Annual general Meeting Under Companies Act 2013

Nov 18, 2019

Annual General Meetings [Section 96 of Companies Act 2013]:

Annual General Meeting (AGM) is a shareholders meeting.

Members (shareholders) of the company get an opportunity to discuss the activities of the company in AGM

Section 96(1) of companies Act 2013 deals with AGM. Every company, other than a One Person Company (OPC) is required to hold an AGM every year.

Following are the extracts of the provisions regarding holding of an AGM:

Holding of AGM:

  1. Annual general meeting (AGM) should be held once each year.
  2. First AGM of the company should be held within a period of 9 months from the date of closing of the first financial year of the company.
  3. Subsequent AGM should be held within a period of 6 months from the date of closing of financial year.
  4. The gap between two AGM should not exceed 15 months.
  5. In case, company could not take AGM within specified period of time, the registrar may, for any special reason, extend the time within which any Annual General Meeting (AGM) shall be held. Such extension period cannot exceed 3 months.

Note 1: it shall not be necessary for the company to hold any Annual General Meeting (AGM) in the year of its incorporation.

Note 2: No extension of time shall be granted by the Registrar for the holding the first AGM.

Note 3. Clarification by Ministry of Corporate Affairs (MCA) has been given that delay in audit of the annual accounts of the company does not ordinarily constitute a ‘special reason’ for extension of time for holding its annual general meeting.

Time & place for holding an AGM [Section 96(2)]:

  1. Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m.
  2. AGM can be called on any day that is not a National Holiday.
  3. AGM 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:

Note: However, AGM of an unlisted company may be held at any place in India if consent is given mode by all the members in advance in writing or by electronic.

Since AGM can be called on any day, it may also be held on week off days (Saturday or Sunday) as week off day is not a national holiday.

The Central Government is empowered to exempt any company from these provisions [Section 96 (2)], subject to such conditions as it may impose.

Example: If the major shareholders of a private company are Non indian residents and they wish to hold AGM in their country, they may apply to Central Government for relaxation of provision of 96 of companies Act 2013. The Central Government may grant them permission.

Consequences of default in holding AGM:

  1. Power of Tribunal to call AGM [Section 97]:

If any default is made in holding the annual general meeting of a company, on the application of any member, the Tribunal may call or direct the calling of, an AGM of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:

such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

  1. Punishment for not holding AGM [Section 99]:

If any default is made in holding AGM of the company the company and every officer of the company who is in default shall be punishable with fine which may extend to ` 1 lakh and in case of continuing default, with a further fine which may extend to ` 5,000 for each day during which such default continues

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