When is the AGM of a company held?

We have all seen numerous emails of the intimation of AGMs held by companies where we are shareholders. Such emails are often ignored as nothing but mere intimation but these emails notify us of the AGM that is scheduled to be held and the agenda that is up for discussion and voting. Every shareholder has a right to vote in these AGMs and provide their input. So what is this AGM and why it is important for the company and the shareholders alike? 

Given below is the meaning of AGMs and related details of the same.

What are AGMs?

AGM is the abbreviation used for the Annual General Meeting of a company whether public or private company. It is mandatory yearly compliance that has to be met by the companies registered under the Companies Act, 2013, and is a meeting between the shareholders and the management of the company. A company is required to follow all the provisions relating to conducting the AGM as well as related matters like duly sending the notice for the meeting, the minutes of the meeting, matters resolved under the meeting, etc.

The provisions of section 96 of the Companies Act, 2013, state that all companies except OPC (One Person Company) are required to hold an AGM once a year. When the AGM is to be held for the first time in any company, it has to be held within 9 months from the end of the first financial year. Another condition to be met for AGMS is that the AGM has to be held within 6 months of the completion of the financial year. The maximum gap between two subsequent AGMs, however, cannot exceed 15 months. 

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When is the notice for AGMs issued?

The notice of the AGM is the first clear step in initiating the meeting. As per the provisions of the Act, the notice for the AGM has to be sent to all the eligible members 21 days prior to the meeting. This notice shall have all the details of the date, day, time of the AGM, the venue of the AGM, and the agenda to be discussed and resolved. This notice is to be sent to all the following parties,

• The directors of the company
• All the members of the company (including the legal representatives of the deceased members and the assignee of the insolvent member)
• The statutory auditors of the company.

This notice can be sent through either of the following ways to the registered address (or email id as the case may be) as per the records of the company,

• Email
• Registered post
• Speed post 

What is the quorum of AGM? 

While conducting an AGM, the quorum of the meeting is quite important. The quorum of the meeting implies the minimum number of members that have to be present in the meeting for the meeting to be successfully conducted and the resolutions and decisions passed in the meeting to be valid. The quorum for private companies and public companies is different and the details of the same are mentioned below.

1. Private Companies
   • Minimum 2 members to complete the quorum
2. Public Companies 
   • Number of members less than 1000 – Minimum of 5 members to complete the quorum
   • Number of members more than 1000 but less than 5000 – Minimum of 15 members to complete the quorum 
   • Number of members more than 5000 – Minimum of 30 members to complete the quorum

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What is reporting of AGM and Minutes of AGM?

The Companies Act, 2013 provides a special compliance requirement that has to be met after conducting the AGM of public companies. As per this compliance requirement, a listed company has to file a report on the AGM with the Registrar within 30 days from the date the AGM is concluded. This report is in the form of a confirmation that the AGM was convened and conducted as per the provisions of the Companies Act, 2013. 

The Minutes of a meeting is the formal record of the AGM and the details of the matters that are discussed in the AGM. This record has to be a written record and can be in electronic form or physical form in the Minutes Book. Every company has to record the minutes of the meeting in proper sequence of the resolutions passed in such meeting. Such record is to be maintained and signed by the Company Secretary or any other person who is duly authorized in this regard by the Board. These Minutes have to be recorded in the Minutes Book within 30 days from the AGM and have to be kept at the Registered Office of the company or any other place that is approved by the Board. 

What are the consequences of not duly holding an AGM?

The rules related to conducting the AGM have to be followed by every company. If a company fails to hold the AGM or convene it as per the provisions of the Companies Act, 2013, the Tribunal may order an AGM to be conducted through its own direction or on basis of an application made by any Director or a member. If the company further defaults in the conducting of the AGM, then the company and every officer in default are liable to face a penalty in the form of a fine up to Rs. 1,00,000, furthermore, a fine of Rs. 5,000 is levied per day of the continuing default. 

Conclusion 

The AGM is the routine course of business, however, the matters discussed in the AGM are of utmost importance for both the shareholders and the company. Therefore, provisions of the Companies Act relating to the AGMs have to be mandatorily adhered to by all the companies registered under the Act failing which they are liable to face penalties.

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