Companies Act Section 96

Companies Act, Section 96: Annual General Meeting

Section 96 of the Companies Act deals with the legal requirements related to the Annual General Meeting (AGM) of a company. This provision is crucial for ensuring that companies engage with their shareholders, promote transparency, and adhere to corporate governance norms. The section outlines the timing, requirements, and conditions for holding an AGM, specifying the responsibilities of the company in relation to this important event. Below is an elaborated explanation of this section.

Subsection (1): Requirement for Holding an Annual General Meeting

1. Mandatory Annual General Meeting for Companies (Except One Person Companies):

General Requirement: Section 96 mandates that every company, with the exception of a One Person Company (OPC), is required to hold at least one general meeting in each financial year. This meeting is called the Annual General Meeting (AGM), and it is an essential part of the corporate governance structure of the company.

The AGM must be in addition to any other meetings that the company may hold during the year. The purpose of the AGM is to allow shareholders to receive comprehensive updates on the company’s performance, discuss its strategy, and vote on key matters such as the appointment of directors, the approval of financial statements, and the declaration of dividends.

2. Timing of the Annual General Meeting:

Time Gap Between AGMs: A key requirement of Section 96 is that no more than fifteen months can elapse between the date of one AGM and the date of the next. This ensures that shareholders are regularly updated on the company’s affairs and have the opportunity to discuss important matters on an annual basis.

First Annual General Meeting (AGM):

For a newly incorporated company, the first AGM must be held within nine months from the end of its first financial year. This is an exception to the general timing requirement and ensures that even new companies engage with shareholders in a timely manner.

Subsequent AGMs: After the first AGM, the company must hold the AGM within six months from the end of each financial year. This ensures that the company’s AGM occurs within a reasonable period after the close of each financial year, allowing shareholders to discuss the company’s financial performance, operations, and plans.

3. Exemption from AGM in the Year of Incorporation:

A company is not required to hold an AGM in the year of its incorporation if it has held its first AGM in compliance with the time frame mentioned above (within nine months of the first financial year’s closing). This provision acknowledges that newly incorporated companies may not have sufficient operational history to hold a comprehensive AGM in the same year of their incorporation.

4. Extension of Time for Holding AGM:

Registrar’s Discretionary Power: The Registrar of Companies (RoC) has the authority to extend the time within which any AGM, other than the first AGM, should be held. The extension can be for a period not exceeding three months. This provision allows for flexibility in exceptional circumstances, such as unforeseen operational delays, regulatory changes, or other valid reasons that may prevent the company from holding the AGM within the specified period.

Subsection (2): Conditions for Calling and Holding the Annual General Meeting

1. Time of Day for Holding the AGM:

The AGM must be held during business hours, which are defined as being between 9 a.m. and 6 p.m. on a day that is not a National Holiday. This ensures that the meeting takes place during a period when shareholders, directors, and company representatives are generally available.

By restricting the meeting hours to business hours, the provision prevents meetings from being held at inconvenient or unsociable times, ensuring that participants can attend the AGM without undue inconvenience.

2. Location of the Annual General Meeting:

The AGM must be held at the registered office of the company or at another location within the same city, town, or village where the registered office is situated. This requirement ensures that the meeting takes place in a location that is accessible to shareholders and closely associated with the company’s operations.

This rule aims to keep the AGM within a reasonable geographic range of the company’s registered office, ensuring that shareholders can easily attend the meeting in person if they wish to do so.

3. Special Provisions for Unlisted Companies:

Unlisted Companies Holding AGMs Anywhere in India: If a company is unlisted, it has the flexibility to hold the AGM at any location in India, provided that all the shareholders give their written consent or consent via electronic mode in advance. This provision offers greater flexibility for companies whose shareholders may be geographically dispersed across the country, facilitating easier participation in the AGM.

4. Exemption for Certain Companies:

The Central Government has the authority to grant an exemption from the provisions of this subsection for specific companies, subject to conditions it may impose. This could apply in cases where the AGM may be held at a different time or location than the one prescribed in the section. This provision allows the government to adapt the rules based on the circumstances of the company, ensuring that the law remains flexible and applicable to a variety of business models.

5. Definition of National Holiday:

For the purposes of this section, the term "National Holiday" is defined as any day that is officially declared as a National Holiday by the Central Government. This ensures clarity around the days when the AGM cannot be held, avoiding confusion about whether the meeting can be scheduled on such holidays.