First AGM, Later AGMs and EGMs: Founder Timelines Under Sections 96-100
When a new company must hold its first AGM, how often after that, where meetings can sit, the s.99 fine for missing them, and how members can force an EGM.
CA Harun Raaj
makeitlegit.in
You have incorporated, the business is running, and a meeting clock is already ticking. Sections 96 to 100 of the Companies Act, 2013 set the meeting rules. They decide when the first annual general meeting (AGM) is due and how often AGMs follow. They say where meetings can sit and what the Tribunal can do when meetings are not held. They also set the fine, and let members holding one-tenth of the voting share capital force an extraordinary general meeting (EGM). The Tribunal is the company law tribunal. Founders who put these dates in a compliance calendar at incorporation rarely meet the Tribunal.
This article covers the meeting timetable only; notice periods and explanatory statements under ss.101-102 are not covered here.
The AGM rhythm: fifteen months, nine for the first, six after
The core rule is in s.96(1): every company other than a One Person Company must "in each year hold in addition to any other meetings, a general meeting as its annual general meeting", must specify the meeting as such in the notices calling it, and "not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next" (s.96(1), Companies Act 2013).
A One Person Company is outside that sentence altogether. Every other company, whether private, public, small or large, lives under three nested limits:
- no more than fifteen months between two consecutive AGMs;
- for the first AGM, "within a period of nine months from the date of closing of the first financial year of the company" (first proviso to s.96(1));
- in any other case, "within a period of six months, from the date of closing of the financial year" (first proviso to s.96(1)).
Put simply, the first AGM is measured from the close of your first financial year, not from the date of incorporation. Every later AGM is measured from the close of that later year, and the fifteen-month gap between two AGMs always applies on top.
Two provisos that change the arithmetic
The second proviso to s.96(1) says that if a company holds its first AGM within the nine-month window, "it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation". Take a company incorporated in October whose first financial year closes the following 31 March. Its first AGM falls due within nine months of that close, that is by 31 December of the following year. The incorporation year is the year in which it was incorporated, and the proviso confirms that no separate AGM is owed in that year provided the first AGM is held as the section requires. Do not read the proviso as extra time; it only removes a meeting.
The third proviso says "the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months". Two things to note. The extension is for the Registrar to grant for a special reason, so it is not a right you can assume. And it does not apply to the first AGM at all. For planning purposes, treat the nine-month deadline for your first AGM as fixed.
If your first financial year is going to close at an awkward time, decide that when you set the accounting year, not afterwards: the nine months run from the close, and nothing in s.96 stretches them.
Where and when an AGM can be held
Section 96(2) says an AGM "shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday". It must be held "either 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 situate". "National Holiday" means a day declared as such by the Central Government (Explanation to s.96(2)).
Three constraints sit in that one sentence: hours between 9 a.m. and 6 p.m., not a National Holiday, and at the registered office or elsewhere in the same city, town or village.
There is a relaxation for an unlisted company. The first proviso to s.96(2) allows an unlisted company's AGM to be held "at any place in India if consent is given in writing or by electronic mode by all the members in advance". The words that matter are "all" and "in advance". A single dissenting or silent member means the relaxation is not available, so collect the written or electronic consents before the meeting is called rather than at the door. The second proviso adds that the Central Government may exempt any company from s.96(2) on conditions it imposes; if you rely on an exemption, keep the notification and check the conditions.
When the AGM is not held: any member can go to the Tribunal
If a company defaults in holding its AGM under s.96, "the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient" (s.97(1), Companies Act 2013). The proviso adds that the directions "may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting".
For a founder this means three practical points:
- the application can come from any one member; s.97(1) states no minimum shareholding;
- the Tribunal can act despite the articles, so a quorum clause in your articles will not protect you;
- the Tribunal can deem a single member present in person or by proxy to be a meeting.
A meeting held under s.97(1) "shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act" (s.97(2)). Whether it affects how the fifteen-month interval is counted is not stated in the section, so do not assume that it resets the clock; take advice on the dates.
When any other meeting cannot be called: the Tribunal supplies the procedure
Section 98 covers meetings other than an AGM. If "for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company", the Tribunal may act on its own motion or on the application of "any director or member of the company who would be entitled to vote at the meeting" (s.98(1)).
It may order the meeting to be called, held and conducted as it thinks fit, and may give ancillary directions, including directions "modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company". The proviso again allows a direction that one member present in person or by proxy is deemed to constitute a meeting (s.98(1)). A meeting held in accordance with the order is deemed "for all purposes" to be a meeting of the company duly called, held and conducted (s.98(2)).
This is the route of last resort for a company where the ordinary machinery has broken down, for example because the procedure in the articles cannot be followed. The section does not need any particular dispute; it needs impracticability.
The penalty for missing a meeting: s.99
Section 99 attaches a fine. "If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues" (s.99, Companies Act 2013).
Expressed in figures, the fine can extend to ₹1,00,000 on the company and on each officer in default, and where the default continues, a further fine of up to ₹5,000 for every day it continues. The section reaches a failure to hold the AGM under s.96, a failure to hold the meeting the Tribunal has directed under s.97 or s.98, and a failure to comply with the Tribunal's directions. The words are "may extend to", so the amount is not fixed, but the daily element means delay is expensive. Late filing is a separate subject and not covered here.
EGMs: the Board's call and the one-tenth requisition
The Board "may, whenever it deems fit, call an extraordinary general meeting of the company" (s.100(1)). No special reason is needed. An EGM must be held at a place within India, except for the EGM of a wholly owned subsidiary of a company incorporated outside India (proviso to s.100(1)). A foreign parent therefore cannot require the EGM of an ordinary Indian company to be held abroad.
Members can also compel the Board. A requisition is a formal written demand. Under s.100(2) the Board must call an EGM on a requisition made by:
- in a company having a share capital, members who hold, on the date of receipt of the requisition, "not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting" (s.100(2)(a));
- in a company without share capital, members who have, on that date, "not less than one-tenth of the total voting power of all the members having on the said date a right to vote" (s.100(2)(b)).
The threshold is measured on the date the requisition is received. The measure for a share-capital company is the paid-up share capital that carries the right to vote, not simply the number of members.
What a valid requisition looks like
The requisition "shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company" (s.100(3)). A requisition that is unsigned, does not set out the matters, or is not sent to the registered office does not satisfy the section.
The 21, 45 and three-month clock
Section 100(4) provides: "If the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition."
Three periods follow. The Board has twenty-one days from receipt to proceed to call a meeting. The meeting itself must be on a day not later than forty-five days from receipt. If the Board falls short on either, the requisitionists may call and hold the meeting themselves, within three months from the date of the requisition. Note that the section works matter by matter ("in regard to any matter"). The Act text does not state how to count the days, so confirm the count for your own dates.
A meeting called by the requisitionists "shall be called and held in the same manner in which the meeting is called and held by the Board" (s.100(5)), so the ordinary meeting formalities apply to them too.
Who bears the cost
"Any reasonable expenses incurred by the requisitionists in calling a meeting under sub-section (4) shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuneration under section 197 payable to such of the directors who were in default in calling the meeting" (s.100(6)). The company pays first, and the amount comes out of the remuneration or fees of the directors who defaulted.
What to do now
- Next step: put the first AGM date (nine months from the close of the first financial year) and the six-month dates for later years in your compliance calendar today (first proviso to s.96(1)).
- Deadline: the first AGM within nine months of the close of the first financial year, other AGMs within six months of the close of the financial year, and never more than fifteen months between two AGMs (s.96(1) and first proviso). A member requisition has to be acted on within twenty-one days of receipt, for a meeting on a day not later than forty-five days from receipt (s.100(4)).
- Consequence: the company and every officer in default can be fined up to ₹1 lakh, and up to ₹5,000 more for each day a default continues (s.99); any member can apply to the Tribunal for an AGM (s.97(1)); and requisitionists can call the EGM themselves, with their reasonable expenses reimbursed by the company and deducted from the remuneration of the defaulting directors (s.100(4) and (6)).
Have a CA review your facts before you act or file.
FAQ
When is the first AGM due?
Within nine months from the date of closing of the first financial year of the company (first proviso to s.96(1)). The Registrar's three-month extension is for AGMs "other than the first annual general meeting" (third proviso to s.96(1)).
How often after that?
Within six months from the close of each financial year, with no more than fifteen months between consecutive AGMs (s.96(1) and first proviso).
Does a One Person Company hold an AGM?
Section 96(1) applies to "every company other than a One Person Company", so the section does not require one.
Can an unlisted company hold its AGM outside its home city?
Yes, at any place in India, if all the members consent in writing or by electronic mode in advance (first proviso to s.96(2)).
Can one member force a missed AGM?
A member can apply to the Tribunal under s.97(1) where a default has been made in holding the AGM. Whether the Tribunal calls the meeting is for the Tribunal to decide.
What if the Board ignores an EGM requisition?
If it does not act within twenty-one days of a valid requisition for a meeting on a day not later than forty-five days from receipt, the requisitionists may call and hold the meeting themselves within three months of the requisition (s.100(4)).
What is the fine for not holding the AGM?
The company and every officer in default can be fined up to ₹1 lakh, plus up to ₹5,000 a day for a continuing default (s.99).
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See Also
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