In Bangladesh, holding Annual General Meetings (AGMs) is a vital responsibility for companies to ensure transparency and accountability to their shareholders. AGMs allow shareholders to review the company’s performance, elect directors, and make important decisions regarding its future.
Understanding AGMs’ procedures and legal requirements is crucial for companies operating in Bangladesh to comply with regulatory frameworks and uphold corporate governance standards.
What are Annual General Meetings in Bangladesh?
An annual general meeting (AGM) in Bangladesh is held once a year by shareholders. At this meeting, the company’s directors present an annual report to the shareholders. This report details the company’s performance and future direction over the past year.
During the AGM, voting shareholders have the opportunity to make important decisions. They vote on matters such as choosing auditors, deciding CEO salaries, approving dividend payments, and appointing members to the company’s board of directors.
AGMs are essential for ensuring transparency and allowing shareholders to share their opinions in the company’s management. It is a formal way for the company to communicate with its shareholders and for shareholders to express their opinions and make their voices heard.
Procedure Of The Annual General Meeting In Bangladesh
Here is the correct procedure for holding Annual General Meeting in Bangladesh:
Timing
Companies in Bangladesh must hold an annual general meeting (AGM) within nine months of the end of their fiscal year. According to section 81 of the Companies Act, AGMs must occur once every calendar year, with at most fifteen months passing between consecutive meetings.
Notice
An AGM can be convened after providing shareholders a written notice at least fourteen days in advance. For resolutions requiring a supermajority (at least 95% approval), known as special resolutions, the notice period extends to twenty-one days. The Board of Directors must distribute a report to shareholders before the meeting, either through registered email, speed mail, or online platforms.
Quorum
A quorum of at least two members must be present to proceed with an AGM, including proxies. Public companies must have at least five members in attendance to establish a valid quorum.
Documentation
During the AGM, certain documents must be presented:
- The company’s annual financial report
- Auditor’s report
- Director’s report
These reports provide shareholders with comprehensive insights into the company’s financial health and performance over the past year.
Questions
Shareholders are told to ask questions during the AGM. They can inquire about various aspects of company management in the remuneration report and address queries to the auditors if prompted by the AGM chair.
Audit
Shareholders can submit written inquiries about corporate affairs to the company auditor at least five days before the AGM. These inquiries must be directed to the board of directors, who will then forward them to the auditor if they pertain to corporate matters.
This structured procedure ensures that AGMs in Bangladesh are conducted in accordance with legal requirements, fostering transparency and accountability within corporate governance practices.
Agenda Of AGM In Bangladesh
During an Annual General Meeting (AGM) in Bangladesh, the following topics or business transactions are typically covered:
Adoption of Audited Financial Accounts
Shareholders review and adopt the company’s audited financial accounts, which provide a detailed summary of the company’s financial performance over the past year.
Examination of Director’s Report and Auditor’s Report
The director’s report, outlining the company’s activities and performance, and the auditor’s report, verifying the accuracy of financial statements, are scrutinized and discussed.
Shareholder Dividend Announcement
Shareholders are informed about the dividend declared for the year, if any, and discuss matters related to the distribution of profits.
Appointment of New Directors
Shareholders vote to appoint new directors to the board, replacing outgoing ones or filling vacancies to ensure effective governance.
Selection of Auditors and Setting of Compensation
Shareholder meetings are an important time for stakeholders to make decisions on how the company is run. Voting on issues like choosing auditors and setting their compensation ensures everyone has a say in the company.
Additional Business
Any other matters not included in the regular agenda may be discussed under special business, requiring specific resolutions or shareholder decisions.
This structured agenda ensures that all essential matters are addressed during the AGM, allowing shareholders to participate in key decisions and company governance processes.
Rights Of AGM Members
Members of an Annual General Meeting (AGM) in Bangladesh, which includes shareholders, have specific rights and privileges. These rights include attendance at the meeting and the ability to vote on various matters concerning the company’s affairs. Depending on the company’s provisions, members can exercise their voting rights through paper ballots, mail-in ballots, or electronic ballots.
During an AGM, members also have the option to appoint proxies to represent them and cast votes on their behalf. The proxy appointment must be in writing, with the member signing the proxy form to authorize another individual to act on their behalf.
Corporate shareholders must sign and seal the proxy form if they designate a proxy to attend and vote at the meeting. The chairperson of the AGM can be chosen by the members present at the meeting. However, suppose the company’s articles of association specify a chairperson. In that case, that person will preside over the AGM as per the legal requirements.
These rights ensure that members, including shareholders, can actively participate in decision-making processes and governance matters during the AGM, contributing to transparency and accountability within the company.
Minutes Of An AGM
The Annual General Meetings (AGM) minutes are a crucial record that every company must prepare without exception. These minutes document the proceedings and decisions made during the AGM.
The minutes include a summary of the actions taken and resolutions approved during the meeting. They serve as the official record of what happened and what the shareholders and directors agreed upon.
Within thirty days after the AGM, all relevant parties must finalize and approve the minutes. Once approved, the company places the minutes into the minute book kept at the registered office or a Board-designated location.
Any member or shareholder of the company has the right to access the AGM’s minute book upon written request to the company. Access may be subject to payment of a reasonable fee, as determined by the company.
Accurate, accessible minutes ensure transparency, accountability, and a historical record of AGM decisions in governance practices.
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Time Extension For Holding An AGM
In Bangladesh, the Registrar of Companies (RoC) has the authority to grant an extension of up to three months for conducting an Annual General Meeting (AGM). The company must submit an e-form GNL-1 to the RoC to request an extension.
In the request, the company needs to provide valid reasons for why an extension is necessary. State these reasons clearly and propose the required length for the extension.The RoC will review the justifications provided by the company for granting the extension.
This process allows companies flexibility in meeting their AGM obligations under certain circumstances, ensuring that they can comply with legal requirements while addressing any unforeseen challenges or situations that may affect their ability to hold the AGM within the prescribed time frame.
Penalty For Postponing The AGM
Failure to convene an AGM within the specified timeframe under section 81 of the Companies Act of 1994 incurs penalties in Bangladesh. The responsible person or business may initially face a penalty of up to 10,000 takas for delaying the AGM.
If the delay continues, the Tribunal will impose an additional fine of 250 takas per day until the AGM occurs.. The Tribunal can intervene if a company fails to hold the AGM within the mandated time or any extended period granted by the Registrar of Companies.
In these circumstances, the Tribunal can direct how to conduct the AGM according to its instructions. Continued non-compliance with the Tribunal’s directives can lead to more severe penalties. For not following the Tribunal’s AGM orders, the Tribunal may fine the company and its officers up to Rs 1 lakh.
These penalties ensure companies hold AGMs on time, promoting transparency and accountability in corporate governance practices.
Conclusion
In conclusion, holding Annual General Meetings in Bangladesh is a legal Advice and a deep-rooted aspect of corporate governance. AGMs serve as platforms where shareholders can actively participate in company affairs, ask questions, and contribute to decision-making processes.
By following the Companies Act of 1994, companies can foster trust and ensure transparency and accountability among shareholders and stakeholders.
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