What are the legal recourses?
Delayed Annual General Meeting
An Annual General Meeting (AGM) is a mandatory yearly gathering between the Board of Directors and shareholders (members) of a company for making the shareholders aware of the company's performance and to present balance sheet as well as profit and loss account.
The provisions of Section 81 of the Companies Act, 1994 along with some other provisions are applicable concerning the holding of AGM.
Section 81(1) of the Companies Act, 1994 states that every company whether public or private shall hold its AGM in each calendar year. A company must hold its first AGM within 18 (eighteen) months from the date of its incorporation. After the first AGM, each AGM must be held within a period not more than 15 (fifteen) months.
The Registrar of Joint Stock Companies and Firms (RJSC), the incorporating authority of companies in Bangladesh, may on an application made by a company within 30 (thirty) days from the date of expiry of the aforesaid period for holding the AGM, extend the time, not being the first AGM, shall be held for a further period not exceeding 90 (ninety) days or not exceeding 31st December, whichever is the earlier. However, RJSC has no power to extend the delay for holding the AGM beyond the specified period.
To call an AGM, a 14 (fourteen) days' notice in writing is required to be sent to every member under Section 85(1) of the said Act stating the date, time and place of such meeting along with the statement/agenda of the business to be transacted at the meeting.
However, an AGM may be called with a shorter notice if it is so agreed in writing by all the members entitled to attend and vote. But accidental omission to give notice or the non-receipt of notice by any member shall not invalidate the proceedings of the meeting. The Board of Directors for bona fide and proper reason may postpone or cancel any notice convening an AGM.
There may be various situations where the company may not be able to hold the AGM within the statutorily prescribed timeframe. The Honourable High Court Division of the Supreme Court of Bangladesh has the jurisdiction under section 81(2) and 85(3) of the Companies Act, 1994 to direct the company to hold AGM by condoning the delay.
Under Section 81(2), if a company defaults in complying with the provisions of Sub-Section (1) as stated above, the Court may, on the application of any member of the company, call or direct the calling of a general meeting of the company and give such ancillary or consequential direction as the Court thinks fit.
Therefore, an application for condoning the delay in holding the AGM shall be made before the Honourable High Court Division under Section 81(2). It is the discretion of the Court to allow or reject the application. After hearing the Petitioner and perusal of the application, if the Court finds a prima facie case and admits the application, the Court shall thereby give direction to the Petitioner to publish the notice of the application in two national newspapers within the stipulated time as prescribed by this Court.
Also, the Petitioner shall be directed to file affidavit-in-compliance after complying with the aforesaid direction of the Court within the prescribed time. Accordingly, the Petitioner in compliance with the direction shall file the Affidavit-in-Compliance about the newspaper publication. Thereafter, if the court finds merit after hearing the learned Advocate for the Petitioner and allows the application with a view that the delay in the circumstance should be condoned, in that case, the court shall give direction to the RJSC to accept all fillings and returns accordingly, in connection with the said AGM and shall further imposed fine on the Petitioner company.
However, the Directors shall not be exempted from the responsibility of holding the AGM for any reason whatsoever. It is the duty of the Board of Directors of the company to hold an AGM after the close of every financial year and required to discharge functions imposed on them by the provision of the Companies Act, 1994. According to Section 82 of the said Act, if the default is made in holding the meeting as per Sub-Section-1 of Section 81 or in complying with any directions of the Court under Sub-Section-2 thereof, the company and every officer of the company who is in default shall be punishable with fine which may extend to Tk. 10,000 (ten thousand takas) and in case of continuing default, with a further fine which may extend to Tk.250 (two hundred fifty takas) for every day after the first day during which such default continues.
AGM is of great importance as it ensures a transparent as well as accountable management in business. This is a forum to reflect its corporate governance too. Furthermore, the members have the opportunity to participate and raise their voices in different affairs of the company. Thus, a company must hold the AGM timely, as it plays a dynamic and pivotal role to ensure the interest of the shareholders.
Afrin Jahan Khan is Advocate, Supreme Court of Bangladesh & Senior Associate, Legal Counsel
Law Column is authored by the associates of Legal Counsel which is one of the leading full-service corporate law chambers of Bangladesh having core expertise in corporate and commercial law, employment and labor law, family law, property law, corporate taxation and so forth. (www.legalcounselbd.com or email at [email protected])