Procedures of an Annual General Meeting (AGM) in Bangladesh
A company’s annual general meeting (AGM) is a required yearly gathering. There is the possibility of a penalty if the AGM is not held. A corporate lawyer or secretary must understand the AGM process, including time, notice requirements, and any implications. The essay will concentrate on the obligatory requirements of the Company Act of 1994.
AGM (Annual General Meeting)
The Annual General Meeting (AGM) is a yearly gathering of an organization’s members or shareholders. It provides a forum for key stakeholders to meet and discuss crucial issues concerning the organization’s performance, strategy, and governance.
Participants in the AGM get updates on the organization’s financial performance, elect or reappoint directors, approve financial statements, and address any other topics on the meeting agenda. It enables shareholders to ask questions, express concerns, and participate in decision-making processes that influence the future of the organization. The AGM is critical in developing openness, accountability, and member and shareholder participation.
Annual General Meeting (AGM) Procedures
According to business law, there are a few statutory procedures. The steps are as follows:
- Timing Notice
- Quorum Documents
- Audit Question
- Registration of special and exceptional resolution copies
- Annual General Meeting Dates
A corporation must conduct its annual general meeting within eighteen months of its incorporation. Following the Gregorian calendar, each corporation must hold the annual general meeting as prescribed in Section 81, and no more than fifteen months must elapse from one annual general meeting to the next.
Annual General Meeting Notice
An annual general meeting can be held fourteen days after receiving written notice. A special resolution can be called with 21 days’ notice. The Board of Directors shall compile a report and distribute it to each member of the company at least twenty-one days before the meeting. If the report is forwarded after the time period specified by law, it is presumed to have been duly forwarded, and no shareholders can object to it. The notification for a valid shareholder’s meeting must be submitted within twenty-one days of the special resolution.
The Annual General Meeting quorum
A meeting requires a quorum of at least two members, who must be present at the AGM (proxies included). At least 5 members must be present in public corporations.
AGM Documents Required
The following documents must be presented at the Annual General Meeting:
- Annual financial report of the company
- Report of the Auditor
- Report of the Director
The AGM chair will allow shareholders to ask the company’s management, remuneration report, and auditors questions.
Shareholders can ask the auditor any questions about the company’s issues in writing at least five days before the AGM or during the meeting. They must submit their questions to the board of directors, and if they are relevant to the company’s operations, the company will convey them to the auditor. The auditor of the company is entitled to attend the annual general meeting and respond to all queries.
Registration of special and exceptional resolution copies
Within fifteen days of the resolution’s passage, a copy shall be printed and officially certified under the signature of any authorized person and given to the Registrar for recording.
A copy of the registered item has been affixed to every copy issued after the date of the resolution; if it is not registered, it must be forwarded for printing for fifty taka or such less sum as the business may prescribe. In the event of a breach, a corporation will be accountable for fifty taka per copy.
Any deliberate default committed by a corporate employee is punishable under Section 88.
Penalty for postponing the AGM
If a default is made in terms of holding the annual general meeting at a prescribed time in accordance with sub-sections (1) and (2) of Section 81 of the Companies Act, 1994, the person and company who is liable for the default will be punished with a fine of up to ten thousand takas, and if the default continues, it will be two hundred fifty takas every day after the first day during which such default continues.
Consequences and Penalty for Default in Holding an AGM
In case a company fails to hold an AGM within the stipulated time or extension obtained by it, the Tribunal may itself or on an application made by any director or member order an AGM to be conducted as per its directions.
If the company further defaults in holding a meeting in accordance with the directions of the Tribunal, the company and every officer of the company who commits the default shall be punishable with a fine of up to Rs 1 lakh. In case of continuing default, a fine of Rs 5,000 per day is levied for each day during which the default continues.
Special Procedure For The Year 2023
Companies are allowed to hold Annual General Meeting via Video Conferencing (VC) or Other Audio-Visual Means (OAVM) in the year 2023. The procedure is as given below:
|Content of Notice||The circular’s structure must be included in the notification. According to General Circular No. 17/2020 dated April 13, 2020, the following matters must also be disclosed when posting the notice in accordance with Rule 20(4)(v):|
1) A statement that the EGM has been called in accordance with the Act and the terms of General Circular No 14/2020.
2) The date and time of the EGM as determined by VC or OAVM.
3) The availability of the meeting notice on the website and stock exchange.
4) Information on how members who do not have a registered email address can vote via remote e-voting or during the meeting.
5) The method via which members’ email addresses can be registered.
6) The method by which members who own physical shares but have not registered their email addresses can vote via remote e-voting or the e-voting system during the meeting.
7) The option for members to receive profits directly into their bank accounts via ECS or any other means.
8) Any other information that has to be communicated.
|Mode of issuing Notice||In the current situation, notices can be delivered to e-mail addresses registered with the company or depository participants.|
Before sending out notices with financial statements, the company must publish at least once in a vernacular newspaper in the district where its registered office is located and once in an English daily, preferably with electronic editions.
|Access to Auditor’s Report||Due to the difficulty of sending out physical copies of financial statements (including the Board’s report, Auditor’s report, or other papers), these can be sent out by e-mail to members, trustees, and those entitled.|
|Dividend dispatch measures||Companies can create suitable preparations for members to give their mandate for receiving dividends immediately in their bank accounts via ECS or any other means. Dividend warrants/cheques may be mailed to stockholders who have not supplied their bank account information.|
|Matters considered in the AGM||Only the items of special business, considered to be unavoidable by the Board, may be transacted, apart form ordinary business.|
|Mode of conducting a meeting||The meeting must be conducted through Video Conferencing or other audio-visual means (OAVM).|
|Place of conducting AGM||At any other location in the district where the company’s registered office is located, taking the necessary precautions. It can also arrange virtual meetings with some members physically present and provide the facility of VC or OAVM to allow other company members to join in such meetings.|
|Quorum of the AGM||All the members physically present in the meeting and those attending the meeting through the.facility of VC or OAVM shall be taken together for arriving at the quorum under section 103 of the Act.|
|How is voting done?||All resolutions will continue to be passed via the facility of e-voting system.|