If the company does not hold the AGM of the company, then how is the AGM held?

As per the Companies Act 2013, every company is required to hold an Annual General Meeting (AGM) each year within six months from the end of the financial year. 

Section 96 provides that every company must hold an AGM in each financial year, and the gap between two AGMs should not be more than 15 months.

The AGM is a critical event for companies, as it provides an opportunity for shareholders to discuss and approve various matters related to the company's business, including the financial statements, auditor's report, appointment of directors, and other important matters.

However, in some cases, a company may not be able to hold the AGM within the prescribed time due to various reasons such as lack of quorum or unforeseen circumstances. In such situations, it is essential for the company to take appropriate measures to ensure that the AGM is held as soon as possible to comply with the statutory requirements.

Extension of time from Registrar of Companies (ROC) to hold AGM

One option available to companies is to request an extension of time from the Registrar of Companies (ROC) to hold the AGM. The request for an extension of time should be made in writing, explaining the reasons for the delay and the proposed date for holding the AGM.

The ROC may approve the request for an extension of time if it is satisfied with the reasons provided by the company. The ROC may also impose certain conditions on the company, such as the submission of the financial statements and auditor's report before the proposed date of the AGM.

Once the extension of time is granted, the company can hold the AGM on the proposed date. The company should ensure that all statutory requirements related to the AGM, such as sending notice to shareholders and filing of annual returns, are completed within the prescribed time.

Application to National Company Law Tribunal (NCLT) to order the holding of AGM

If a company fails to hold the AGM within the prescribed time, or if the ROC does not approve the request for an extension of time, or if the company fails to hold the AGM even after the extension of time, then the members of the company can approach the National Company Law Tribunal (NCLT) and request that it orders the holding of the AGM. Any member of the company may approach the National Company Law Tribunal (NCLT) for an order to call the AGM.

The NCLT has the power to call the AGM if it is satisfied that the company has failed to call the meeting despite the members' demand or that the AGM cannot be called by the company without the Tribunal's order.The NCLT may order the holding of the AGM and may also give directions to the company regarding the conduct of the meeting. 

The NCLT may make an order that the AGM be held on a specific date, and the company must comply with the order. The NCLT may also give directions on the matters to be considered at the AGM, the quorum required, and the appointment of a chairman to conduct the meeting. The NCLT may also appoint an independent person to conduct the AGM if necessary.

It is important to note that the NCLT will only exercise its power to call an AGM if there is a genuine dispute or a situation where the members' rights have been violated. The NCLT will not interfere in routine matters that can be resolved through normal procedures.

Section 97 as per Companies Act, 2013

97. Power of Tribunal to Call Annual General Meeting

(1) If any default is made in holding the annual general meeting of a company under Section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:

Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act.

Penalties

It is essential for companies to comply with the statutory requirements related to the holding of the AGM to avoid penalties and legal consequences. If a company fails to hold the AGM within the prescribed time, it can face penalties ranging from a fine of Rs. 1 lakh to Rs. 5 lakh, and its officers can face imprisonment for up to six months.

In addition to the statutory penalties, the failure to hold the AGM can also affect the company's reputation and creditworthiness. Investors and lenders may view the company as non-compliant and may hesitate to invest or lend to the company in the future.

Therefore, it is crucial for companies to take the necessary steps to ensure that the AGM is held within the prescribed time. Companies should also maintain proper records and documentation related to the AGM, including minutes of the meeting, to avoid any legal or operational issues in the future.

Conclusion

In conclusion, if a company fails to hold the AGM within the prescribed time, it can request an extension of time from the ROC, and if the request is not approved, the members of the company can approach the NCLT to order the holding of the AGM. Companies should ensure that all statutory requirements related to the AGM are complied with to avoid penalties and legal consequences. The failure to hold the AGM can also affect the company's reputation and creditworthiness, highlighting the importance of timely compliance with the statutory requirements.

Please get in touch with our Experts in SeedUp if you are a shareholder of a Company that has not held its Annual General Meeting.