An Annual General Meeting (AGM) is a cornerstone of corporate governance, providing a platform for shareholders to engage with a company's management and influence its strategic direction. As contemplated under the Companies Act, 2013, all companies except the One Person Company are required to hold an AGM every year for discussing various important matters, including financial statements, declaration of dividends, appointments of directors and auditors, etc. Knowing the statutory provisions and amendments recently incorporated along with best practices followed in an AGM shall always make it possible for one to confirm compliance and ensure wholesome shareholder relations.

Detail Analysis of Section 96 of the Companies Act, 2013

Section 96 of the Companies Act, 2013 divulges provisions for holding Annual General Meetings of a company in India. This is an authentic mode to establish transparency and accountability in the management of companies.

Subsection (1): Mandatory Holding of AGMs

1. Application: All companies except One Person Companies are required to hold an AGM every year.

2. Time Frame:

• First AGM: shall be held within nine months from the closure of the very first financial year.

• Subsequent AGMs: These should be conducted within six months of the end of the financial year, so that no more than fifteen months should lapse between two AGMs.

3. Exemption for First Year: A company is exempt from conducting another AGM in the incorporation year if its first AGM is conducted within the allowed period of nine months.

4. Extension by Registrar: The Registrar of Companies (RoC) shall, on receiving a valid petition from the company, grant extension up to three months, excluding the first AGM, for holding an AGM.

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Subsection (2): Time and Place of Holding AGMs

1. Business Hours: AGMs shall be held between 9 o'clock and 6 o'clock in the afternoon.

2. Non-National Holidays: No meetings shall be held on National Holidays declared by Central Government

3. Place:

• The Annual General Meetings shall be held at the registered office of the company or at any other place situated in the city, town, or village within the same limits.

• The Central Government may grant exemption of such proviso subject to certain conditions.

4. Explanation: For the purposes of this subsection, the term "National Holiday" shall mean any day declared as National Holiday by the Central Government.

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Key Considerations

• Notice Requirement: The 21-day notice of the AGM to the members, directors, and auditors with a clear indication of the date, time, venue, and agenda of the AGM.

• Quorum: The minimum number of members required to form a quorum for convening the AGM is determined by Section 103 of the Act.

• Agenda: Approval of financial statements, declaration of dividends, appointment or reappointment of directors, and appointment or reappointment of auditors are some of the routine matters dealt with.

Recent Amendments and Guidelines

Virtual AGMs: As part of the measures against COVID-19, the MCA agreed to permit the companies to hold their AGMs through Video Conferencing or Other Audio-Visual Means. The relaxations given regarding AGMs, which are to be held in the calendar year 2024 have also been extended. 

Revised Secretarial Standards (SS-2): The Institute of Company Secretaries of India (ICSI) issued its revised Secretarial Standards on General Meetings effective from April 1, 2024, relating to the amended provisions of the Act. However, such standards shed light in detailed aspects on conducting AGMs, which include notice, quorum, proxies, and voting procedures.

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Notable Case Laws

• Bhagwati Developers Pvt. Ltd. v. Peerless General Finance & Investment Co. Ltd. (2013) The court held that the AGM is a statutory requirement, and failure to hold it within the prescribed time frame can lead to penalties and legal consequences.

• S. Varadarajan v. Udhayem Leasings & Investments Pvt. Ltd. (2004) emphasized the importance of proper notice and adherence to procedural requirements for the validity of resolutions passed in the AGM.

In Conclusion,

Annual General Meeting is part and parcel of the main doorsteps of corporate governance. Therefore, Annual General Meeting helps more towards maintaining transparency and accountability and encourages active participation by shareholders. "Compliance with statutory provisions, observance of recent amendments, and aspects of practical compliance are vital for managing an AGM." Companies must ensure compliance to uphold stakeholder confidence and meet regulatory expectations.

FAQs on Annual General Meeting

Q1. Whether the company can hold its AGM outside the registered office itself?

A company can hold its AGM at any place within the city, town, or village where the registered office is situated. For unlisted companies, AGMs can be held at any place in India provided all members have given their consent in writing or through electronic mode in advance.

Q2. What is the penalty for not holding an AGM?

The company and every officer in default may be liable to a fine which may extend to one lakh rupees, and in case of continuing default, with a further fine which may extend to five thousand rupees for each day during which such default continues.

Q3. Can shareholders propose resolutions for the AGM?

Yes, shareholders holding at least one-twentieth of the total voting power or shares on which an aggregate sum of not less than five lakh rupees has been paid up can propose resolutions by giving a notice at least six weeks before the AGM.

Q4. Is it mandatory to appoint an auditor in every AGM?

Yes, the appointment or reappointment of auditors is a mandatory agenda item in every AGM.

Q5. Is there scope for a proxy to be appointed to attend and vote at the AGM?

A member who is entitled to attend and vote at the AGM may appoint a proxy to attend and vote for him. The instrument appointing a proxy should be lodged with the company at least 48 hours prior to the date of the meeting.