Annual accounts and directors report at the annual general meeting

At annual general meeting, the performance of the company in the last financial year and to consider the question of payment of dividend and of reappointment of directors and of auditors. Accordingly section 173 of the act prescribes that business other than the following that may be considered at every annual general meeting are special business:

  • The statement of dividend
  • The selection of directors in place of those retiring.
  • The selection of directors in place of those retiring.
  • The appointment of auditors.

Annual accounts and directors report

Annual accounts and directors report at the annual general meeting

All matters at general meetings other than AGM considered special business

All matters other than the foregoing four items of business are considered special business at every annual general meeting. Insofar as a general meeting other than an AGM is concerned their company directors, thus all matters of business that are considered at a general meeting are considered special business.

Object of classifying business as special

The object is two-fold. First, this instantly highlights the attention of members and provokes them to know about the matter. If necessary makes them to attend the meeting personally whenever possible.

All material facts concerning each item of such special business and in particular mentioning the nature of the concern or interest, if any, of every director or manager therein.

Where any such item of special business relates to register a company and any other company. The shares held by the directors and manager, if any, of the first mentioned company in the order shall be disclosed in the statement where the said shareholding is not less than 20% of the paid-up share capital of the other.

Further, where an item of special business involves approval or reference to any document, the place and time where the document can be inspected by a member should also be indicated in the statement.

Provisions of section 173 apply also to a private limited company

The provisions of section 173 apply to a private limited company in case this section is not excluded in the articles of a private limited company. However, this section shows that a public limited company and a private limited company which is a subsidiary of a public company. It is specified in a private limited company which is an auxiliary  of a public company, is treated as a public company.

All matters other than special deemed ordinary

For the purpose of general understanding it may be convenient to state (although this is not used in the act) that there are only four items of business which are deemed to be ordinary business and all other items of business that are placed at an AGM and all the business at other general meetings of members are special business. The annual accounts of every company must be deemed ordinary in their subjects.

Lack of incomplete or inadequate explanatory statement will make a general meeting invalid

The said explanatory statement is intended to apprise the members of all material facts concerning each item of special business to enable the members to come to a proper judgment on the said item. Reappointment of additional directors at the annual general meeting not special business

The annual general meeting of a company vide section 173(1). The private limited company directors are also have a retirement as contemplated by the said section may be by rotation, efflux of time or otherwise. If therefore, under the section 260 an additional director appointed by the board of directors. If such a director is to be appointed director at the annual general meeting.

Appointment of a director in a casual vacancy as a director in AGM

Where it is proposed to appoint a director in a casual vacancy as a regular director at the AGM up to which the original director would have held office, notice under section 257 with deposit of Rs.500 would be necessary.

Director to stand for directorship

In a director meeting, the notice shall be given to the company at least 14 days before a general meeting along with a deposit of Rs.500. The company shall inform the members of the notice by serving individual notices not less than 7 days before the meeting. The notices are to be placed in your local newspapers which the registration office is located. The deposit will be refunded to the person, if the person nominated succeeds in getting elected at the general meeting. The company will take action on the notice only if there is a vacancy which can be filled.

Explanatory statement to set out all material facts elucidation by the department

An explanatory statement setting out the material facts concerning each such item of business, shall be attached to the notice of the meeting, and have not been observed by the company registration statements and managements. It has been noticed that important material facts such as those relating to the quantum of remuneration payable, academic/technical qualifications and the business experience of the proposed appointee, the necessity of his appointment, etc.