[Case Study] AGM notice to members of the company under provisions of the Companies Act 2013

[2022] 141 taxmann.com 28 (Article)

Annual General Meeting (AGM)

Annual General Meeting (AGM) is held to have an interaction between the management and the shareholders of the company. The Companies Act, 2013 makes it compulsory to hold an annual general meeting to discuss the yearly results, auditor’s appointment and so on. A company should follow the procedures under the Companies Act, 2013 to conduct the Annual General Meeting.

Companies requiring to hold an AGM

All companies except one person company (OPC) should hold an AGM after the end of each financial year. A company must hold its AGM within a period of six months from the end of the financial year.

However, in the case of a first annual general meeting, the company can hold the Annual General Meeting in less than nine months from the end of the first financial year. In such cases where the first Annual General Meeting is already held, there is no need to hold any Annual General Meeting in the year of incorporation. Do note that the time gap between two annual general meetings should not exceed 15 months

AGM Notice

A company should send the notice of the Annual General Meeting to:

(a) All members of the company including their legal representative of a deceased member and assignee of an insolvent member.
(b) The statutory auditor(s) of the company.
(c) All director(s) of the company.

Mode of sending AGM Notice

The notice may be given in writing through speed post or registered post or via electronic mode. The notice should be sent to the address of the member as per the records of the company.

In the case of electronic communication, the notice should be sent to the e-mail address of the member as per the records of the company. The notice can be text typed in an email or an attachment to an email. The notice of the Annual General Meeting should be placed on the website of the company or any other website as may be mentioned by the Government.

An Annual General Meeting can be called at a notice period shorter than 21 days if at least 95% of the members entitled to vote in the meeting agree to the shorter notice. The consent may be given in writing or through electronic mode.

Provisions of the Companies Act 2013 on this matter

The relevant provisions as per the Companies Act 2013 is are under:-

Section 136 of the Companies Act 2013:

(1) copy of the financial statements, including consolidated financial statements, board report and every other document required by law to be annexed or to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to an persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting:

Provided that if the copies of the documents are sent less than twenty-one days before the date of the meeting, they shall notwithstanding that fact, be deemed to have been duly sent if it is so agreed by members:-

(a) holding, if the company has a share capital, majority in number entitled to vote and who represent not less than ninety-five per cent of such part of the paid up share capital of the company as gives a right to vote at the meeting; or

(b) having, if the company has no share capital, not less than ninety five per cent of the total voting power exercisable at the meeting:

Provided further that in the case of a listed company, the provisions of this sub-section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements:

Provided also the Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed:

(2) A company shall allow every member or trustee of the holder of any debentures issued by the company to inspect the documents stated under sub-section (1) at its registered office during business hours. Provided that every company having a subsidiary or subsidiaries shall provide a copy of separate audited or unaudited financial statements, as the case may be, as prepared in respect of each of its subsidiary to any member of the company who asks for it.

If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

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