Foreign Company Registration
Post Incorporation Compliance
General Meetings or meetings of the members/shareholders of a company may be of two types:
ANNUAL GENERAL MEETINGS
An Annual General Meeting (AGM) is a meeting of the members/shareholders that every company is mandatorily required to hold every financial year. An AGM is held every year to carry out certain annual appointments etc. and to inform the members of the previous and future activities of the company. It provides the shareholders and partners with an opportunity to receive copies of the company's accounts as well as reviewing fiscal information for the past year and enables them to know the directions the business will take in the future.
When is an Annual General Meeting held?
An AGM must be held by every type of company once a year and there shall not be a gap of more than 15 months between two AGMs. However,the First AGM of a company may be held at any time within 18 months from the date of its incorporation.
The AGM must be held on a working day during business hours. If any day is declared by the central government to be a public holiday after the issue of the notice convening such meeting, such a day will be treated as a working day.
Where is an Annual General Meeting held?
The AGM must be held at:
- The registered office of the company or
- At some other place within the city, town or village in which the registered office of the company is situated.
What are the legal requirements for holding an Annual General Meeting?
A notice of at least 21 days before the meeting must be given to the members unless consent is accorded to a shorter notice by all the members entitled to vote thereat. The following documents needs to be sent along with the notice of the meeting:
- A copy of the annual accounts of the company;
- Director’s report on the position of the company for the year; and
- Auditor’s report on the annual accounts.
Companies having share capital should state in the notice that a member is entitled to attend and vote at the meeting and he is also entitled to appoint proxies in his absence. A proxy need not be a member of that company. A proxy form should be enclosed with the notice. The proxy forms are required to be submitted to the company at least 48 hours before the meeting.
A company may, by appropriate provisions in its articles, fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings.
What is the Quorum required for Annual General Meeting?
Unless the articles of the company provide for a larger number, the quorum for an AGM shall be as follows:
- In case of Public company: Minimum 5 members personally present; and
- In the case of any other company: Minimum 2 members must be personally present within half an hour from the time for holding the meeting.
What are the consequences of not holding an Annual General Meeting?
The Company Law Board (CLB) may, on the application of any member
- Call or direct the calling of a general meeting which shall be deemed to be an AGM of the company;
- Give such ancillary or consequential and fine which may extend to Rs. 5,000 for continuing default, a further fine of Rs. 250 per day.
What are the businesses carried out at an Annual General Meeting?
The Ordinary Business that is taken up at every AGM is as follows:
- Declaration of dividend.
- Consideration of annual accounts, director’s report and the auditor’s report.
- Appointment of and the fixing of the remuneration of the statutory auditors.
- Appointment of directors in the place of those retiring.
Any business apart from the above is referred to as a Special Business. In order to undertake any such matter in an AGM, prior notice is required to be served to the members. Therefore, the notice calling the AGM shall be accompanied by an explanatory statement for every special business proposed to be discussed at the meeting.
What is an EGM?
An Extraordinary General Meeting (EGM) is a meeting of the shareholders of a company which is not an AGM. When certain urgent issue arises in relation to the working of the company which requires the input of the members and is too serious or urgent to wait until the next AGM, an EGM is held. Members and/or shareholders must be informed of the purpose of the EGM so that they can prepare themselves to discuss and exercise intelligent judgment over the matters under consideration.
Who can call for an EGM?
The members of the company can call for an EGM. The number of members entitled to place a valid requisition shall be as follows:
- In the case of a company having a share capital, members holding not less than one-tenth of such paid-up capital of the company that carry voting rights in regard to that matter as on the date of depositing the requisition;
- In the case of a company not having a share capital, members holding not less than one-tenth of the total voting power in regard to that matter as at the date of deposit of the requisition.
- EGM called by Board
On the receipt of a valid requisition, the board of directors of a company shall within 21 days move to call an EGM and the meeting should be held within 45 days from the date of the requisition.
- EGM called by Requisitionists
If the board fails to call an EGM, it may be called by the requisitionists themselves within 3 months from the date of deposit of the requisition. If EGM is duly commenced within the said period of 3 months, it can be validly adjourned to any day after the expiry of 3 months.
What are the essentials of a valid requisition?
The requisition for EGM shall:
- specify the matters for which the meeting is proposed to be called;
- signed by the requisitionists; and
- shall be deposited at the registered office of the company.
What are the legal requirements for holding an EGM?
A notice of at least 21 days before the meeting must be given to the members unless consent is accorded to a shorter notice by members, holding not less than 95% of voting rights in the company.
What is the Quorum Required for EGM?
Unless the articles of the company provide for a larger quorum, the following number of members shall constitute a valid quorum:
- In the case of public company: five members personally present; and
- In the case of any other company: two members personally present.
If within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved. In any other case, the meeting shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and at such other time and place as the Board may determine. If at the adjourned meeting also a quorum is not present within half an hour from the time appointed for holding the meeting, the members present shall be a quorum.
What are the consequences of not holding an EGM?
If the directors fail to call and hold the meeting as aforesaid, the requisitionists may themselves proceed to call meeting within 3 months from the date of the requisition, and claim the necessary expenses from the company.
- MINUTES OF PROCEEDINGS OF GENERAL MEETINGS
What is the time limit for preparation of minutes?
The minutes should be prepared within 30 days from the conclusion of the general meeting.
Who should sign the minutes of a meeting?
The Chairman of the same general meeting shall sign the minutes of the meeting. In the event of the death or inability of the Chairman, a director duly authorized by the board can sign the minutes.
What are the presumptions drawn from the minutes?
The following presumptions can be drawn from the minutes of a general meeting:
- Meeting was duly called and held.
- All proceedings in the meeting were duly taken place.
- All appointments of directors or officers made at the meeting were valid.
What is the method of preparation of minutes book?
- The pages of the minutes book shall be serially numbered.
- The loose leaves of the minutes must be bound in the minutes book at reasonable intervals.
- Adequate safeguards must be taken against falsification of the minutes book.
The Companies Act further states that the minutes shall in no case be attached to a minute book by pasting or otherwise.