All about the First Annual General Meeting (AGM) of a Private Limited Company
Have you formed a private limited company on or after 01/01/2023? If yes, then this guide is for you! Let’s go through everything you need to know about first financial year and first Annual General Meeting (AGM) of your newly formed private limited company in simple terms.
What is the First Financial Year of new company?
When you start a company, your first financial year begins on the day of incorporation and typically ends on the following 31st March. However, if your company was incorporated on or after 1st January, your first financial year can extend to 31st March of the next year. Means first financial year can be of maximum fifteen months! as against regular twelve months. This gives you some extra time to close your books and prepare your financial statements.
When should the first AGM be held?
For a private limited company, the company must hold first AGM within nine months from the end of its first financial year. Accordingly, a new Company can hold first AGM Typically before 31st December of the year i.e. 31st March+ 9 months. E.g. First financial year for companies incorporated between 01/01/2023 to 31/12/2023 will end on 31st March 2024 and can hold first AGM on or before 31st December 2024. If the company holds its AGM within this timeframe, it doesn’t need to hold another AGM in the same calendar year.
What Happens in the First AGM?
Here’s a quick look at the main agenda items typically covered in the first AGM:
- Approval of Financial Statements: The directors present the company’s audited financial statements, including the balance sheet and profit and loss account, for the shareholders’ approval. This gives everyone a clear view of the company’s financial health.
- Board Report: The Board will present a report outlining the company’s activities over the past year, its financial performance, and any significant updates or plans for the future.
- Appointment of Auditors: Shareholders will confirm and appoint auditors for the next five financial years to ensure regular auditing of the company’s financials..
- Director regularisation: The first AGM will also regularize any additional directors appointed by the Board since the company’s incorporation.
Important points about holding the AGM
According to the Companies Act:
- Timing and Location: Every AGM must be called during business hours, between 9 a.m. and 6 p.m., on a day that is not a National Holiday. The meeting should be held either at the company’s registered office or another location within the city, town, or village where the registered office is located.
- Flexibility for Unlisted Companies: For unlisted companies, the AGM can be held anywhere in India, provided all members consent in writing or electronically in advance.
- Government Exemptions: The Central Government may exempt a company from these provisions under certain conditions.
- Decision on Time, Date, and Place: The Board of Directors decides the time, date, and place of the AGM, considering any directions given by the company in a general meeting.
- Definition of National Holiday: A National Holiday includes any day declared as such by the Central Government.
- Notice of AGM: Companies must provide at least 21 clear days’ notice to shareholders before a general meeting. The company can hold AGM at shorter notice as well. Also Article of Association of the company can prescribe.
Why is the First AGM Important?
The first AGM is not just a legal formality. It’s a first opportunity for the company to build trust and transparency with its shareholders. It allows the company to showcase its performance, discuss future plans, and ensure that all stakeholders are on the same page. At the first AGM, the shareholders will appoint an auditor who will audit the company’s books for future periods.
Format of first directors report of a small company:
As such there are no major deviation in first year and later documents. Just have to mention about the fact. Like If incorporation date is 31/03/2023 then you can mention:. “Since the Company was incorporated on March 31, 2023, this is the first accounting period of the Company. Accordingly there are no comparative figures available. First financial year I.e. reporting period of the company covers period from 31/03/2023 to 31/03/2024″
For your easy reference, attached herewith are the draft first board report, first-year financial statements, and other related documents.(please note these are just a draft formats and change as per your requirements. Read Disclaimer before using formats). Kindly read and comment for suggestions/improvement.
- First Financial statement: Schedule III
- First Board Report & First AGM notice : Download
- Independent auditors format: Read here