Section 97 of the Companies Act, 2013 – Power of Tribunal to Call Annual General Meeting

Section 97 of the Companies Act, 2013 reads as follows –

(1) If any default is made in holding the annual general meeting of a company under section 96, the Tribunal   may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:

Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act.

If a company does not conduct its Annual General Meeting (AGM) within the prescribed timeframe, any member of the company may approach the Tribunal with an application to request its convening. As per statutory requirements, all companies, except one-person companies, must hold an AGM every financial year. In case of default, members have the right to seek judicial intervention to ensure compliance.

Upon receiving such an application, the Tribunal evaluates the circumstances leading to the non-conduct of the AGM. If the company is unable to justify the delay with reasonable grounds, the Tribunal has the authority to order the company to hold the AGM. The Tribunal may issue necessary directives regarding the conduct of the meeting and ensure its legitimacy.

For the Tribunal’s directive to be effective, at least one company representative must be present during the meeting. In case of non-compliance, the direction may be deemed invalid. However, once an AGM is conducted in accordance with the Tribunal’s instructions, it holds the same legal standing as a regular AGM convened under the Companies Act, 2013. Any resolutions or decisions taken in such a meeting remain legally binding.

For instance, if a company, say “ABC Ltd.,” fails to conduct its AGM within the stipulated time, a shareholder, Mr. X, may file an application before the National Company Law Tribunal (NCLT). The Tribunal may then issue an order mandating the AGM’s conduct and allowing the presence of a single member, Mrs. X, to satisfy the quorum requirement, thereby validating the meeting under Section 97.

Additionally, no provisions of the Companies Act or the company’s Articles of Association can override the Tribunal’s order. The company is obligated to comply, failing which further legal consequences may follow.

Types of Meetings Under Section 97 of the Companies Act:

• Annual General Meeting (AGM):

• • Companies are required to conduct an AGM each year.
  • These meetings cover both Ordinary Business (e.g., financial statement review, dividend declaration, director appointments, and auditor approvals) and Special Business (any other matters requiring shareholder approval).
  • If a company defaults in conducting the AGM, members can approach the Tribunal for intervention.

• Extraordinary General Meeting (EGM):

• • EGMs are held to address urgent matters that cannot wait until the next AGM.
  • These meetings are called when required by members to handle special business.

• Meeting of Class Members:

• • Specific groups, such as preference shareholders, may hold meetings to discuss resolutions affecting their rights.
  • These meetings follow the same rules as general meetings with necessary modifications.

• Meetings of Debenture Holders and Creditors:

• • These meetings are conducted to approve resolutions affecting debenture holders or creditors.
  • Participants have the right to vote and express their views.

Role of the Tribunal in Ensuring Compliance:

If a company does not hold its AGM on time and the Registrar of Companies (ROC) refuses an extension, members can petition the NCLT to order the meeting. The Tribunal may specify the date, provide instructions regarding the agenda, quorum, and even appoint a chairperson if necessary. However, the NCLT only intervenes in genuine disputes and rights violations, avoiding routine business matters.

Filing an Application for Calling an AGM:

• Form NCLT-1:

  • A company member seeking the Tribunal’s intervention must file an application using Form NCLT-1.

• Petition Submission:

  • A formal petition must accompany the application.
  • The member must verify the petition, and legal counsel must review and present the facts before the Tribunal.

• Payment of Filing Fees:

  • A prescribed fee must be paid, and proof of payment should be submitted along with the application.

• Additional Documents:

1. • Any relevant documents providing further clarity to the Tribunal should be included in the submission.

Conclusion on Section 97 of Companies Act 2013

If a company, other than a one-person company, fails to hold its AGM within the financial year, it must conduct the meeting within six months of the end of the financial year or within fifteen months from the previous AGM, whichever is earlier. If it fails to do so, any company member may file an application using Form NCLT-1, requesting the Tribunal’s directive to convene the AGM. The Tribunal’s directive is only valid if at least one company representative appears before it.

Frequently Asked Question of Section 97 of Companies Act 2013

1. What authority does the Tribunal have under Section 97 ?
   The Tribunal can issue directives to a company for conducting its AGM if the company has failed to do so.
2. What form is required for filing an application ?
   Form NCLT-1 must be submitted for requesting an AGM.
3. Who can file an application for convening an AGM ?
   Any company member, including directors and shareholders, may apply to the Tribunal for calling an AGM.

This article is presented by CA B K Goyal & Co LLP Chartered Accountants, your trusted partner in audit and compliance solutions. For expert assistance, feel free to contact us.