of business that are deemed ordinary.

 

 

Quorum and Chairman- Sec 174-175

 

Unless the articles of the company provide for a large number, five members personally present in the case of public company, and two members personally present in the case of any other company, will be the quorum for a meeting of the company. Unless otherwise specifically provided in the articles of the company, if within half an hour from the time appointed for holding a meeting of a company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved. In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may determine. If at the adjourned meeting also, a quorum is not present within half an hour from the time appointed for holding the meeting, the members present shall be a quorum.

 

Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands. If a poll is demanded on the election of the chairman, it shall be taken forthwith in accordance with the provisions of this Act, the chairman elected on a show of hands exercising all the powers of the chairman. If some other person is elected chairman as a result of the poll, he shall be chairman for the rest of the meeting.

 

 

 Voting- Sec 176-185

 

At any AGM voting in regard of any resolution put to the vote of the meeting, be by show of hands, unless a poll is demanded u/s 179.

 

Chairman’s declaration of result of voting by show of hands is conclusive as regard to a resolution has or has not been carried, or has or has not been carried either unanimously or by a particular majority. An entry to that effect in the books containing the minutes of the proceedings of the company, shall be conclusive evidence of the fact.

 

Voting rights of members who have not paid calls or any amount payable that has not been paid, or on which the company has exercised right of lien, can be restricted. Any other restriction on the exercise of voting right will be void.

 

Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the chairman of the meeting of his own motion (i.e. sou motu) , or shall be ordered to be taken by him on a demand made by any person empowered in this behalf. The demand for a poll may be withdrawn at any time by the person or persons who made the demand.

 

A poll demanded on a question of adjournment be taken forthwith. A poll demanded on any other question (not being a question relating to the election of a chairman) shall be taken at such time not being later than forty-eight hours from the time when the demand was made. Where a poll is to be taken, the chairman of the meeting shall appoint two scrutinisers to scrutinise the votes given on the poll and to report the same to him. Of the two scrutinisers appointed, one shall always be a member present at the meeting, provided such member is available and willing to do the same.

 

On a poll taken at a meeting of a company, a member entitled to more than one vote, need not use all his votes or cast them in the same manner. He has a right to use his votes differently.

 

The chairman of the meeting shall have power to regulate the manner in which a poll will be taken. The result of the poll, be deemed to be the decision of the meeting on the resolution in regard of which the poll was taken.

 

 

Proxies – Sec 176

Companies having share capital should also state in the notice that a member is entitled to attend and vote at the meeting and is also entitled to appoint proxies in his absence. A proxy need not be a member of that company. A proxy form should be enclosed with the notice. The proxy forms are required to be submitted to the company at least 48 hours before the meeting.

 

 

Business to be Transacted at Annual General Meeting : Classification Sec 173

 

Business transacted deemed special-

 

In case of an annual general meeting, all business to be transacted at the meeting shall be deemed special, with the exemption of business relating to matters which are deemed ordinary. In every AGM, the following matters must be discussed and decided. Since such matters are discussed at every AGM, they are known as ordinary business

 

The following matters constitute ordinary business at an AGM :-

 

a.         Consideration of annual accounts, director’s report and the auditor’s report

b.         Declaration of dividend

c.         Appointment of directors in the place of those retiring

d.         Appointment of and the fixing of the remuneration of the statutory auditors.

 

In case any other business ( special business ) has to be discussed and decided upon, an explanatory statement of the special business must also accompany the notice calling the meeting. The notice must should also give the nature and extent of the interest of the directors or manager in the special business, as also the extent of the shareholding interest in the company of every such person. In case approval of any document has to be done by the members at the meeting, the notice must also state that the document would be available for inspection at the Registered Office of the company during the specified dates and timings.

 

 

Illustrative list of items of Business for the Agenda for the First Annual General Meeting:

 

1.         To note the certificate of incorporation of the company, issued by the registrar.

2.         To take note of the Memorandum and Articles of Association of the company as registered.

3.         To adopt Common Seal of the company.

4.         To note the situation of the registered office of the company.

5.         To confirm/note the appointment of first directors of the company.

6.         To read and record notices of disclosure of interest given by directors.

7.         To consider the Appointment of Additional Directors.

8.         To fix financial year of the company.

9.         To appoint bankers and open bank accounts of the company

10.       To authorise printing of share certificate.

11.       To authorise the issue of share certificates to subscribers of Memorandum and Articles of Association.

12.       To approve preliminary expenses and preliminary contracts.

 

 

 

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