Annual general meeting is statutorily mandated gathering of interested members. At the AGM, the directors of the company present a annual report of the company to its shareholders, and further informs them about their past performance and strategy. Shareholders are given an opportunity to vote on various issues such as appointment of directors, executive, dividend, compensation, selection of auditors, and other resolutions.
The purpose of AGM is to provide shareholders opportunity to meet and discuss matters in relation to company. Since the owners of company that is shareholders are different from the ones managing the company that is board of directors. Thus it provides an opportunity to shareholders to know about the affairs and working of the company, represent their thoughts and concerns about the company or its functioning.
Companies act provide for AGM to be conducted in the absence of director, wherein Chairperson can give explanation for absence of director from the meeting. But what if whole board is absent?
That is serious issue to be concerned about, that whether a AGM can be conducted in absence of all of the Board of Directors. Because there are so many instrumental values such as satisfying the shareholders in regards with conduct of company, making them answerable and empowering shareholders. And also intrinsic values which might be associated with the same, since owner and manager are different, making manager answerable to owner.
The statutory exception that provides for Chairpersons explanation for absence of director should be used only in cases in which it would be very difficult for directors due to various reasons to be physically present for the meeting. Procuring presence of all directors might be quiet cumbersome for the company, and might come with high cost involved in the same, and the intention behind carving out such exception is best to continue conduct of company smoothly without hassle. But when none of the director is present in the meeting, it defeats the whole purpose of AGM. AGM shouldn’t be conducted just for sake completing the formalities as required by the statute, but it must be conducted taking in regards the ulterior motive for conducting the same that is shareholder and directors interaction.
Further it is also possible that complete absence of Board of Directors from Meeting might evidence, presence of mismanagement of the company, and its intention to evade statutory obligation it owes to its shareholders, and might be proceeded before relevant tribunals.
Views expressed are personal, please take independent Legal advice from a professionals.
Ghostline Legal