Introduction:
According to Section 2(20) of the Companies Act “Company” means a company incorporated under Companies Act, 2013 or under any previous law. In common law, a company is a “legal person” or “legal entity”, as it is capable of surviving beyond the lives of its members.
Technically, a company means “a company, which is registered by its members and shareholders, whose act jointly known as the act of the company”. In order to act accordingly to the will of members to manage and administer the company, there requires a meeting to connect all members.
In order to facilitate the rights of the members over the company and other administrative decisions, Companies Act, 2013, provides a statutory provision regarding the conduct of Annual General Meeting, under Section 96 of the Act. So that, interests of shareholders and members in activities of company are protected.
Purpose
The main purpose of the Annual General Meeting (AGM) is to safeguard the interest of the shareholders of the company and to bring together the shareholders of the company, for the welfare of the company.
The ultimate purpose of the Annual general meeting is to have suggestions and make decisions for the improvement of the Company.
Statutory Provisions Of Annual General Meeting:
Section 96(1) of the Companies Act, 2013, it provides that every company with two or more persons as shareholders or members should conduct an annual general meeting every year, which is to be conducted within the elapse of fifteen months.
Section 96(1) also provides the power of the registrar in extending the period to conduct annual general meeting, not exceeding three months, only for any special reason.
Section 96 (1) also provides that, in the case of first annual general meeting of the company. It shall be held within a period of nine months from the date of closing of the first financial year of the company or within the period of six months, from the date of closing the financial year, so that it doesn’t elapse fifteen months rule.
Further, Section 96(1), also provides that, if a company holds its first annual general meeting aforesaid, it is not necessary to hold any annual general meeting in its year of incorporation.
Section 96 (2) of the Companies Act, 2013, provides that, every annual general meeting shall be conducted between 9 a.m. to 6 p.m. which is considered as business hours and provides the meeting a genuine stand of importance from the shareholder’s sight.
Moreover, Section 96(2) also insists that the annual general meeting shall be held on any day, other than the National Holiday, so that, it wouldn’t deprive the interest of the shareholders.
The above section is also very particular, about the location of the meeting, as it is to be recorded officially, it shall only be held in the registered office of the Company or at any place in that area, village, town or city, so that, it is convenient for all the shareholders to attend the meeting.
Power of Tribunal to Call for Annual General Meeting:
The act also provides power to call for annual general meeting under section 97(1) of the Companies Act 2013, where any default has been made by the company, in conducting the annual general meeting as per Section 96 of the Companies Act, 2013, followed by any member’s application to the tribunal to call for annual general meeting, the tribunal may order the company to conduct the Annual General Meeting, expeditiously, along with certain directions to the company in respect to the Annual General Meeting, which also includes the convenor of the meeting, shall be one member of the company who presents in the company in person or by proxy is deemed to constitute a meeting.
If the company made any default in conducting Annual General Meeting, under Section 96 and 97 of the Companies Act, 2013, the company, shall be punishable up to Rupees one lakh and up to five thousand rupees per day of exceeding delay till the Annual General Meeting, conducted by the Company, as provided under Section 99 of the Companies Act, 2013.
Procedure And Requisites –
Proper Authority:
The foremost essential requisite is, the meeting should be called by any Board of Directors or any Proper Authority, which may include any member mentioned in the Article of the Company or any Tribunal, which calls for a meeting if there is a default.
Notice of Meeting:
According to Section 101 (1) of the Companies Act, 2013, there must be proper notice given to the members. Any failure to give notice, even to anyone member, may invalidate the meeting. This places the duty of the Company to reaffirm, that, every important person of the Company, entitled to receive, such notice about the future meeting, shall receive before 21 days of the date of the Meeting. Further, the failure doesn’t amount to invalidate proceedings, as provided under Section 101(4) of the Act.
The every important persons of the Company, shall include
- Every member of the company, legal representative of any deceased member or the assignee of an insolvent member.
- The auditor or auditors of the company; and
- Every director of the company under Section 101(3) of the Act.
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Notice Content:
According to Section 101 (2), every notice of the meeting shall specify the place, date, day and the hour of the meeting and shall contain a statement of the business to be transacted at such meeting. The rule can be exempted in situation as held in Rao Bahadur MRS Ratnavelusami v MRS Manickavelu Chettiar. In this case, there was a failure of a Company to call for requisition, the requisitionists themselves sent a notice for a meeting to be held at the registered office of the Company. But the Managing Director locked the premises of the registered office. It was held that a meeting held at some other place and resolutions passed were valid.
According to Section 102 of the Act, the Notice shall contain the business transacted at the meeting, with an explanatory statement, which sets out the following material facts annexed to the meeting.
(a) Quorum: Quorum is also a requirement for a valid successful meeting, as mentioned under Section 103 of the Act. Quorum means the minimum number of members must be present at the meeting and the articles of the Company shall provide the number of members to constitute a Quorum.
(b) Chairman: A Chairman is essential for a successful meeting and he shall be appointed by the members of the company, as provided under Section 104 of the Act. The Chairman is a member of that Company, who was elected by other members of the Company by votes or shall be appointed by the Court, if necessary. A Chairman possesses the power of adjournment and postponement of annual general meetings.
Business Transaction in Annual General Meeting:
Two kinds of Business Transactions shall take place in Annual General Meetings, they are,
1. General Business: According to Section 102 (2) (a) of the Companies Act, 2013, Business at the General Meeting the business of considering accounts and directors’ report, the declaration of dividends, the appointment of directors and auditors and fixing their remuneration are regarded as General Business
2. Special Business: According to Section 102(2) (a) of the Companies Act, 2013, any other business at an annual meeting and all business at extraordinary general meetings are regarded as special business.
The business of an Annual General Meeting shall be done in form of resolutions passed at the meeting. This is carried through voting process in different kinds.
Report on Annual General Meeting:
According to Section 121 (1) of the Companies Act, 2013, every public company has to prepare in the prescribed manner a report on each Annual General Meeting including confirmation to the effect that the meeting was convened, held and conducted as per the provisions of the Acts and rules made under it.
According to Section 121(2) of the Act, the company shall file with the Registrar a copy of the report referred to in subsection (1) within thirty days of the conclusion of the annual general meeting with such fees as may be prescribed, or with such additional fees as may be prescribed, within the time as specified, under the Act.
According to Section 121(3) of the Act, if the company fails to file the report under sub-section (2) before the expiry of the period specified under Section 403 with additional fees, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.
CONCLUSION:
The Annual General Meeting thus provides an opportunity to Shareholders to come together once a year to review the activities of the Company. The importance of the meeting also includes the retirement of Directors and comes up with a re-election as provided under Section 149 of the Act. The Shareholders of the Company are empowered to ask any questions relating to accounts or affairs of the Company at the Annual General Meeting of the Company.
This article has been written by Subha Mohan S, 5th Year B.A.LL. B. (Hons.) VELS Institute of Science Technology and Advanced Studies (VISTAS)
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