Annual General Meeting
It is a meeting of the shareholders which has to be held by companies once in a year.
Objective of AGM
The objective of holding an AGM is to provide an opportunity to members to discuss the functioning of the company, and take steps to protect their interests. They can discuss any matter relating to the conduct of the affairs of the company.
Periodicity of AGM
The first annual general meeting should be held within 18 months of its incorporation. Subsequent annual general meetings must be held each year within six months of the close of the financial year. 15 months is the maximum interval between two AGMs. The Registrar may extend the time up to a period of three months except in the case of the first AGM.
Notice for AGM
The Board of Directors have to call the AGM by giving 21 days notice to all the members entitled to attend the meeting. Certified copies of Profit and Loss Account and Balance Sheet, Directors’ Report and Auditors’ Report should also be forwarded to the members at least 21 days before the holding of the meeting.
Types of Business transactions at AGM
The business transacted at the AGM can be classified into:
- Ordinary or Routine Business and
- Special Business
Ordinary or Routine Business:
It consists of:
- Adoption of Annual Accounts, Directors’ Report and Auditors’ Report.
- Declaration of dividend.
- Election of Directors in place of existing director who retires on rotation basis.
- Appointment of auditors and fixation of remuneration to Auditors.
It relates to Increase in Authorized Capital and Alteration of Articles of Association etc.
Extraordinary General Meeting (EGM)
Any meeting other than an Annual General Meeting is termed as Extraordinary General Meeting.
Objectives of EGM
The objective of holding an EGM is to discuss any matter of urgent importance which cannot be postponed till the next Annual General Meeting. The meeting may be held to discuss the following:
- Alteration of Memorandum of Association
- Change in the Articles of Association
- Reduction of share capital
- Decisions on mergers or acquisitions
- To prevent a hostile takeover
- To prevent oppression and mismanagement of the company’s affairs.
Convening the EGM
The EGM may be called by the Board of Directors. Shareholders holding at least one-tenth of the paid up capital may requisition the Board of Directors to hold an Extraordinary General Meeting. If the Board fails to accept their request, shareholders themselves may convene the meeting.
The Company Law Board may order to call an EGM either on its own initiative or on the application of any director or member of the company who are entitled to vote at the meeting.
Notice for EGM
The members are given a notice of 21 days regarding the particulars and nature of resolutions to be discussed during the EGM. The special resolutions passed at Extraordinary General Meeting have to be filed with the Registrar within 15 days.