ANNUALGENERAL MEETING (AGM)- companies act 2013 best cs book notes
It is an annual meeting of body of members. Every company isrequired to call at least one meeting of its shareholders each year. Thismeeting is known as annual general meeting. Every company whether public orprivate, having share capital or not, limited or unlimited must hold thismeeting. The first annual general meeting of a company must be held withineighteen months from the date of its incorporation, and then no meeting will benecessary for the year of incorporation and the following year. Like forexample, if a company is incorporated in January 1960, its first annual generalmeeting should be held within eighteen months, i.e., up to June 1961 and thenno meeting will be necessary either for 1960 or 1961. Therefore, one annualgeneral meeting must be held every year. The gap of one meeting and the nextshould not be more than fifteen months. The Act provides no provision for thedeferment of the first AGM.
If a company fails to hold this meeting, two consequences will follow. Firstly,any member can apply to the CLB and latter will order the calling of themeeting. A meeting held in pursuance ofthis order will be deemed an annual general meeting of the company. This powerhas been vested exclusively in the CLB. The court cannot exercise it even underits inherent powers.
Secondly, the failure to call this meeting either generally or in pursuance ofthe order of the CLB is an offence punishable with fine. The penalty is imposedupon the company as well as every officer “who is in default”.
The registrar has been given the power, for any special reason, to extend thetime for holding an AGM for a period of only three months. But the time forholding the first AGM of a company is never extended.
IMPORTANCE OF AGM-
AGM is an important institution for the protection of the shareholders of acompany. The ultimate control and destiny of a company should be in the handsof its shareholders. Thus, shareholders should meet together at least once in ayear to review the working of the company. This meeting affords thatopportunity. It is in this meeting that directors will come up for re-election.Auditors retire at this meeting enabling the shareholders to consider whetherthey should be re-appointed or replaced. Dividends are declared at thismeeting. Chairman delivers a speech listing the advances of the company duringthe year. Directors have to present annual accounts for the consideration ofthe shareholders. A failure to present the accounts is a punishable offence.The shareholders can ask any questions relating to the accounts or affairs ofthe company.