Annual General Meeting of Company and its Formalities

Annual General Meeting of Company and its Formalities 

Meetings of a company basically can be classified into two types as Shareholders meeting and Directors' meetings. These two types of meting further can be subdivided into given types;

Shareholder’s Meeting  

The Company Act of India has recognized four types of meetings of shareholders; the statutory meeting, annual general meeting, extraordinary general meeting, and class meeting

But the Company Act of Nepal in Section 67(1) has classified only two types of meetings of shareholders as ordinary general meetings and extraordinary general meetings.

Ordinary General Meeting (GM)

A meeting that is held after the incorporation of a company and regularity is called an ordinary general meeting of the shareholder. It is also sub-divided into two types as below;

·       First Annual General Meeting (FAGM)

The meeting which is held for the first time is called the first annual general meeting. This meeting is also termed as a statutory or preliminary annual general meeting. Such a meeting is held for only one time in the life of the company. It is convinced as soon as the company is incorporated. 

Section 76(1) of the Company Act, 2063 of Nepal, every public company must hold its first annual general meeting within one year from the date of receiving a certificate of commencement of its business.

·       Annual General Meeting/AGM

An annual general meeting is such a time-bound meeting that is held after the holding of the FAGM. Such meetings must be held within a fixed period of time. It cannot be held unless and until the FAGM is held.

Every company in respect of informing the shareholders about the achievement, problem, future plans of the company as well as in respect of passing the annual accounts of the company, appointing auditors, and passing other important matters.

The AGM is the second meeting to be called within the time stipulated by law after the holding of FAGM. According to Section 76(1) of the Company Act, 2063, every public company after receiving a license for the operating business shall have to conduct the first annual general meeting within one year and then it shall have to conduct an annual general meeting within 6 months of completing every fiscal year.  

Matters or Formalities of AGM

The overall matters or formalities related to AGM are discussed as below:

• Call AGM

A public company shall have to provide information to the shareholders 21 days prior to the Annual General Meetings and 15 days prior to the Special General Meeting at the available address in the company mentioning the place, date and matter to be discussed. Such notice shall have to publish at least two times in the National level daily newspaper. 

However, when the postponed meeting is to be called and there are no new matters to be discussed, the meeting can be called by publishing the notice in the National Level daily newspaper 7 days prior to the meeting which will be legal.

• Presence of Directors

Every director of a company shall be present by himself in the general meeting. If any director could not be present by him in the general meeting due to circumstances out of control, he may present in the general meeting through video conference or any other similar technology and use his vote.

• Place of AGM

Unless otherwise, pre-approval is given by the office to conduct General Meeting, the public company shall have its General Meeting at District where the Registered Office of the company is located or at the border district which is suitable for majority shareholders.

However, unless otherwise mentioned in the memorandum of the Private Company, such company shall conduct its General Meeting any place within or out of Nepal. [Sec. 67(4)]

• Participation

Generally, shareholders can take participate in the GM. However, if the shareholder is an organized body any person appointed by such a body can take participate in the GM. And shareholders can appoint any person to take participate for the purpose attaining GM of the company by providing Proxy. The directors of the company must be presented at the General Meeting as far as possible.

• The legality of the meeting

Every shareholders before the commencement of the General Meeting shall determine whether the Gm has been called in pursuant to this Act and Regulations or not and in this relation, although it has not been called following other laws, if the notification is provided in pursuant to the subsection (2) of the Section 67 and the GM give assent to the conduct if it meets the quorum pursuant to the Sec. 73, such GM shall be held legal.

• Quorum

According to section 73(1) of Company Act, the quorum for the purpose of the AGM of a private company shall be as mentioned in the MA of such company. If otherwise a high number is prescribed in the MA, the meeting shall not be held unless at least 3 shareholders are not presented to meet the 50 percent share among the whole number of share representation of a share among the whole number of share representation of a share distributed Public Limited Company.

If the meeting is postponed due to the not meeting the quorum, another meeting shall be called by providing 7 days notice and 25% of shareholders' presence are sufficient for such recalled meeting.

• Operation of AGM

As per the Sec. 67(5), the company shall keep its recent records at the meeting place regarding the list of Name, Address, number of share for the inspection of shareholders.

• Discussion and Decision

As per section 67(6) of the Company Act, the AGM primarily shall discuss and decides on the matters which were mentioned in the notice sent for the AGM.

• Conclusion of Meeting

As per section 67(7) & (8) of the Act, the chairperson of the meeting can conclude the meeting as per the necessity. Such a meeting can be called later and the later called meeting can discuss and decide on the matter which was sent along with the notice. The later called meeting shall have equal legality as the prior concluded meeting.

• Special Provision for Private Limited Company

According to section 67(11) of the company Act, the general meeting and its procedures of a private company shall be held according to its MA and unanimous agreement. If such procedures are not mentioned, this act shall be applicable.

• Voting Rights

According to Section 71 of the Company Act 2063, each shareholder having a name registered in the registration book can cast vote in the general meeting. He has the right of one vote for one share. If such a listed shareholder is unable to take part in the meeting can appoint another person by providing proxy. 

• Matters to be discussed in the General Meeting

According to section 77 of the Company Act, the following are the major matters to be discussed in the general meeting;

• Annual audited financial statement, auditor report, and report of directors
• Dividend to be distributed and their remuneration
• Appointment of the directors and their remuneration
• Appointment of auditor and his remuneration
• Other particular matters presented by shareholders representing a minimum of 5% of the total votes and approved by the board of director before the notice published for the annual general meeting. 

• Details of the General Meeting to be sent at the office

According to Section 80(1) of Company Act, 2063, every company conducting annual general the meeting shall within 30 days of the holding of AGM, forward to the office a return indicating the number of shareholders presented in the meeting, number of directors presented in the meeting through video conference or any other similar technology, a copy of the annual financial statement, director’s report and auditor’s report and a resolution adopted by the meeting. 

Unless otherwise provided in the Company Act, 2063 the private company shall have to submit an auditor’s verified copy of its annual financial report within 6 months from the date of completing the fiscal year.

References

Mishra B.P. (2006), Mercantile Law, Kathmandu: Asia Books Distributers

Upreti Shreepraksh. (2018), Business Law, Kathmandu: Samjhana Publication Pvt Ltd

Panday Yugraj. (2019), Business Law, Kathmandu: Asmita Books Publisher & Distributors Pvt Ltd

Kalika S.N. (2013), The Law of Contract, Kathmandu: Prithivi Prakashan