Section 96 of Companies Act,. Annual general meeting

“(1) Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:

…

Provided further that the Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose.

Explanation. – For the purposes of this sub-section, National Holiday means and includes a day declared as National Holiday by the Central Government.”

Critical Analysis of Section 96 of Companies Act 2013

All companies, except for ‘One Person Company’, are required to have an annual general meeting along with other meetings. As per section 102, clause (a), there are four standard transactions at the meeting, while anything beyond that is considered special. The annual general meeting is mandatory by law, and the Board can choose when and where to hold it, and authorize directors to oversee the process.

The subjects covered or business performed in an AGM include, the audited financial statements will be considered and adopted. The Directors’ and Auditors’ reports will be considered. Dividend declaration for shareholders. Appointment of directors to succeed departing directors. Appointing auditors and determining their salary. Aside from the above-mentioned conventional business, any other business may be done as the company’s special business. 

the regular business of the corporation will be carried out by an ordinary resolution in which the votes cast in favour out number those cast against the resolution. However, in the case of exceptional commercial transaction, the resolution may be enacted as either an ordinary or special resolution, depending on the appropriate legislative restrictions. a minimum of 75% support is necessary for special resolution.

An Annual General Meeting (AGM) must occur between 9 a.m. and 6 p.m. on any non-national holiday at a location within the city, town, or village of the registered office.

Every firm is required to prepare annual general meeting minutes. The AGM minutes refer to a written record of the meeting’s proceedings. They detail the events that occurred and the resolutions passed during the AGM.

The Company Secretary will record the AGM proceedings. If there is no Company Secretary, any other person lawfully authorised by the Board or the Chairman will record the proceedings.

The minutes of the AGM must be signed and kept in the minute book within thirty days. The Minute book will be kept at the Registered Office or another location chosen by the Board. Any member/shareholder of the firm may see the Minutes book of the AGM upon request and payment of the statutory price.

Upon request, the company will furnish the member with a copy of the AGM minutes within seven days. Failure to do so will result in a Rs.25,000 penalty for the company and a Rs.5,000 penalty for the official in charge.

The Registrar has the authority to prolong the timeframe for an annual general meeting at the company’s request, in accordance with the third condition under sub-section (1) of section 96. Power can be extended for a maximum of three months. This power cannot be exercised during the first annual general meeting.

The annual general meeting can take place at the registered office or within the same city, town, or village. For an unlisted company, the AGM may be held anywhere in India with prior consent of all members, whether in writing or electronically.

However, the Central Government can exclude a firm from the AGM regulations, subject to certain criteria. Thus, a company can have an AGM outside of India provided it petitions the Central Government to modify the rules of Section 96 of the Companies Act of 2013, allowing it to do so.

Section 8 vis a vis Section 96 of Companies Act

The Board of Directors can decide on the time, date, and location of each AGM in advance, taking into account any directions provided by the firm in its general meeting.

It is recommended that a Section 8 corporation can arrange its next AGM at a shareholder meeting, with the board planning the AGM based on shareholders’ input. For companies not classified under Section 8, only the board of directors has the authority to set the timing, date, and location of each AGM.

Consequences of failing to conduct AGM.

Failure to hold the AGM within the specified time frame could result in violating section 96 of the Companies Act, 2013, leading to possible penalties under section 99. The violation remains in effect until compliance is achieved. If the AGM is not conducted, fines of up to 1,00,000 rupees can be imposed on the company and each responsible officer. Additional daily fines of up to 5000 rupees can be imposed until the issue is resolved. If the Board fails to arrange the AGM, any member can seek NCLT intervention to organize the meeting. The tribunal will call for the AGM and provide instructions, stating that one member in person or by proxy is sufficient for a valid AGM, which will be recognized as the official meeting of the company.

Precedent pertaining to Section 96 of Companies Act: “SRG Altis Zeus Health Care Pvt. Ltd. vs Mr. Akash Bakshi”

The healthcare company appellants disagreed with the National Company Law Tribunal’s ruling regarding the Annual General Meeting’s legality. The Tribunal invalidated the AGM and prevented any decisions made during it from being enforced, due to financial losses caused by mismanagement and embezzlement by the respondents. The Appellant Company must hold its Annual General Meeting for FY 2020-21 by 30.11.2021 as required by law, scheduling it for 23.11.2021 following Article 43(iii) of their Articles of Association, which mandates a seven-day notice. The Respondents lodged an interim application with the Tribunal upon learning of the meeting, leading to the mentioned conclusions. The Ld. Counsel for the Respondents argued that the meeting complied with company regulations and laws, explaining the difference between ordinary and Annual General Meetings under the Companies Act. The primary petition is pending, prompting an appeal against the interim order.

The Respondent’s Counsel argued that the meeting adhered to company regulations and laws, emphasizing the differences between ordinary and Annual General Meetings as per the Companies Act. The primary petition is still pending, leading to an appeal against the interim decision. The Registry is requested to upload the judgment on the Tribunal’s website and send a copy to the tribunal.

FAQs

Q. How many times ‘Annual General Meeting’ conducted in a year?

Every company other than ‘OPC’ shall conduct annual general meeting at least once in a financial year, it is compulsory to conduct at least one AGM.

Q. Can AGM hold on national holidays?

An annual general meeting cannot be held on ‘National Holiday’ perhaps it can be conducted on public holidays as it is not specified under Companies Act, 2013.

Q. Can AGM date get extended?

Yes, the date for annual general meeting can be extended by the company’s Registrar under proviso third of Sub-section (1) of section 96 of this act, maximum extension up to 3 months.

Q. How many days of notice to be served for AGM?

When calling the annual general meeting, a company is required to provide its members with a clear 21-day notice. The location, the day and time of the meeting, and the scheduled meeting hour should all be included in the notice.