New Changes regarding Annual General Meeting & Extra-ordinary General Meeting

New Changes regarding Annual General Meeting & Extra-ordinary

General Meeting

In this Article, we shall analyze the changes in case of provisions of Annual

General Meeting & Extra-Ordinary General Meeting. There are certain

clauses in AGM which have not changed like gap between two AGM’s not

to exceed 15 months, etc. In this write up, let us look at what has changed in

case of provisions pertaining to AGM and EGM

Sl.No.	Particulars	Provisions contained in Companies Act,1956	Provisions contained in Companies Act,2013
01.	Maximum time for holding the first AGM	Section 166 (1)-18 months from the date of incorporation or 9 months from the closure of accounts, whichever is earlier.	Section 96 (1)-9 months from the closure of accounts. NOTE:The provision regarding holding first AGM within 18 months from the date of incorporation has been scrapped.
02.	Time and Day of Meeting	Section 166 (2)-Every AGM shall be called for a time during business hours, on a day that is not a public holiday.	Section 96 (2)-Every AGM shall be called during business hours, that is, between 9 A.M. to 6 P.M. on any day that is not a national holiday. NOTE: The term “ National Holiday” has been defined as”means and includes a day declared as National Holiday by the Central Government”.Only 26th January (Republic Day), 15th August (Independence Day) and 2nd October (Gandhi Jayanti) are declared as National Holidays by the Government. Therefore, it can safely be concluded that companies can keep their AGM on Sunday and any other public holiday also.
03.	Length & Mode of Notice of Meeting	Section 171 (1)-A general meeting can be called by giving not less than 21 days notice in writing.	Section 101 (1):- A general meeting of a company may be called by giving not less than clear 21 days’ notice either in writing or through electronic mode. NOTE:- The length of the notice remains the same under the new Act also but it uses the expression “ clear days”.It means day of giving the Notice and day of the meeting are to be excluded. Morover, as per Section 53 (2) (b)  of the old Act, service of notice is deemed to have affected after expiry of 48 hours from the time of posting. Similar provision is not there in the new Act. Perhaps this was intentionally omitted as faster means of service of notice through e-mail or other electronic mode is available. Therefore, in cases where notice of the meeting is given in writing, then it is advisable to keep in mind the transit time for the Notice to reach the members.
04.	Notice for Adjourned Meeting	No provision regarding Notice for Adjourned Meeting in the Act.	Section 103:-In case of an adjourned meeting or of a change of day, time or place of meeting under Section 103 (2) (a), i.e., where the meeting stands adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine, the company shall give not less than three days notice to the members either individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.
05.	Consent for shorter notice	Section 171 (2) (i)- An AGM can be called at shorter notice only when the consent is given by all the members entitled to vote at the meeting.	Section 101 (1):- A general meeting may be called after giving a shorter notice if consent is given in writing or by electronic mode by not less than ninety-five per cent of the members entitled to vote at such meeting.
06.	Quorum	Section 174 (1)- Private Company-2 members personally present. Public Company-5 members personally present	Section 103 (1):- Private Company-2 members personally present. Public Company- 5 members personally present if the no. of members as on the date of meeting is not more than 1000. 15 members personally present if the no. of members as on the date of meeting is more than 1000 but upto 5000. 30 members personally present if the no. of members as on the date of meeting exceeds 5000.
07.	Proxy	Section 176:- Proxies cannot be appointed in case of a company not having share capital and a member of a private company shall not be entitled to appoint more than 1 proxy to attend on the same occasion.	Section 105 (1)-Proxies cannot be appointed in case of a company not having share capital. As per the Rule 7.17, For the purpose of third proviso to the sub-section (1) of section 105, a member of a company registered under section 8 shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company.  Further, No person shall act as proxy on behalf of members not exceeding 50 and holding in the aggregate not more than 10 percent of the total share capital of the company carrying voting rights.
08.	Statements to be annexed to the Notice	Section 173 (2)- Where any item of special business to be transacted at the meeting relates to or affects any other company, then the extent of shareholding interest in that other company of every director and manager, if any, of the 1st mentioned company shall be set out in the statement, if the extent of such shareholding interest is not less than 25% of the paid up share capital of such other company.	Section 102 (2) (b)- Where any item of special business to be transacted at the meeting relates to or affects any other company, then the extent of shareholding interest in that other company of every promoter,director and manager, if any, and every KMP of the 1st mentioned company shall be set out in the statement, if the extent of such shareholding interest is not less than 2% of the paid up share capital of such other company. NOTE:- Significant change in respect of % of paid up share capital has been made and promoter and every KMP has also been brought into picture. Thus, the scope is widened.
09.	Explanatory Statement in respect of material facts	Section 173- This Section does not define material facts.	Section 102 (1):- It defines the material facts to be set out in the Explanatory Statement, namely, the nature of concern or interest, financial or otherwise, if any, in respect of each items of every director and the manager, if any; every other key managerial personnel; and relatives of all of above and  any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.
10.	Consequences for non-disclosure or insufficient disclosure in explanatory statement	No such provision in the Act	Section 102 (4):-If any benefits accrue due to non-disclosure, all the aforesaid persons shall hold such benefit in trust for the company and shall be liable to compensate the company to the extent of benefit received by them.
11.	Calling of EGM on requisition	Where the Board does not call a meeting within 21 days from the date of deposit of valid requisition not later than 45 days from the date of deposit of requisition, no provision exists of giving a list of members together with their registered address on the expiry of the forty fifth day from the date of deposit of the requisition.	As per Rule 7.15, The requisitionists shall have a right to receive and the company concerned is bound to give a list of members together with their registered address on the expiry of the forty fifth day from the date of receipt of the requisition, where the Board does not call a meeting within 21 days from the date of receipt of valid requisition not later than 45 days from the date of receipt of requisition.  The aforesaid list shall be sent as early as possible but not later than three days from the expiry of the forty fifth day.
12.	No Explanatory Statement to Notice of EGM by requisitionists	No such provision	As per Rule 7.15, No explanatory statement as required under section 102 need be annexed to the notice of an extraordinary                                                          general meeting convened by the requisitionists. The requisitionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.
13.	Penalty	Section 168:- Company and every officer of the company in default shall be punishable with a fine which may extend to Rs.50,000/- and in case of continuing default, with a further fine which may extend to Rs.2,500/- for every day after the 1st during which such default continues.	Section 102 (5)- In case of failure to comply with the provisions of Section 102 (1), a fine upto Rs.50,000  or 5 times the profit accruing to promoter, director, manager or other KMP whichever is more can be levied on the defaulting officer. NOTE:-Penal provisions in the new Act will ensure care in drafting of Notice and disclosure of material facts of any item of special business to be transacted. This is a welcome measure and transparency can be expected from the promoters/directors/managers/ KMP.

***** Thank you*****

                                                                                                                        Prepared By:-

                                                                                                                        K.V.Lakshmi

                                                                                                                        Company Secretary