(1) Meaning and Purpose:
Annual General Meeting is a regular meeting of the members of a company which is held annually. This meeting provides an opportunity to the members of the company to review working of the company and express their views on the management of the company.
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The purpose of calling the meeting is to transact the ordinary business of the company. The ordinary business consists of:
ADVERTISEMENTS:
(a) The passing of the annual accounts,
(b) Declaration of dividends,
(c) Election of directors in place of those who are retiring by rotation,
(d) Appointment and fixation of the remuneration of auditors of the company.
(2) Statutory requirement:
ADVERTISEMENTS:
It is a statutory requirement on every company to call and hold an annual general meeting every year. The first annual general meeting of a company must be held within 18 months of its incorporation.
There can be no extension of this period even by the Registrar. Subsequent annual general meeting must be held by the company each year within 6 months after the close of the financial year but the interval between any two annual general meetings must not be more than 15 months.
Registrar may, however, for any special reason, extend the time within which any annual general meeting (not being the first annual general meeting) shall be held, by a period not exceeding 3 months. Non- completion of final accounts alone may not be a valid ground for granting extension.
Financial year refers only to a period in respect of which any profit or loss account is laid at an annual general meeting whether that period is a year or not. The financial year of a company relating to a particular period may be less or more than a calendar year but shall not exceed 15 months [Sec. 166 (1)].
ADVERTISEMENTS:
There should be one annual general meeting in every calendar year and, therefore, there must be as many general meetings as the number of calendar years for which the company had been carrying on business.
“There is a clear statutory duty on directors to call the meeting whether or not, the accounts, the consideration of which is only one of the matters to be dealt with at an annual general meeting, are ready or not.”
Annual General Meeting must be called even if the management of the company is vested in the Central Government. The directors should hold the meeting at the end of the year in question and adjourn to some future date early in the following year when the accounts will be available. The fact that the company did not function is also not excuse for not a calling the meeting.
(3) Authority to convene the annual general meeting:
The power to convene the Annual General Meeting vests with the Board of Directors. Individual directors have no such power. Secretary cannot issue any notice for the Annual General Meeting without the authority of the Board. Courts have no power either to convene or direct the holding of the annual general meeting or to extend time for holding of the annual general meeting.
(4) Time and Place of the meeting:
Company must call the annual general meeting on a working day during business hours either at the registered office of the company or at some other place within the city in which the registered office of the company is situated. An adjourned annual general meeting can be held on a public holiday.
(5) Notice requirement:
Company must give at least 21 days’ written notice to call an annual general meeting of the shareholders. Annual general meeting may be held with a shorter notice if it is so agreed by all the members entitled to vote in the meeting (Sec. 171). The notice must expressly specify the meeting to be Annual General Meeting.
(6) Default in holding the annual general meeting:
If default is made in holding an annual general meeting in accordance with section 166, the Company Law Board (Central Government w.e.f. date yet to be notified) may, on the application of any member of the company, call or direct the calling of a general meeting of the company and give such ancillary or consequential directions as the Company Law Board/Central Government thinks expedient in relation to the calling, holding and conducting of the meeting. The directions that may be given include that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
A general meeting so held shall be deemed to be an annual general meeting of the company. If default is made in holding a meeting of the company in accordance with section 166, or in complying with any directions of the Company Law Board/Central Government, company and every officer of the company who is in default, shall be punishable with fine which may extend to f 50,000 and in the case of a continuing default, with a further fine which may extend to f 2,500 for every day after the first during which such default continues.