Annual General Meeting is a very important event for every company wherein Directors present company’s financial results of the past year, the performance of the company, company’s future prospects and business plan to the members of the company.
The Board of Directors of the company act as an agent of the company and members being owners of the company, Board is answerable to them. Therefore Annual General Meeting is a very big event for every company.
Unlike Board or committee meetings, Annual General Meeting is not held as and when required. As the name suggests it is an annual event and hence is called only once a year. So can it be called anytime during the year?
In this article, we will try to understand what is the due date of holding the Annual General Meeting along with some examples.
Legal Provisions with respect to the holding of an Annual General Meeting
Section 96 of the Companies Act, 2013 enumerates various provisions related to the calling and holding of the Annual General Meeting by every company.
Every company other than One Person Company shall each year hold in addition to any other meetings, a general meeting specifying it as Annual General Meeting. The notice calling the meeting shall specify the meeting as Annual General Meeting.
Conditions to oversee while fixing the date Annual General Meeting
Basically, Section 96(1) of the Companies Act, 2013 specify 2-time frames or conditions for determining the due date for holding the Annual General Meeting Both the conditions must be taken into consideration while fixing the date of AGM. The date that is earlier between two shall be the due date for holding AGM:
Not more than fifteen months (15 months) shall elapse between the date of one annual general meeting and that of the next.
In case of first AGM it shall be held within a period of 9 months from date of closure of the financial year and in case of subsequent AGM, within a period of 6 months from the date of closing of the financial year of the company.
Example - 1
The annual General Meeting of the company for FY 2018-19 was held on 15th June 2019. Now while computing the due date for holding AGM the FY 2019-20, both the conditions must be taken into account:
Condition 1: Not more than 15 months shall elapse between the two AGM - Accordingly, the period of 15 months elapse on 15th September 2020.
Condition 2: As it is subsequent AGM, it must be held within a period of 6 months from the closure of the financial year. Now the financial year 2019-20 is closed on 31st March 2020 and therefore 6 months period ends on 30th September 2020.
Therefore, in this case, 15th September 2020 shall be the due date for holding AGM and not the 30th September 2020 (earlier between the two).
Example - 2:
Suppose if the Annual General Meeting for FY 2018-19 was held on 30th September 2019, then the due date for holding the next AGM i.e. AGM for the FY 2019-20 would be 30th September 2020 as 15 months period ends on 30th December 2020.
First and Subsequent AGM of a company
The second proviso to Section 96(1) of the Companies Act, 2013 states that in the case of the first AGM, it is not necessary for the company to hold AGM in the year of its incorporation. That means suppose if the company is incorporated in January 2020, then it is not mandatory for the company to hold its first AGM in 2020 itself. Rather the company may hold its first Annual General Meeting in the year 2021.
But if the company is incorporated in November 2019, then the company must close its books of accounts on 31st Match 2020 and hold its first AGM on or before 31st December 2020 i.e. 9 months from the closure of the financial year. The period of 9 months is allowed only in the case of the first AGM. Second and Subsequent AGM of the company must be held within a period of 6 months from the closure of the relevant financial year or within 15 months from the date of the previous AGM, whichever is earlier.
Can AGM be extended?
Due to some reasons, if AGM of the company cannot be held within the time frame as provided under Section 96 (1) of the Companies Act, 2013, then such company may file an application to the Registrar for extension of AGM. As per the Third proviso to Section 96(1) of the Companies Act, 2013, the Registrar may allow extension for holding AGM maximum by 3 months.
But it is very important to note that, the company cannot file an AGM extension application in case of the first AGM of the company.
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