Every company holds at least one meeting with its shareholders every year, which is called the annual general meeting. The first annual general meeting of the company is held within nine months after the first financial year close. The gap between one meeting and the next should not be of more than 15 months.
If a company fails to conduct a meeting, there are two possible consequences. Firstly, any member can apply to the tribunal for a direction to conduct the meeting. Secondly, a member can apply under section 97 of the act for the tribunal to give directions on when the meeting should be conducted. The failure to call this meeting either generally on the order of the tribunal is an offence punishable with fine. The penalty is imposed upon the company as well as every officer who is in default.
In the case of Meenakshi Mills Co Ltd v. Registrar of Joint Stock Companies, the company’s annual general meeting failed to be held in December 1934 and was adjourned to March 1935. The subsequent meeting was held in February 1936, which led to prosecution as the meeting was not held in 1935. The court held that the adjourned meeting in March 1935 was not valid as each year’s meeting is important for the company. Therefore, the company was convicted.
The registrar has the power to extend the annual general meeting for a special reason for a period of only three months. However, the meeting must still be held during business hours, between 9 am and 6 pm. It should be held on a day that is not a public holiday. The meeting must also take place at the location where the registered office is situated.
Importance of annual general meeting: The annual general meeting is a protection for the shareholders of the company. Ultimately, control and destiny should be in the hands of the shareholders. It is highly desirable that shareholders come together once a year to review the company’s work. During this meeting, some directors retire and are re-elected by the shareholders. At that time, shareholders have control to re-elect directors. They can also take action to disapprove policies. They can also retire and re-elect auditors. Directors deliver speeches and answer any questions shareholders may have regarding the company’s accounts and affairs.
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