Anaya Nolan
Annual General Meetings (AGMs) are held to facilitate interaction between the management and shareholders of a company. In India, the Companies Act, 2013 makes it compulsory for all companies except One Person Companies (OPCs) to hold an AGM annually to discuss yearly results, the appointment of auditors, and other business matters. While shareholders can attend and vote at AGMs in person, the pandemic accelerated the trend of virtual AGMs, with the Indian Ministry of Corporate Affairs allowing companies to conduct AGMs through video conferencing or other audio-visual means. This has made it more convenient for shareholders to participate without the need for travel. However, concerns have been raised about the potential for companies to muzzle minority shareholder voices in virtual AGMs.
| Characteristics | Values |
|---|---|
| Can shareholders attend AGM remotely? | Yes, the Ministry of Corporate Affairs has allowed companies to conduct AGMs through video conferencing or other audio-visual means (OAVMs) until 31 December 2022. |
| What is an AGM? | An Annual General Meeting (AGM) is a meeting held between the management and shareholders of a company. |
| Who can attend? | All shareholders can attend and vote at AGMs. Majority and minority shareholders have the right to attend meetings or designate a proxy to attend and vote on their behalf. |
| When is an AGM held? | An AGM must be held within six months of the end of the financial year (by 30 September every year). The time gap between two AGMs should not exceed 15 months. |
| What is discussed at an AGM? | The business transacted at an AGM includes: the consideration of financial statements, the director's report and auditor's report, dividend declaration, appointment of directors and auditors, and other special business. |
| How is an AGM conducted? | The company sends emails to shareholders at least 21 days before the meeting, highlighting the agenda and key decisions. Shareholders can cast their votes electronically before the AGM or by physical or postal ballot during the meeting. |
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What You'll Learn
Voting by physical ballot, postal ballot, or e-voting
Under Indian corporate law, members (including shareholders) of a company are entitled to attend and vote at the Annual General Meeting (AGM) by physical ballot, postal ballot, or e-voting. A postal ballot allows shareholders to cast their votes without physically attending the meeting, while e-voting is facilitated through an electronic platform authorised by the Ministry of Corporate Affairs, Government of India. The platform is certified by the Standardization Testing and Quality Certification (STQC) Directorate, Department of Information Technology, Ministry of Communications & IT, Government of India. NSDL, the organisation responsible for creating the e-voting system, also provides an option for companies to facilitate electronic voting at the meeting venue using portable devices like tablets.
The Companies Act, 2013, makes it compulsory for all companies except One Person Companies (OPCs) to hold an AGM annually to discuss matters such as financial statements, the director's report, auditor's report, dividend declarations, and the appointment of directors and auditors. The Act also specifies that the time gap between two annual general meetings should not exceed 15 months.
Shareholders who are unable to attend the AGM in person may vote by proxy, either online or by mail. Proxies must be appointed in writing, and the proxy form should be signed by the member. In the case of corporate shareholders, the form should be signed and sealed by an authorised signatory.
The postal ballot system was introduced to facilitate "corporate democracy" and make it more convenient for shareholders to cast their votes without attending the general meeting. It is applicable to all public companies with more than 200 members and private limited companies. However, One Person Companies (OPCs) or entities with 200 or fewer members cannot utilise this voting system.
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Appointing proxies
Under Indian corporate law, members (including shareholders) of a company are entitled to appoint proxies to attend an AGM and vote on their behalf. This is only applicable when it is a poll vote. The proxy should be appointed in writing, and the proxy form should be signed by the member. If the proxy is appointed by a corporate shareholder, the proxy form should be signed and sealed by an authorised signatory of the corporation.
The Companies Act, 2013, outlines that a member of a company registered under Section 8 is not permitted to appoint any other person as their proxy unless that person is also a member of the company. Additionally, a person can act as a proxy for up to fifty members, holding no more than ten percent of the company's total share capital. If a member holds more than ten percent of the total share capital with voting rights, they may appoint a single proxy, who cannot represent any other member or shareholder.
It is important to note that proxies do not have the right to speak at the AGM and can only vote on a poll. The Central Government may also prescribe certain classes of companies whose members are not entitled to appoint proxies.
The appointment of proxies should be made at least forty-eight hours before the meeting, as per the articles of the company. Members are entitled to inspect the proxies lodged during a specified period before the meeting, provided they give sufficient written notice to the company.
With the impact of the COVID-19 pandemic, the trend of virtual AGMs has increased in India. This has made it easier for shareholders to attend without the need for travel, although it has also raised concerns about the potential for companies to muzzle the voices of minority shareholders.
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The role of the chairman
The chairman must ensure that all voices are heard equally and that decisions are made fairly and impartially, without attempting to influence members' views or disclose how they intend to vote. The chairman is also responsible for maintaining order, regulating the orderly expression of views, and guiding the members through the meeting. They must ensure that all motions and amendments are within the scope of the notice and powers of the meeting and that the relevant documents are available.
The chairman plays an important role in facilitating the meeting and ensuring it runs on time. They ensure that all items on the agenda are properly discussed, resolved, or tabled, and that the members are acting in accordance with the rules and conventions of the meeting.
In addition, the chairman can convene the AGM, set the agenda, and supervise the preparation and confirmation of notices, the agenda, and the minutes. They do not, however, possess decision-making powers and can only make decisions if delegated by the committee or owners' corporation.
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The minutes of the AGM
The AGM itself is a forum for interaction and discussion between the management and shareholders, with shareholders entitled to attend and vote in person or by proxy. The meeting covers a range of business, including the presentation and adoption of financial statements, consideration of reports, dividend declaration, and the appointment of directors and auditors.
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The validity of virtual AGMs
In India, the first mention of virtual general meetings dates back to 2011 with General Circular No. 27/2011, where the MCA (Ministry of Corporate Affairs) allowed meetings to be held electronically as part of a green initiative. However, the trend of virtual AGMs gained momentum during the pandemic when physical meetings became challenging due to lockdowns and social distancing norms. The MCA's circulars have been seen as a relaxation to ease the hardship faced by companies and shareholders in conducting and attending physical meetings.
In Australia, the Australian Securities and Investments Commission (ASIC) has taken a 'no-action' position on virtual AGMs during the pandemic, allowing companies to postpone meetings and use technology to facilitate participation. However, ASIC has also cautioned that virtual AGMs could shut out shareholders, and companies should ensure that all members have a reasonable opportunity to participate.
To summarise, the validity of virtual AGMs varies depending on the jurisdiction. While some countries have embraced virtual meetings, others are still navigating the legal complexities and considering amendments to existing laws. It is essential to refer to the specific laws and regulations in each country to determine the validity of virtual AGMs.
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Frequently asked questions
Yes, they can. The Ministry of Corporate Affairs has allowed companies to conduct AGMs through video conferencing or other audio-visual means (OAVMs). Shareholders can attend these meetings from the comfort of their homes.
The company will send an email to alert shareholders at least 21 days before the meeting. The notice will highlight the meeting's agenda and key decisions requiring approval from shareholders. Shareholders can also view the annual report on the company's website.
Virtual AGMs have become more popular since the pandemic, as they are easier for shareholders to attend without the hassle of travel. They also allow for wider shareholder participation across the country.
