Annual General Meeting (AGM) is a yearly meeting of stockholders or shareholders, members of company, firm and organizations. Annual General Meeting is held every financial year and it is mandatory for everyone. In AGM functions like reviewing company account, approving audited accounts, elections, fiscal records of the past year are discussed.
As per Companies Act, an annual general meeting must be held by every company once a year without fail. There cannot be a gap of more than 15 months between two AGMs.
However, the first AGM of a company can be held at any date, within a period of 18 months, since the date of incorporation of the company. Annual general meetings help members understand the company’s rate of growth and potential for improvement.
An AGM gives insights into what steps made the company more successful and which steps caused loss. it helps the members and the board to decide the future course of action. An AGM must be held on a working day.
If the Government declares a public holiday on the day of the meeting, it will be considered a working day by the members attending the meeting. The annual general meeting can be held at the registered office of the company.
Legal Requirements for holding an Annual General Meeting
Legally, a notice period of 21 days must be given to all the members before the meeting. However, there is an exception to this rule. If all the voting members consent, the meeting may be held at an earlier date. Further, the following documents are also to be sent with the notice. Articles of Association, company bylaws, and jurisdiction specifies the rules that govern annual general meeting.
- Copy of annual accounts of the company
- Director’s report on the company’s position for the given year
- Report by the Auditor of the annual accounts.
Members are allowed to use proxies in their absence. The proxy does not need to be a member of the company. However, the proxy forms have to be submitted to the company at least 48 hours before the meeting.
Quorum for Annual General Meeting
Unless the articles of the company state otherwise, the quorum for an Annual General Meeting is as follows
- Public companies: At least 5 members must be present.
- Other companies: At least 2 members must be present within half an hour of the commencement of the meeting.
Issues Undertaken at Annual General Meeting
The functions of business undertaken at a typical annual general meeting are listed as follows:
- The declaration of dividend among shareholders
- Consideration of annual accounts
- Discussion of the director’s report and the auditor’s report
- Appointment and fixing of the remuneration of the statutory auditors
- Appointing replacement directors in place of existing directors retiring