Notice of AGM

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minal (Querist)
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07 October 2010 In Notice why do we include resloution under special business and why we dont include resolution under ordinary business? Is there any provions for that?

Ankur Garg

Ankur Garg (Expert)
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08 October 2010 Hi,

You are requested to check section 173. As per section 173 there are only 4 businesses which are considered as ordinary businesses.

1. adoption of accounts
2. appointment of director
3. appointment of auditor
4. declaration of dividend

In company law rest of the businesses are considered as special business and you have to explain their nature by attaching explanatory statement with them as desired by section 173.

Regards

minal

minal (Querist)
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08 October 2010 Thank u Sir but explanatory statement requires to be given in case it is public company it not necessary for private company

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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04 August 2024 ### AGM Notice and Resolutions

#### 1. **Types of Business at AGM**

**AGM Notice**: The notice of an Annual General Meeting (AGM) must include the agenda for the meeting, specifying both ordinary and special business items.

**Ordinary Business**: This typically includes routine matters such as:
- Approval of financial statements
- Declaration of dividends
- Appointment or reappointment of directors who are retiring by rotation
- Appointment or reappointment of auditors and fixing their remuneration

**Special Business**: This includes items that are not routine and require a special resolution or a resolution with a higher threshold, such as:
- Alteration of the Memorandum or Articles of Association
- Issuance of shares or debentures
- Approval of related party transactions
- Appointment of a director other than those retiring by rotation

#### 2. **Inclusion of Resolutions in the Notice**

**Ordinary Business**: These are items that are considered standard and are usually straightforward. They do not require a detailed explanation because they are typically routine.

**Special Business**: These are non-routine matters that may significantly affect the company. They often require a detailed explanation to provide shareholders with sufficient information to make an informed decision.

#### 3. **Provisions Regarding Explanatory Statements**

**Public Companies**: The Companies Act mandates that a public company must include an explanatory statement in the AGM notice for all special business items. This explanatory statement provides details about the nature and reasons for the proposed resolution, ensuring transparency and giving shareholders the necessary information to understand the implications of the resolutions.

**Private Companies**: For private companies, while there is no specific legal requirement to provide an explanatory statement for special business, it is considered good practice to do so. This helps in maintaining transparency and informing shareholders about the details of the resolutions to be passed.

#### 4. **Regulatory Provisions**

- **Section 102 of the Companies Act, 2013**: This section requires that an explanatory statement be annexed to the notice for all special business. It is mandatory for public companies but advisable for private companies to follow the same practice.

- **Section 173 of the Companies Act, 2013**: Specifies the requirements for the AGM, including the types of business to be conducted and the notice period.

#### 5. **Why Explanatory Statements Are Not Required for Ordinary Business**

Ordinary business is generally self-explanatory and involves routine matters that do not require detailed explanations. These matters are expected to be understood by shareholders and do not need the additional context provided by an explanatory statement.

### Summary

- **Include in Notice**: Both ordinary and special business resolutions must be included in the AGM notice.
- **Explanatory Statement**: Required for special business in public companies (under Section 102). For private companies, it's not mandatory but recommended for transparency.
- **Ordinary Business**: Does not require explanatory statements as these items are routine and straightforward.

If you’re drafting an AGM notice, ensure it covers all required items and follows best practices for clarity and transparency, especially when dealing with special business resolutions.