Companies Act Section 121

Companies Act, Section 121: Report on Annual General Meeting

Section 121 of the Companies Act outlines the obligations of listed public companies concerning the preparation and filing of a report on their Annual General Meeting (AGM). This section ensures that AGMs are conducted in accordance with legal provisions, promotes transparency, and enables regulatory authorities to monitor corporate governance practices.

This provision consists of the following key elements:

1. Mandatory preparation of an AGM report by listed public companies.

2. Submission of the AGM report to the Registrar of Companies (ROC) within a stipulated time frame.

3. Penalties for non-compliance, including fines for the company and its officers.

1. Requirement to Prepare an AGM Report

Applicability

This requirement applies exclusively to listed public companies.

Private companies and unlisted public companies are not obligated to submit such a report.

Contents of the Report

The AGM report must be prepared in a prescribed format as per the Companies Act and associated rules.

The report must include confirmation that:

The AGM was convened, held, and conducted in compliance with the provisions of the Companies Act.

The rules and regulations regarding shareholder participation, quorum, voting, and resolutions were properly followed.

This ensures that shareholders' rights are safeguarded and the company adheres to corporate governance norms.

2. Filing the AGM Report with the Registrar of Companies (ROC)

Time Limit for Filing

The AGM report must be filed within 30 days from the conclusion of the AGM.

The company must submit the report along with the prescribed fees as per regulatory guidelines.

Additional Fees for Late Filing

If the company fails to file within the stipulated 30-day period, it may still file the report by paying an additional fee, as prescribed by regulatory authorities.

However, continued delay may result in penalties.

Filing this report with the ROC ensures that the company's AGM proceedings are officially recorded and subject to regulatory review.

3. Penalties for Non-Compliance

If a listed public company fails to file the AGM report within the required timeframe, the following penalties will be imposed:

(a) Penalty on the Company

The company shall be liable to pay a penalty of ?1,00,000 for failure to file the report within 30 days.

If the failure continues, the company will be subject to an additional penalty of ?500 per day after the first day of default.

The maximum penalty the company may face is ?5,00,000.

(b) Penalty on Company Officers in Default

Every officer of the company responsible for the default will be personally liable.

Each defaulting officer will be subject to a minimum penalty of ?25,000.

If the failure continues, an additional penalty of ?500 per day will be imposed.

The maximum penalty per officer is ?1,00,000.

These penalties serve as a deterrent against non-compliance and encourage listed companies to adhere to the legal requirements regarding AGMs.

4. Importance of Section 121

Ensuring Compliance with Corporate Governance Norms

By mandating an AGM report, this provision ensures that AGMs are conducted properly and in compliance with corporate laws.

Protecting Shareholders' Rights

Listed companies have a large number of shareholders, and an AGM is a crucial event for them to participate in decision-making.

This section ensures that shareholders can trust that meetings are held fairly and transparently.

Regulatory Oversight

Filing the report with the ROC ensures that regulators can review and verify AGM proceedings.

This enables early detection of any corporate governance failures or violations of shareholder rights.

Penalties as a Deterrent

The strict penalties for non-compliance discourage companies and their officers from delaying or avoiding their legal obligations.