Issues undertaken at the Annual General Meeting
1. Review of the Financial Statements: Management puts the financial statements on the floor. The income statement, balance sheet, and cash flow statement are presented to shareholders to adopt the financial statements. Management also discusses another significant financial event that occurred over the past year.
2. The Election of the Board of Directors: The management of the company is undertaken by the board of directors, and they are conferred with the powers to make important decisions on behalf of shareholders. Shareholders cast their votes for the candidates they think are deserving candidates to manage the affairs of the company.
3. Appointing Auditors: This is one of the most important aspects of the AGM. The auditor is an independent party that is appointed to ensure that the financial statements of the company depict the true and fair picture of the affairs of the company and are free from any material misstatement. The shareholders pass a resolution at the meeting to appoint the auditor for a particular period, and even the remuneration of the auditor is fixed by the shareholders.
4. Compensating the Leadership: As the office bearers are selected to manage the affairs of the company, another aspect is to remunerate them for their efforts and advice. This includes paying salaries, bonuses, and other forms of compensation to the office-bearers. The board reviews the performance of the company’s top leadership and makes decisions regarding their payment, and then shareholders give their assent to the agenda.
5. Dividend Payment: The Board of Directors must state in the Directors Report the amount of dividend that they agree to pay as a dividend. The dividend recommended by the Board of Directors in the Board’s Report must be declared at the AGM of the company, and the shareholders share their assent or disagreement with the same. A declaration of dividend constitutes an item of ordinary business to be transacted at every AGM.
6. Approving the Minutes of the Previous AGM: Managing the minutes of the meeting allows the board to ensure proper records of all decisions made at the previous meeting. Shareholders can ask to make any corrections before the board finalizes the minutes of the meeting.
7. Making Changes to the Company’s Constitution: The members or shareholders of the company vote for the changes that require the approval of the members or shareholders either by ordinary resolution or by special resolution. The changes could be any amendment of articles of association, share capital, etc.
Annual General Meeting: Meaning, Legal Requirements and Quorum
Annual General Meeting (AGM) is a yearly meeting of the company’s shareholders, stockholders, members, firms and organizations. Annual General Meeting (AGM) is held every financial year and it is mandatory for everyone to attend. A company is one of the most popular types of business arrangements in India and is widely selected by entrepreneurs and non-individual entities to run businesses and achieve their objectives. In India, the Companies Act, 2013 is the umbrella act regulating companies and all related compliances. The purpose of forming the Companies Act is to provide a legal framework for the formation of companies, covering the strata of incorporation, compliance, accountability, management, administration, etc.
Section 2(20) of the Companies Act, 2013 defines a company as a “Company incorporated under this act or any previous company law.”
Geeky Takeaways:
- A company is an artificial person created by law and has a separate legal entity, perpetual succession, a common seal, and limited liability.
- As members manage the affairs of the company, it is required that they all gather along with all the office bearers of the company and discuss performance, targets, upcoming action plans, etc.
- In the Annual General Meeting, functions like reviewing company accounts, approving audited accounts, elections, and financial records of the past year are discussed.
Table of Content
- Legal Requirement for Holding an Annual General Meeting
- Quorum for the Annual General Meeting
- Issues undertaken at the Annual General Meeting
- Conclusion
- Frequently Asked Questions (FAQs)
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