Annual General Meeting
Also called: AGM · Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
An Annual General Meeting (AGM) is the yearly meeting of a company's shareholders. At this meeting the directors put the company's accounts before the owners and answer their questions. Shareholders also vote on key matters, such as appointing directors and auditors. It matters because it is the main place where directors answer to shareholders, and small shareholders can question the people running the company face to face. Under Section 96(1) of the Companies Act 2013, no more than 15 months may pass between one AGM and the next.
Example
In 1926, a shareholder named P.D. Shamdasani took seven directors of the Tata Iron and Steel Company (TISCO), and Tata Sons Ltd, to court in Bombay. His charge was that they had not held the AGM within 15 months of the previous one, as the Indian Companies Act required. They pleaded guilty and were each fined Rs. 5. The case shows that a clear, dated duty like this gives even one small shareholder a rule they can enforce.
Don't confuse with
- Extraordinary General Meeting (EGM): an EGM is a shareholders' meeting called between AGMs to deal with an urgent or special matter. An AGM is a required yearly meeting.
- Board meeting: only directors attend a board meeting, and it runs the company's business. Shareholders attend the AGM, and it holds the board to account.