Organizing Annual General Meetings for Public Companies in Nepal: A Comprehensive Guide

This article describes the fundamental steps required to hold an Annual General Meeting (AGM) of a public company including the time period to conduct the meeting along with the procedure for such meeting.

1. What is an Annual General Meeting?

An annual general meeting (AGM) is a gathering of all shareholders and directors for the purpose of interacting and discussing the annual performance or annual report, which provides shareholders with information regarding the company’s strategy and performance.

1.1. What is the Governing Authority behind Annual General Meeting?                                   

The Office of the Company Registrar (“OCR”) is the authoritative body with the authority to regulate a company’s AGM.

1.2. What are the Relevant Laws for Annual General Meeting?

Law    

Provisions

Companies act, 2063

Chapter-5 (Meetings of a Company)

 

2. What is the Time Period to Conduct AGM?

In the event that a public company is authorized to commence operations, it is obligated to conduct an annual general meeting (AGM) within one year. Subsequently, the AGM must be conducted annually within six months following the conclusion of the fiscal year. 

If a company fails to conduct an AGM even within three months after the expiration of time period mentioned above, then the office may give the direction to call for the AGM of a company.

If a company fails to conduct AGM even after the time period mentioned above, if a shareholder files a petition, the court may cause to hold the AGM or issue appropriate order.  

3. What is the Procedure for conducting Annual General Meeting in Nepal?

Step 1: Issue Formal Notice of Shareholders

An advance notice of ’21 days’ is required for the company to convene the annual general meeting (AGM) of its members. Additionally, a notice must be carried in a national daily publication a minimum of twice.

The notice ought to include the meeting location, date, and time, as well as the hour of the scheduled meeting.

When required, the information contained in the statements and reports may also be distributed via electronic communication channels.

Step 2: Determine the Agenda of AGM

Before an AGM begins, the office is required to determine the agenda and distribute it to the shareholders.

General Agenda: Annual financial statement

  1. Auditor’s report
  2. Directors’ Report

Special Agenda:

  1. Increasing the authorized capital of the company,
  2. Decreasing or altering the share capital of the company,
  • Altering the name or main objectives of the company,
  1. Amalgamating one company into another company,
  2. Issuing bonus share,
  3. Buying back of own shares by the company,
  • Selling shares at a discount etc.

Step 3: Submission of report to office

The company needs to submit the report to office 21 days before the holding of AGM.

The report should include:

  • The total number of the shares allotted,
  • Number of fully paid up and unpaid shared out of the allotted shares out of the allotted shares,
  • Particulars of director, managing director, auditor, executive chief and manager of the company, and amount of remuneration, allowance and facility paid to them,
  • The amount claimed to be receivable by the company or payable by the company to any other person to details of, lawsuits, if any, ongoing in this respect,
  • A statement of the management expenditures of the company in a financial year,
  • The number of dividends yet to be claimed by the shareholders,
  • Other necessary matters.

Step 4: Quorum for an AGM

The articles of association of a private company shall delineate the minimum requirements for a quorum at its general meeting.

A public company is required to have a minimum of three shareholders, each of whom must hold more than fifty percent of the total number of shares allotted to the company.

Step 5: Annual report presentation by Board of directors

Audited annual financial statements, the auditor’s report, and the director’s report are presented by the directors at a public company’s annual general meeting.

Step 6: Voting and Decision

With regard to all matters submitted for a vote, the resolution of the meeting shall be considered as the opinion of the majority of the shareholders in attendance.

 In the event that the ballots for and against an item are divided evenly during a general meeting, the chairperson may exercise the casting vote.

An individual may only participate in the AGM and cast a vote if their name appears in the shareholders register.

Step 7: Minute to be prepared by the company

The minutes of the Annual General Meeting (AGM) must be recorded in every company. The AGM minutes are a written record of the deliberations that took place during the meeting. They provide a record of the proceedings and resolutions adopted during the AGM. 

Step 8: Return of report of AGM to office

The public company is required to provide the Office with the following information thirty days after the annual general meeting: a return detailing the number of shareholders in attendance, a copy of the annual financial statement, the director’s report, the auditor’s report, and any resolutions adopted by the meeting.

The office in question will assess a fine in the event that the company neglects to submit the returns.

4. What are the Post Annual General Meeting Procedures?

In accordance with legal requirements, all public companies must distribute the following: returns of annual general meetings detailing the number of shareholders in attendance, a copy of the annual financial statement, the directors’ report and auditors’ report, and any resolutions enacted by the meeting. Additionally, the Organization is obligated to provide the Office with a copy of the auditor-certified Annual Financial Statement no later than six months after the conclusion of its Fiscal Year.  

5. Conclusion

Under the oversight of the Office of the Company Registrar (OCR), AGMs are mandated by the Companies Act, 2063. Public companies are obliged to convene an AGM within one year of commencing operations and annually thereafter within six months of the fiscal year-end. The Annual General Meeting Begins with issuing formal notices to shareholders, delineating the agenda (inclusive of general and special items), submitting reports to the office, ensuring a quorum, presenting annual reports by the board of directors, conducting voting, preparing meeting minutes, and submitting post-AGM reports to the office.

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