Why is annual general meeting important

Annual General Meeting AGM is an important annual event where Shareholders get an opportunity to deliberate about the activities of the company. It provides members with an opportunity to collectively discuss the affairs of the company and to exercise their ultimate control over the management of the company. AGM is not only inevitable for Companies but also for Universities, Schools, Charities, Unions and other corporate and institutions owned and controlled by the stakeholders are also required to hold an AGM to discuss the future prospects of the concerned organization.

Every Company shall hold its first AGM within nine months from the date of closing of the first financial year of the Company and thereafter in each year within six months from the closure of the financial year, such that the time gap shall not be more than fifteen months between two successive AGMs.

Section 96 requires that the subsequent AGM should be held on the earliest of the following dates:. For detailed discussion on due date of AGM, please find link of our article:. If a company holds its first AGM as aforesaid, it shall not be necessary for the company to hold any AGM in the year of its incorporation. Hence, for a company incorporated on The annual general meeting in such case shall be required to be convened on or before The said meeting shall be treated as the annual general meeting for the year and However, for a company incorporated on Further, as per Regulation 44 5 of SEBI LODR Regulation, , the top listed entities by market capitalization, determined as on March 31 st of every financial year, shall hold their AGM within a period of five months from the date of closing of the financial year.

Therefore, in case of top listed Companies , the Due Date of AGM shall be within 15 months from the date of last AGM or 5 months from the closure of the financial year, whichever is earlier. The business hours are prescribed to mean the time period between 9 a. The venue of the meeting shall be either the registered office of the company or some other place within the city, town or village in which the registered office of the company is situated.

It is to be noted that the meeting needs to be called during business hours. It may extend and conclude beyond business hours. According to a clarification issued by circular no. Ministry further clarified that postal limit may be construed to mean city postal delivery area officially accepted by the postal authority. If you are unable to attend an AGM and you need to appoint a proxy, make sure it is someone you trust to make decisions. A proxy form needs to be completed and sent along with the AGM notice to the shareholders.

Make sure you are sticking to the agenda of the meeting and do not fade away with other unnecessary discussions that do not fulfill the objectives of the AGM. The proxy or remote meeting video conferencing should be encouraged and ensure this is communicated clearly via the notice issued. Given the rapidly evolving nature of the situation, the notice should also set out how the company will communicate further updates.

The shareholders may grant proxies to a small number of persons like Directors who can vote on their behalf at the meeting. The appointment of proxies should minimize the number of persons physically in attendance at the meeting. If video conferencing is not possible, shareholders can monitor the meeting progress by live streaming online. As there is still great uncertainty as to how long the Covid crisis will last, companies should continue to monitor the situation closely with a view to adopting policies and procedures to allow the AGM to take place rather than to adjourn it.

The Companies Act facilitates the participation of directors in meetings by telephone, video, or other electronic means. In the case of a Section 8 company, the Board decides the date, time and place of the AGM as per the directions given in a general meeting of the company. In the case of a private company, two members present at the meeting shall be the quorum for the AGM.

In the case of a public company, the quorum is:. In case the quorum for the meeting is not present within half an hour from the scheduled time, the meeting will be adjourned to the same day in the following week for the same time and at the same place.

The members including shareholders of the company are entitled to attend and vote at the AGM. Members can cast their votes by a physical ballot or postal ballot or through e-voting. Members can appoint proxies to attend an AGM and vote on their behalf. The proxy should be appointed in writing, and the proxy form should be signed by the member. In case the proxy is appointed by a corporate shareholder, the proxy form should be signed and sealed by an authorised signatory of the corporate.

The members can elect one among themselves as the chairman of the meeting. However, if the articles of association of the company provide for a chairman, such person shall chair the AGM of the company. Every company has to prepare the minutes of the AGM compulsorily.

The minutes of the AGM means the written record of the proceedings of the meeting. They state the events that took place and the resolutions passed in the AGM. Where there is no Company Secretary, any other person duly authorised by the Board or by the Chairman will record the proceedings. The Minutes book will be kept at the Registered Office of the company or at such other place approved by the Board.

Upon request, the company will give a copy of the minutes of the AGM to the member within seven days of request. If the minutes are not given by seven days of the request, the company shall be liable to a penalty of Rs.

The company should apply for an extension through e form GNL-1 specifying the reasons for the extension and the period for which company requires an extension. The RoC will record the reasons for giving the extension. However, no extension is available to hold the first annual general meeting.

In case a company fails to hold an AGM within the stipulated time or extension obtained by it, the Tribunal may itself or on an application made by any director or member order an AGM to be conducted as per its directions. If the company further defaults in holding a meeting in accordance with the directions of the Tribunal, the company and every officer of the company who commit the default shall be punishable with a fine of up to Rs 1 lakh.

In case of continuing default, a fine of Rs 5, per day is levied for each day during which the default continues.