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.
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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.
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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.
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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
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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.
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Consequences for non-disclosure or
insufficient disclosure in explanatory statement
|
No such provision in the Act
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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.
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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.
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12.
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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.
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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:-
