An Analysis Of Provisions Relating To Annual General Meeting Under The Companies Act 2013

Coverage of this Article

Key Takeaways

-A company, requires its members to make every decision after giving it careful thought and exercising prudent judgement, Annual General Meeting is a medium for a company to do so.

Procedure Of Meeting

-To function effectively, every meeting held in a company must adhere to a set of well defined rules and procedures.

Provisions

-Section 96(1) of the Companies Act, 2013, any company with two or more shareholders or members must convene an annual general meeting.

Report on Annual General Meeting

-According to Section 121 (1) of the Companies Act of 2013, every public company is required to prepare a report on each Annual General Meeting in the form specified, including certification that the meeting was called, held, and conducted in accordance with the Act's and its implementing rules.

Annual General Meeting Extension

-The time frame for holding an AGM may be extended by three months by the registrar of Companies.

Other meetings

-Section 100 of companies Act lays down the guidelines for the board to call a general meeting extraordinary in nature to deliberate upon some matter requiring immediate attention.

Conclusion

-An enormous institution, a company, requires its members to make every decision after giving it careful thought and exercising prudent judgement.

Key Takeaways

• A company, requires its members to make every decision after giving it careful thought and exercising prudent judgement, Annual General Meeting is a medium for a company to do so.
• Companies Act, 2013, establishes a statutory provision on the conduct of the Annual General Meeting, under Section 96 of the Act, to enable the rights of the members over the company and other administrative decisions.
• Annual General Meeting (AGM) are conducted to protect the interests of the company's shareholders and to bring the shareholders together for the benefit of the company. A company that has been incorporated under the Companies Act, 2013, or under any previous law is referred to as a "Company" according to Section 2(20) of the Companies Act. A company is a "legal person" or "legal entity" under common law because it can survive even beyond the lives of its members.

A company is a formal organisation made up of a number of people engaged in business operations. A large number of people must work together to manage a company, discussing and deliberating many topics before making a choice. Decisions are frequently made in meetings, which are official conversations amongst the company's management (mostly the directors, but occasionally members as well), who discuss the affairs and business of the company.

Companies Act, 2013, establishes a statutory provision on the conduct of the Annual General Meeting, under Section 96 of the Act, to enable the rights of the members over the company and other administrative decisions. in order to safeguard the interests of shareholders and members in business operations. The management and shareholders of the company communicate at the annual general meeting (AGM). The holding of the Annual General Meeting is covered by the Companies Act of 2013 when considered together with the Companies (Management and Administration) Rules of 2014.

Procedure Of Meeting

To function effectively, every meeting held in a company must adhere to a set of well defined rules and procedures. There can be some differences, but the overall process is the same. There are various steps that must be adhered to:

Issuance of notification– To ensure their attendance, the board of directors and all other concerned members must be informed in advance of the meeting. Depending on the circumstance, it may be long or short notice.

Contents of notice– The notification must include the location, the date, the time, a description of the important topic to be covered, and a brief summary of the company. The convener must properly sign it and include the date of issuing.

Quorum – The person in charge of informing the meeting must make sure that the relevant quorum, which must be present in the meeting as required by the Act, has been pre-notified of the meeting. The quorum must be upheld during the entire meeting.

Chairman – There must always be a chairman presiding over meetings. Typically, the meeting's chairman is the board of directors' chairman. He is in charge of starting and wrapping up the meeting's consideration of motions. He is in charge of making sure the meeting runs smoothly. The choice of the chairman may alternatively be made by a show of hands.

Resolutions– In every meeting, these decisions are made. There are specific steps and guidelines to follow when these are discussed and voted on. These are offered in different parts.

Voting – There may be issues when there is no broad agreement, in which case voting is required. If there is still a disagreement after extensive discussion, the chairperson may ask for a vote. The 2013 Companies Act established specific guidelines for voting at various meetings. The chairman oversees the voting procedure. There may be issues when there is no broad agreement, in which case voting is required. If there is still a disagreement after extensive discussion, the chairperson may ask for a vote. The 2013 Companies Act established specific guidelines for voting at various meetings. The chairman oversees the voting procedure.

Adjournment and Minutes – After careful deliberation and discussion, the meeting is adjourned, followed by dissolution, during which the attendees disperse. These discussions must be recorded in the company's official minutes of meetings, which provide an overview of each meeting. According to the Companies Act, 2013 every significant meeting detail must be disclosed.

Report – Companies must prepare a report of the meeting outlining how it was conducted. A copy of the document must be submitted to the registrar.

Purpose of Annual General Meeting

The primary purpose of the Annual General Meeting (AGM) is to protect the interests of the company's shareholders and to bring the shareholders together for the benefit of the business. The main goal of the annual general meeting is to discuss ideas and make choices that will help the company grow.

Provisions

Section 96(1) of the Companies Act, 2013, any company with two or more shareholders or members must convene an annual general meeting. This meeting must take place within fifteen months of the year's end.

Section 96(1) gives the registrar the authority to give special permission to extend the time limit for holding annual general meetings by a maximum of three months. The section likewise states that in the event of the company's first annual general meeting. It must be held within nine months of the company's first financial year's end, or within six months of the financial year's end, to avoid violating the fifteen-month rule.

Additionally, Section 96(1), states that a company need not hold any annual general meetings in the year of incorporation if it has its first annual general meeting.

Section 96 (2) mandates that each annual general meeting must take place between the hours of 9 a.m. and 6 p.m., which are regarded as business hours and give the meeting a credible aspect of importance in the eyes of the shareholders.

Moreover, Section 96(2) also demands that the annual general meeting be held on a day other than a national holiday in order to protect shareholders' interests.

The aforementioned provision is also particularly specific concerning the meeting's location since it must be held at the company's registered office or another venue in that region (such as a village, town, or city) in order for all shareholders to be able to attend.

Business transactions in Annual General Meeting

An Annual General Meeting's business is conducted in the form of resolutions adopted at the meeting. This is reflected in various voting procedures. There are two types of business transactions that must occur during annual general meetings:

• General Business: The consideration of the accounts and directors' report, the declaration of dividends, the nomination of directors and auditors, and the setting of their compensation are all considered to be general business under Section 102(2)(a) of the Companies Act, 2013.
• Special Business: All other business at an annual meeting and all business at extraordinary general meetings are classified as special business, according to Section 102(2) (a) of the Companies Act, 2013.

Report on Annual General Meeting

According to Section 121 (1) of the Companies Act of 2013, every public company is required to prepare a report on each Annual General Meeting in the form specified, including certification that the meeting was called, held, and conducted in accordance with the Act's and its implementing rules.

In accordance with Section 121(2) of the Act, the company must submit a copy of the report mentioned in subsection (1) to the Registrar within thirty days of the end of the annual general meeting, along with any additional fees that may be required and within the time frame stipulated by the Act.

Penalty levied for default in holding Annual General Meeting

The Tribunal may order an AGM to be held in accordance with its instructions if a Company fails to convene one within the allotted period or the extension it has been granted, whether on its own initiative or in response to an application submitted by a Director or member. A fine of up to Rs. 1 lakh may be imposed on the firm and each official of the company who subsequently defaults in conducting a meeting in line with the tribunal's instructions. A fee of Rs. 5,000 is assessed for each day that a default persists in the event of continuing default.

Annual General Meeting Extension

The time frame for holding an AGM may be extended by three months by the registrar of Companies. The Company should submit an application for an extension using the electronic form GNL-1, outlining the justifications for the extension as well as the length of time the Company needs one. The ROC will note the justifications for the extension.

Other meetings

Extraordinary General Meeting

Section 100 of companies Act lays down the guidelines for the board to call a general meeting extraordinary in nature to deliberate upon some matter requiring immediate attention.

Board Meeting

In accordance with Section 173 of the Companies Act of 2013, board meetings are where directors exercise their authority. This is to ensure that the board of directors supervise the company efficiently.

Conclusion

An enormous institution, a company, requires its members to make every decision after giving it careful thought and exercising prudent judgement. In order to ensure that decisions are made after careful consideration, the companies Act of this country sets a number of meeting requirements. These provisions make sure that companies run smoothly and make it easier for them to work efficiently.