Definition: Annual General Meeting, shortly referred to as AGM, is the compulsory yearly formal get together of the company’s shareholders held to transact lawful business. It is a significant event organized by the company every year to discuss the activities, strategies and performance with its shareholders.
As per the Companies Act, 2013 every company whether the public limited company or private limited company (except one person company) is mandated to organize an AGM.
Further, it is provided that the company’s board should hold a meeting or authorize the holding of the meeting of its members, to transact ordinary business and special business (if any).
Further, when the Board does not organize the general meeting in any financial year, the interested member has the right to apply the relevant authority for the same and the authority then directs the convening of AGM.
Legal Rules for Convening AGM
There are certain legal rules which are to be complied with, discussed as under:
- It has to be held once in each calendar year, i.e. from January to December.
- The gap between the two Annual General Meetings should not exceed fifteen months.
- The body corporate needs to mention (AGM), in the notice calling it.
- The first annual general meeting of the body corporate is required to be convened within nine months from the completion of the first financial year. Thus in the year in which the company gets incorporation, it is not obligatory to organize the meeting in that year.
- The subsequent annual general meeting of the body corporate should be organized within six months from the date of completion of the concerned financial year.
- The Registrar of Companies (RoC) has the power to grant three months extension, to convene the annual general meeting to any body corporate, for special reasons, other than first AGM of the company.
- A copy of the annual return is required to be filed with the registrar within 60 days from the date on which annual general meeting is held.
Date, Time and Venue for convening AGM
The AGM can be convened during the business hours, i.e. from 9:00 AM to 6:00 PM on any day except National Holiday. The meeting can be organized at the company’s registered office (head office), or at any other place, in the city in which the registered office is located.
Further, AGM of an unlisted company can be organized at any place within the country, if all the members give their consent in writing or online, beforehand.
When we talk about Government company, it is the Central Government which approves any place other than its registered office, for holding the meeting.
Transaction of Business
- Ordinary Business: All the businesses given below, transacted at the AGM are regarded as ordinary business.
- Consideration of financial statement and report
- Declaration of dividend
- Appointment of directors in place of the retiring ones.
- Appointment of auditors and Fixing their remuneration
- Special Business: Any business other than those mentioned above are said to be special business.
Holding of Valid AGM
- Calling of Meeting: It is required that the meeting has to be called by the relevant authority. Moreover, proper notice must be given in a specified manner.
- Constituting the meeting: Adequate quorum is to be present at the general meeting. And the chairman should preside the meeting.
- Carrying out the meeting: It is necessary that the business must be lawfully transacted. This means that the resolutions (ordinary or special) is required to move and pass properly. The voting at the meeting is to be done by a show of hands or on the poll. Further, the preparation of the minutes of the meeting is to be done properly.
In case if the AGM of the body corporate for any financial year has not been convened, the company’s financial statement and the documents needed to be attached, duly signed along with the statement of facts and reasons for not organizing the AGM is required to be submitted to the Registrar of Companies.
Further, the filing is to be done within sixty days of the last date prior to which the meeting has to be convened, along with the fees or additional fees stipulated by the authority in this regard.