BAJAJ BROKING
March 03, 2025
5 mins read
The day-to-day activities and business of any company are conducted according to the strategies of the company's owners, directors, managers, etc. However, there are a few compulsory activities or procedures that every company has to include in its functioning. An Annual General Meeting is one such activity that is conducted amongst the company shareholders and board of directors.
There’s a lot more to Annual General Meetings that you must be aware of if you are a shareholder in any private limited company or a limited company. Keep reading to find everything you need to know about AGM.
As the name suggests, an Annual General Meeting is an annual gathering of a company’s shareholders and board of directors to discuss the company's finances and business strategies. According to the Companies Act 2013, every private limited company or a limited company has to mandatorily hold an Annual General Meeting to update the shareholders about the company‘s finances and include them in decision-making processes.
In a nutshell, the annual general meeting is conducted between the board of directors and shareholders of a given company. These meetings are conducted to update the shareholders about the company's businesses, financial planning, strategies to pay dividends, etc.
You must know that shareholders get a right to vote in the company’s decision-making, which includes how dividends are to be paid, the election of the board of directors, etc. It is in these annual general meetings that the shareholders cast their votes, approve decisions made by the board of directors or suggest ratifications.
Know that the Annual General Meeting is conducted as per the guidelines issued by the Securities and Exchange Board of India. Over the years, there have been many changes in the way SEBI wants an AGM to be conducted in every private limited company or a limited company.
For instance, in 2018, SEBI issued guidelines that the top 1000 listed companies must conduct their Annual General Meeting at a date not later than five months after the end of a financial year.
Remember that even if the specific period for conducting an Annual General Meeting changes, it is compulsory to have this meeting at least once a year.
AGM Requirements for Newly-Listed Companies
Now you need to know that when a company is newly listed it has to follow certain specific provisions while conducting its first Annual General Meeting. Let’s take a look at the AGM requirements for newly listed companies:
The First AGM: The first AGM of a company has to be conducted within 18 months from the date of its incorporation. It is irrelevant whether the company has a long list of shareholders or not.
Subsequent AGM: The next Annual General Meeting is conducted at the earliest possible window on any of the following days:
At the earliest possible instance after 15 months has lapsed from the first general meeting.
31st December of the given year or the year’s last working day.
Any time on or before 30th September. This debt is advised as it marks six months from the end of a financial year.
Note: These provisions and requirements are not to be followed mandatorily in subsequent meetings.
In addition to mandating AGM in these companies, there are a few criteria and qualifications in the way these meetings are to be conducted. Take a look at a few common criteria for an AGM:
Minutes from the previous year's AGM must be presented in the current AGM.
The company has to present its annual financial statements to the shareholders.
It is during the AGM that the shareholders get their chance to cast a vote to elect the board of directors for the upcoming year.
The shareholders are given a right to approve or ratify the decisions made by the board of directors.
Certain specific provisions are made for companies that operate in charitable or non-profit activities.
To begin with, you must first know that section 8 of the Companies Act 2013 defines charitable or non-profit companies.
Any company that comes under this definition is not liable to pay dividends. Therefore, their responsibility to conduct an Annual General Meeting can be tweaked to suit the needs of the company.
In addition to making it mandatory to conduct an AGM with shareholders and the board of directors, the SEBI has also issued guidelines regarding the timing and venue of such meetings:
An Annual General Meeting can be conducted only between 9 AM to 6 PM.
An Annual General Meeting can be held on any day of the financial year, including weekends, but not on national holidays.
An Annual General Meeting is conducted at the company's registered office. However, the board of directors can work on the replacement venue and provide a notice to shareholders regarding the replacement.
Quorum
Before you leave let’s take a quick look at the quorum that is required to conduct an annual General meeting. Section 103 of the Companies Act mandates the minimum number of members that have to be present to conduct an AGM.
Here’s a list of the required number of members for both public and private companies:
Private Companies: The total number of members in the company as of the day of the meeting doesn’t matter. If it's a private company, the AGM can be held only if there are at least 2 members present.
Public Companies:
Total number of members | Qurom |
Below 1000 | 5 |
More than 1000 but less than 5000 | 15 |
Above 5000 | 30 |
Notice of Annual General Meeting
Before conducting an Annual General Meeting a notice at least 21 days before conducting the meeting has to be sent to shareholders, auditors and any other parties.
The Annual General Meeting of the company is more than just a business interaction as it provides shareholders and other members an insight into the company‘s finances and plans. These meetings provide a sense of collective ownership in the company.
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The main purpose of an annual General meeting is to update shareholders about the company‘s finances, future planning, and other strategies for the upcoming financial year.
An AGM has to be attended by both the board of directors and shareholders.
Shareholders can exercise their right to vote either by attending the meeting in person or through an e-voting system.
The topic of discussion during an AGM usually revolves around the company’s financial planning for the upcoming financial year, how dividends are to be paid out, the election of the board of directors etc.
The key difference between an annual General meeting and an extraordinary general meeting is that the former is held for general business and company dealings whereas the latter is held to take care of any immediate crisis or situation.
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