Annual General Meeting and Statutory Meeting are two different types of meetings held in a Company. These meetings are mainly conducted by shareholders 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 meeting.
Annual General Meeting vs Statutory Meeting
The main 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. The latter on the other hand is a meeting to be held only once in the whole lifespan of a company and that too in public companies.
An Annual General Meeting is a compulsory meeting that is held once a year for the shareholders in a company. The meeting is held for updating 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.
Comparison Table Between Annual General Meeting and Statutory Meeting (in Tabular Form)
| 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 performance of the company 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 progress and management of the company and to 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 the matters concerning incorporation, share allotments, contracts and prospective ventures of the company, and so on. |
What is Annual General Meeting?
It is a compulsory meeting of shareholders that is held in both public and private companies at least once in 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 directors of the company, to give their feedback by voting for the decisions taken by the directors as well as for the prospective directors of the coming year.
To hold an Annual General Meeting, the Board of Directors needs to send a notice to 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 along with its office-bearers may be punished with a fine that may extend up to an amount of 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 which 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 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 imperatively wind up that company.
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. While 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 both public and private companies at least once every year. While the latter is held 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 year that 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.
- The objective of Annual General Meetings is to keep the shareholders informed about the decisions, progress, and management of the company and to enable them to vote for those decisions as well as for the directors of the forthcoming year. While the main objective of Statutory Meetings is to inform the shareholders about the matters regarding incorporation, share allotments, the progress of the company in terms of the contracts signed by it, and management issues.
- If a company defaults in convening Annual General Meetings, 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 Statutory Meeting is not convened by a public company, then the court can imperatively close the company.
Conclusion
Both Annual General Meetings and Statutory Meetings are important shareholder meetings as both of them keep the shareholders informed about the performance, progress, and management of the company they have invested in.
While Annual General Meetings help them to keep a check on the arbitrary decisions of the real managers of the company that is the directors. Statutory Meetings enable them to discuss and keep track of the management, success, and prospects of a new company.
References
- https://www.cambridge.org/core/journals/earth-and-environmental-science-transactions-of-royal-society-of-edinburgh/article/proceedings-of-the-statutory-meetings/69A73EBF54430F49C25DA24CFBDA6B4F
- https://www.emerald.com/insight/content/doi/10.1108/14720701011035666/full/html
- https://uwe-repository.worktribe.com/preview/979969/AGMpaperCGIJBS.pdf