Annual General Meetings and Statutory Meetings are two types of meetings held in a Company. Shareholders mainly conduct these meetings to keep a check on the activities of the managers of the Company, that is, the directors.
The other two types of shareholder meetings are Class Meetings and Extraordinary general meetings.
- An Annual General Meeting (AGM) is a yearly gathering of a company’s shareholders to discuss and vote on company matters, review financial statements, and elect board members; a statutory meeting is a mandatory meeting held by a public limited company within a specified period after starting its business operations, as required by law.
- AGMs are held annually, while statutory meetings are one-time events within a specified timeframe after the company’s establishment.
- Both meetings involve shareholder participation, but AGMs address ongoing company matters and performance, whereas statutory meetings focus on initial business operations and legal compliance.
Annual General Meeting vs. Statutory Meeting
The difference between the Annual General Meeting and Statutory Meeting is that the former is a mandatory meeting to be held once a year in both public and private companies. On the other hand, the latter is a meeting to be held only once in the whole lifespan of a company, and that too in public companies.
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An Annual General Meeting is a compulsory meeting held once a year for the shareholders of a company. The conference is held to update the shareholders on the performance and progress of the company.
A Statutory Meeting, on the other hand, is the first meeting held by a public company with share capital not less than one month and not more than six months after the commencement date of the business. It is held only once in the company’s whole lifetime.
|Parameter of Comparison||Annual General Meeting||Statutory Meeting|
|Definition||It is a compulsory company meeting to be held once a year to keep the shareholders updated about the company’s performance and elect its directors for the forthcoming year.||It is the first meeting held in a public company with share capital after the commencement of its business.|
|Company Type||Both public and private companies.||Public Companies|
|First Meeting||Within one and half years (18 months) of the Company’s incorporation.||Within not more than one month and not less than six months.|
|Number of Meetings||Once a year.||Once in the whole lifespan of the company.|
|The objective of the meeting||To keep the shareholders informed about the company’s progress and management and enable them to give their feedback on company issues and elect the company’s executives for the forthcoming year.||To keep the shareholders informed about matters concerning incorporation, share allotments, contracts, prospective company ventures, etc.|
What is Annual General Meeting?
It is a compulsory shareholder meeting held in public and private companies at least once a year within the last six months of the annual accounting period.
Such a meeting aims to keep the shareholders updated about the management and progress of the company and the decisions taken by its directors.
Such meetings are the only occasions that allow the shareholders to interact with the company’s directors to give their feedback by voting for the decisions taken by the directors and the prospective directors of the coming year.
To hold an Annual General Meeting, the Board of Directors must notify the entitled members at least 21 days before the commencement of the meeting. Along with the notice, attested copies of the Balance sheet and Profit and Loss account, Auditor’s report, and Director’s report should be delivered to the members.
However, an Annual General Meeting can be held at a shorter notice if the members agree to vote in the meeting.
If a company fails to hold an Annual General Meeting, then the Union Government, at the request of a member, can direct or itself call for such a meeting and give the instructions it deems relevant for the purpose.
Also, the company and its office-bearers may be punished with a fine that may extend up to Rs.500, and an additional amount of Rs.250 per day would be charged for the duration of such continuous defaults.
What is Statutory Meeting?
It is the first meeting held by a public company after the commencement date of the business within not less than one month and not more than six months. It is convened only once in the whole lifespan of a company.
The objective of such a meeting is to keep the shareholders informed about the issues related to incorporation, allotted shares, the performance of the new company so far, etc.
Companies that do not need to convene such a meeting include a private company, a company limited by Guarantee and not having a share capital, a public company that was earlier registered as a private company, a company having unlimited liability, and a company registered as a public company under Section 43A.
A notice mentioning “Statutory Meeting” along with a Statutory Report must be sent to the entitled members at least 21 days before the commencement of the meeting.
The Statutory Report must contain information relating to the allotment of shares, cash received by the company so far, a summary of the receipts and payments made by the company, information about the management personnel like directors, auditors, and others, contracts signed by the company so far, information about arrears that are due and the brokerage or commission that has been paid or to be paid to any director concerning the sale of any debentures or shares of the company.
If a company fails to call for a Statutory Meeting, then the court has the authority to wind up that company imperatively.
Main Differences Between Annual General Meeting and Statutory Meeting
- Both meetings are held in the interest of the shareholders. But Statutory Meetings are held once in the whole lifespan of the company. At the same time, Annual General Meetings are held at least once a year within six months of the conclusion of the annual accounting period.
- The main difference between an Annual General Meeting and a Statutory Meeting is that the former is held in public and private companies at least once yearly. While the latter is contained only in public with share capital, and that too only once in the whole lifespan of the company.
- After the incorporation of a company, it is compulsory to hold the first Annual General Meeting within one and a half years, which is 18 months. While a Statutory Meeting of a public company must be held within not more than one month and not more than six months.
- Annual General Meetings aim to keep the shareholders informed about the company’s decisions, progress, and management and enable them to vote for those decisions and the directors of the forthcoming year. While the main objective of Statutory Meetings is to inform the shareholders about matters regarding incorporation, share allotments, the progress of the company in terms of the contracts signed by it, and management issues.
- Suppose a company defaults in convening Annual General Meetings. In that case, the directors can be fined by the court, which may extend up to Rs. 500, and an additional amount of Rs. 250 would be charged every day for the period of such continuous defaults. While if a public company does not convene a Statutory Meeting, then the court can imperatively close the company.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.