WHAT IS AN ANNUAL GENERAL MEETING (AGM)?
As the name suggests, an Annual General Meeting is a yearly meeting of the company in which annual financial reports of the company are presented. Section 96 of the Companies Act, of 2013 deals with the provisions related to the Annual General Meeting. It is attended by the shareholder, directors, and auditors of the company.
WHEN AN ANNUAL GENERAL MEETING (AGM) BE HELD?
The Board of Directors has to hold an Annual General Meeting within fifteen months from the date of the last AGM or within six months from the end of the Financial Year (FY), whichever is earlier.
A company that has just incorporated and has to hold its first AGM, such a company has to hold an AGM within 9 months from the end of the Financial Year (FY).
WHAT ARE THE CONSEQUENCES OF NOT HOLDING AN AGM WITHIN THE VALID TIME FRAME
If an AGM is not held within the valid period, then the company may apply for an extension of three months to the Registrar of Companies. The company has to give special reasons for not holding the meeting within the valid time frame. Special reasons can be a Tsunami, flood, earthquake, fire, war, an act of God, etc.
However, a company that has just incorporated and has not held its first AGM, would not be granted any further extension.
DAY ON WHICH AN AGM CAN BE HELD
An AGM can be held on any day except on a National Holiday. Republic Day (26th January), Independence Day (15th August), and Gandhi Jayanti (2nd October) are declared National Holidays in India as prescribed by Secretarial Standards – 2 issued by the Institute of Company Secretaries of India (ICSI).
However, Section 8 companies that are formed for charitable purposes are exempted from this provision vide notification GSR 466 (E), dated 5th June 2015 by the Ministry of Corporate Affairs.
TIME DURING WHICH AN AGM CAN BE HELD
An Annual General Meeting can be called only during business hours of the company. The prescribed business hours in India are from 9 A.M. to 6 P.M. It must be noted that the AGM must be called during business hours but it may extend and conclude beyond the business hours. Section 8 companies are exempted from complying with this provision, they can hold an AGM at any time of the day.
PLACE AT WHICH AN AGM CAN BE HELD
The company is required to hold the Annual General Meeting at its Registered Office. However, if due to some reasons the AGM cannot be held at the Registered Office, then the company can hold the AGM at any other place within the same city, town, or village where the Registered Office is situated.
The Ministry of Corporate Affairs has exempted Government companies and Section 8 companies from complying with this provision. Such companies can hold the AGM at any place they wish.
PUNISHMENT FOR ANY DEFAULT IN HOLDING AN AGM
The punishment for default in complying with Section 96 is stipulated in Section 99 of the Companies Act, 2013. If there is any default in holding the AGM, then the officer of the company in default shall be punished with a Fine which may extend to INR 1,00,000, and a further fine which may extend to INR 5,000 for each day during which the default continues.
REMEDY FOR THE SHAREHOLDERS AGAINST THE COMPANY FOR NOT HOLDING AN AGM
Suppose the company makes any default in holding an AGM. In that case, any aggrieved shareholder may apply to the National Company Law Tribunal (NCLT) to direct the company to hold the AGM. Then the NCLT can pass an order directing the company to hold the Annual General Meeting.
A company, whether new or old, compulsorily has to hold an Annual General Meeting every year as it is the right of the shareholders of the company. If any default is made by any officer of the company, he/she will be punished for that. There are certain exemptions provided for Section 8 and Government companies concerning the day, time, and place of the AGM. Not everything is provided in the Companies Act, 2013, other provisions have been brought through amendments, notifications, and secretarial standards, thus they have to be read with Section 96 of the Companies Act, 2013.