Highlights
- Definition
- Timeframe and Duration
- Steps to Conduct an Annual General Meeting (AGM)
- Importance of an AGM
- Consequence of not Holding the AGM
Definition
Section 133(1) of the Companies Act, No. 12 of 2002 provides that Annual General Meeting (AGM) is a mandatory yearly meeting of a company’s shareholders or members where key decisions affecting the company are discussed and approved. It provides shareholders with the opportunity to receive information about the company’s financial performance, elect directors, and raise questions or concerns.
Timeframe and Duration
- For the company holding its new Annual General Meeting then it must hold the AGM within 18 months of incorporation as clearly provided under Section 133(2) of the Companies Act No. 12 of 2002.
- Thereafter, Section 133(3) of the Companies Act, No. 12 of 2002 states that an AGM must be held once in every calendar year, and not more than 15 months shall elapse between AGMs.
Steps to Conduct an Annual General Meeting (AGM)
1. Preparation of the Agenda
The law under Section 133(1) (a-f) provides that the Annual General Meeting shall transact the following business as Agendas:
- Presentation of Annual accounts.
- Presentation of Directors’ report
- Presentation of Auditors’ report
- Appointment of directors.
- Appointment of auditors.
- Any special resolutions to be discussed.
2. Issuance of Notice to Members
- It is a statutory requirement to issuance a written notice of the AGM to all members at least 21 clear days before the date of the meeting as provided under section 135 and 136 (a) of the Companies Act, No. 12 of 2002.
- The notice must include:
- Date of the meeting.
- Time the meeting will start.
- Venue of the meeting (physical location or virtual platform).
- Agenda of the meeting.
- Any relevant documents (e.g., financial reports).
Notices can be sent by hand, post, or electronically (if permitted by the company’s articles).
3. Venue and Timing
- Choose a convenient venue accessible to most members (or host virtually if allowed).
- Clearly state the time of commencement in the notice.
- Ensure the venue is properly arranged with necessary equipment (e.g., projectors, seating, internet).
4. Conducting the Meeting
- The Chairperson of the board presides over the meeting.
- Ensure quorum is met as defined in the Articles of Association.
- Go through each agenda item:
- Present reports and statements.
- Allow members to ask questions.
- Conduct voting on key resolutions.
5. Recording Minutes
- The company secretary has to take minutes of the meeting.
- Minutes should record:
- Names of attendees.
- Resolutions passed.
- Votes cast.
- Questions raised and responses given.
6. Post-AGM Compliance
Section 145 (1) of the Companies Act, No. 12 of 2002 provides that the passed resolution shall be delivered to the registrar for registration after thirty days from which the resolution has been passed.
- File relevant resolutions and financial statements with Business Registration and Licensing Authority (BRELA) as required.
- Update company records to reflect decisions made.
Importance of an AGM
- Ensures transparency and accountability in the management of the company.
- Allows members to exercise control over major decisions.
- Promotes good corporate governance.
- Facilitates the approval of audited financial statements.
- Provides a forum for appointing or reappointing auditors and directors.
Consequence of not Holding the AGM
According to Section 133(4) and Section 133(7) of the Companies Act, there are two key implications for failing to hold an Annual General Meeting (AGM):
- Ministerial Direction to Convene AGM
Section 133 (4) provides that, if a company fails to convene an AGM, any member may apply to the Minister for intervention. Upon such application, the Minister may issue directions or convene the meeting, and provide further instructions as deemed appropriate by the Registrar. These directions may include modifications or supplements to the procedures outlined in the company’s articles, specifically regarding the calling, holding, and conducting of the meeting. Any meeting held or resolution passed in accordance with such directions, whether in person or by proxy, shall be regarded as a valid AGM.
- Penalties for Non-Compliance
Section 133 (7) provides that, failure to hold an AGM, either as required generally or in accordance with directions issued by the Registrar, renders the company and every officer in default liable to a fine. Furthermore, if the company fails to submit a copy of the passed resolution to the Registrar within fourteen days for registration, both the company and its officers shall be subject to a default fine.
