AGM (Annual General Meeting)

 

Annual General Meeting (AGM)

 

Public companies in India

In India, the Companies Act 2013 ("Act") regulates the requirement to conduct an annual meeting of the members to discuss the four ordinary businesses such as 1) Financial statement approval 2) Appointment of Director 3) Appointment & to fix the remuneration of statutory auditor 4) Declare the dividend. As per section 96 of the Act, every Company requires to conduct such a meeting by served a notice of 21 days minimum length prior to the meeting either at the latest known address or email id of the members. However, a company may conduct such meeting through the issue of a notice of shorter length with prior approval of not less than 95 % of the members entitled to vote at such meeting. The Act also mandates that such meeting shall be within prescribed time 9:00 am to 6:00 pm, to be not held on national holidays, and also to be conducted at the place/ town/ village where the registered office of the company situated. However, in the recent trends, as per the latest amendment notified by the Corporate Affairs ministry in India, the unlisted public companies may conduct such meeting in any part of India by taking in advance unanimous approval from all the members in writing or electronically.

 

Private companies in India

In India, the Companies Act 2013 ("Act") regulates the requirement to conduct a meeting of its members have participation/ hold in the share capital of the company to meet on annual basis in a general meeting called Annual General Meeting within the prescribed time window of 9:00 am to 6:00 pm on other than national holidays to discuss some important business includes financial statements approval.

 

Unlike the other countries, every Company incorporated in India require to conduct such meeting on or before the due date on the last day of the sixth month of every closing of the financial year. In India, the Act has recently been gone under major changes. The Corporate Affairs Ministry has recently enforced a new amendment act 'Companies 2nd Amendment Act 2017' from 26th January 2018. An annual general meeting (AGM) is a mandatory yearly gathering of a company's interested shareholders. At an AGM, the directors of the company present an annual report containing information for shareholders about the company's performance and strategy. Shareholders with voting rights vote on current issues, such as appointments to the company's board of directors, executive compensation, dividend payments, and the selection of auditors. Shareholders who do not attend the meeting in person may usually vote by proxy, which can be done online or by mail. At an AGM, there is often a time set aside for shareholders to ask questions to the directors of the company. Activist shareholders may use an AGM as an opportunity to express their concerns. The company presents its annual financial statements to its shareholders for approval.

 

Guide to Annual General Meeting

Annual General Meeting (AGM) is a meeting conducted by every Private Limited Company or Limited Company that provides an opportunity to the shareholders to meet every year and discuss matters relating to the Company. The AGM ensures the interest of the shareholders are protected. In this article, we look at the procedure for conducting an AGM and recording the same.

 

Purpose for Annual General Meeting

Annual General Meeting is a statutory requirement for Private Limited Company and Limited Company in India. Every Company whether, public or private, limited by shares or guarantee, with or without share capital or unlimited company is required to hold an AGM every year. Annual General Meeting is an annual meeting conducted by the shareholders and Directors of the Company. In the Annual General Meeting, the audited accounts of the Company are approved, appointment of auditors and Directors are finalized. Other items that can be decided in an AGM include compensation of officers, confirmation of proposed dividends and any other issue raised by shareholder.

 

First Annual General Meeting

The first annual general meeting of the company must be held within 18 months from the date of incorporation of Company. Even a Company that has no activity is required to conduct a annual general meeting. Subsequent AGM should be held on the earliest of the following dates:

 

 

·        15 months from the date of last annual general meeting.

·        the last day of the calendar year (December 31st).

·        6 months from close of the financial year (September 30th).

All company must hold an annual general meeting in every calendar year. However, if the first annual general meeting is held within 18 months from the date of its incorporation, it is not necessary to hold any annual general meeting in the year of incorporation or in the following year.

 

Notice for Annual General Meeting

The notice for annual general meeting must be sent to all the member, auditors and debenture trustees atleast 21 days before the meeting along with the annual report of the Company. Shorter notice may be provided with the consent of all the members entitled to vote at the meeting.

 

Quorum for Annual General Meeting

For a Quorum, 5 members personally present in the case of public limited company and 2 members personally present in the case of Private Limited Company shall be the quorum for the meeting, unless the Articles of Association provides for a larger quorum. The proxies cannot be counted for the purpose of quorum. If within half an hour from the time appointed for holding a meeting, the quorum is not present, the meeting, shall stand adjourned to the same day in the next week at the same time and place, or to such other day, time and place as the Board of Directors may determine. If at the adjourned meeting also, a quorum is not present within half an hour from the appointed time, then the members present shall be the quorum.

 

Notice for Annual General Meeting as Per Companies Act, 2013

 

Notice of Annual General Meeting [Format] ABC PRIVATE LIMITED Registered Office: XX, Address Line 1, Address Line 2, City, State - Pincode   NOTICE NOTICE is hereby given that the 5th Annual General Meeting of the Members of ABC Limited will be held on Monday, the 15th, August, Year at 10:00AM at the registered office of the company at XX, Address Line 1, Address Line 2, City, State - Pincode, to transact the following business: ORDINARY BUSINESS: 1.      To receive consider and adopt the audited Balance Sheet as at 31st March, Year, the Profit & Loss Account for the year ended on that date and the reports of the Auditors and Directors thereon. 2.      To appoint Auditors of the Company and to fix their remuneration. The retiring Auditors M/s. XYZ & Co., Chartered Accountants are eligible for re-appointment.   By Order of the Board, Place:   Date:                         Director / Company Secretary

 

Procedure for Conducting Annual General Meeting

The procedure for conducting the annual general meeting is explained in detail below:

Before the Meeting

·        Convene a board meeting after giving notice as soon as the financial statements are ready.

·        Discuss the report of the audit committee on the annual accounts.

·        Validate the draft of the board’s report in compliance with the provisions of Section 134 of the Companies Act, and authorise the chairman to sign the report on behalf of the board.

·        Consider the payment of dividend if it is to be declared in the annual general meeting.

·        Fix place, date and time for the annual general meeting and approve the draft notice. Also, authorise the secretary to issue the notice for the meeting.

·        To consider the closure of the members in the register and share transfer books of the company.

·        In the case of listed companies, a notice should be sent to the stock exchange within seven working days about the dates proposed for such closure.

·        If the directors decide for the publication in a newspaper should be arranged seven days before from the notice of closure of the register of members and the share transfer books.

To arrange for the printing of a notice of the general meeting, ensure the notice containing the following contents:

 

ü  Time, date and place of the meeting

ü  Matters to be transacted in the meeting

ü  Procedure of e-voting, if any

ü  Proxy form

ü  Explanatory statement

ü  Route Map

 

At the Meeting

ü  As per the secretarial standard, arrange for the sitting arrangement to enable the directors and the company secretary to be seated by the chairman.

ü  Arrange for the collection of admission slip to get the attendance register signed by the shareholders and make them comfortable in their seating.

 

Appointment of the Chairman

·        Ensure the chairman should be present within 15 minutes from the beginning of the meeting at the venue.

·        In case of absence of the chairman, ensure the directors present at the meeting elect among themselves as the chairman of the meeting.

·        Read the notice of the meeting and auditor report, if advised by the chairman.

·        Produce a copy of Memorandum and Articles of Association (AOA) of the company.

·        Supply to the chairman if any information required by the shareholders relating to accounts and other connected matters.

·        Ensure the chairman of the audit committee is present at the annual general meeting to give any clarifications related to audit and shareholders queries.

 

After the Meeting

·        Prepare minutes of the proceedings and record the minutes of the meeting and the same has to be signed by the chairman within 30 days from the meeting.

·        Send an intimation of appointment of directors by filing form DIR-12 with the registrar of companies within 30 days from the appointment along with the applicable fee.

·        File copies of special and other resolution along with the form MGT-14 within 30 days of the meeting to the registrar of companies.

·        File profit and loss account and balance sheet reports of the directors and the auditors and notice of the meeting in form AOC-4 with 30 days from the meeting.

·        To deposit the dividend distribution tax at the applicable rate within the specified time limit under the income tax act.

·        The copy of the balance sheet to be forwarded to the RBI, where the company has invited public deposits.

·        Open a separate bank account as “Dividend Account” and deposit the total amount of dividend within five days from the authorised persons.

·        Dividend warrants and a notice of dividend to be signed by the authorised persons.

·        File annual return in form MGT-7 with the registrar of companies within 60 days of the meeting and the certificate of the company secretary should be in Form MGT-8 and ensure that the annual return is also signed by the company secretary.

·        In the case of listed companies, a report of the annual general meeting in form MGT-15 should be submitted to ROC within 30 days of the meeting.

It is important to remember that conducting Annual General Meeting of a Private Limited Company is a simple affair that is not complicated. For more information about Private Limited Company or Annual General Meeting, visit IndiaFilings.com

 

What's a proxy?

You don't need to attend the meeting to vote. This is where the "proxy form" you received with your Notice of Annual General Meeting comes in. You appoint a proxy – or agent – when you don't wish to attend in person. Most people just appoint the chairman of the meeting, who must vote according to your directions. Make sure you read the directions on the proxy form and sign in accordance with the instructions to ensure your vote is valid. Then make sure the form is returned to the share registry at least 48 hours before the meeting. True, the world won't end if you fail to vote. Plenty of shareholders routinely don't vote. But apathy is risky – it becomes more likely that management will look after its own interests before yours. So here's a project for you. The next time a company's Notice of Annual General Meeting lands on your kitchen bench, make time in your diary to read through it in conjunction with the annual report. Take note of anything you're unhappy about or that doesn't make sense. Then attend the AGM, vote and ask a question either during the meeting or afterwards. You might be surprised what you learn, you'll be a more engaged shareholder and, even better, you might even score a decent afternoon tea.

 

NOTE :-

The ministry of corporate affairs (MCA) on Tuesday allowed companies to hold their annual general meetings (AGM s) by video conferencing (VC) or other audio-visual means du ring 2020. This has been done as the social distancing norms continue and there is restriction on the movement of people. Earlier, the MCA allowed the companies whose financial year ended on December 31, 2019 to hold their AGM by September 30, 2020.

 

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