[Opinion] Understanding Shorter Notice Consent in Calling Annual General Meeting

CS Vallabh M Joshi & Tejal Davda – [2024] 164 taxmann.com 520 (Article)

1. Introduction

Companies Act, 2013, [‘the Act’] provides for convening of Annual General Meeting (AGM) of companies. The Act provides for compliances and timelines for activities to be undertaken before AGM, during, AGM and after the AGM. One key aspect of pre-AGM compliance is issuing the notice of AGM. The Act provides that the AGM shall be convened by giving 21 clear days’ notice to all the members of the company. Further, the Act also provides that an AGM can be called by sending a notice for a period shorter than 21 days to the members of the company. Further, the Act provides the procedure for taking a shorter notice of consent to call AGM. Further, the Act also provides for shorter notice consent for certain other purposes in the Act.

In this article we shall focus on the compliance requirements for obtaining consent for a shorter notice period of members of company for convening AGM and shorter notice consent for sending of financial statements etc in terms of provisions of section 136 of the Act.

2. Shorter notice consent for AGM in case of public companies

The notice period for convening an Annual General Meeting (AGM) or any other General Meeting is specified under Section 101 of the Companies Act, 2013, which is as follows:

(1) A general meeting of a company may be called by giving not less than clear twenty-one [twenty-one days] notice either in writing or through electronic mode in such manner as may be prescribed:
Provided that a general meeting may be called after giving shorter notice than that specified in this sub-section if consent, in writing or by electronic mode, is accorded thereto—

(i) in the case of an annual general meeting, by not less than ninety-five per cent. of the members entitled to vote thereat; and

(ii) in the case of any other general meeting, by members of the company—

(a) holding, if the company has a share capital, majority in number of members 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 that meeting:
Provided further that where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for these purposes of this sub section in respect of the former resolution or resolutions and not in respect of the latter.]

As per section 101 of the Act consent of not less than ninety-five per cent. of the members entitled to vote thereat is required to call an AGM by giving notice of less than 21 clear days.

So, for example

(a) If a company has twenty members, 95% of the membership equates to nineteen members. Therefore, for a valid shorter notice period, consent must be obtained from these nineteen members.

(b) If a company has nineteen members, 95% of this number is approximately 18.05 members. In this case, consent for a shorter notice period must be obtained from all nineteen members, as the regulations require consent from at least 95% of the members entitled to vote. So, for calling AGM at a shorter notice in case of public companies consent of at least 95% of the members of the company is required.

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