Validity of the agm
This query is : Resolved
13 February 2013
An AGM was held on a public holiday. No transaction was conducted.
Is the meeting valid?
Is the meeting valid?
13 February 2013
Hi
The AGM can not be conducted on public holiday. It is not valid.
The AGM can not be conducted on public holiday. It is not valid.
13 February 2013
Section 166(2) inter alia states that every annual general meeting shall be called on a day, which is not a public holiday.
It has been clarified by the Department vide Circular F. No. 8/23/(166)/69-CL-V that section 166 of the Companies Act deals with the actual period during which the annual general meeting is to be held. Sub-section (2) states that every annual general meeting shall be held on a day that is not a public holiday and this provision is mandatory. If the provision of section 166(2) are to be considered as 'merely regulatory' as suggested "shall be called" used in the section will ceased to have any meaning.
According to section 2(38) of the Companies Act, 1956 'public holiday' means a public holiday within the meaning of the Negotiable Instruments Act, 1881. Further, proviso to section 2(38) enacts that a day declared to be a public holiday by the Central Government shall not be a public holiday in relation to any meeting provided the declaration of holiday was notified after the issue of notice of convening such meeting. Provided that the holiday declared by banks for closure of half yearly accounts under the Negotiable Instruments Act, shall not be considered as a public holiday for the purpose of holding an annual general meeting.
It has been clarified by the Department vide Circular F. No. 8/23/(166)/69-CL-V that section 166 of the Companies Act deals with the actual period during which the annual general meeting is to be held. Sub-section (2) states that every annual general meeting shall be held on a day that is not a public holiday and this provision is mandatory. If the provision of section 166(2) are to be considered as 'merely regulatory' as suggested "shall be called" used in the section will ceased to have any meaning.
According to section 2(38) of the Companies Act, 1956 'public holiday' means a public holiday within the meaning of the Negotiable Instruments Act, 1881. Further, proviso to section 2(38) enacts that a day declared to be a public holiday by the Central Government shall not be a public holiday in relation to any meeting provided the declaration of holiday was notified after the issue of notice of convening such meeting. Provided that the holiday declared by banks for closure of half yearly accounts under the Negotiable Instruments Act, shall not be considered as a public holiday for the purpose of holding an annual general meeting.
13 February 2013
Adjourned annual general meeting may be held on a public holiday:
The Department has vide Circular File No. 8/16(1)/61-PR stated that there is no contravention of section 166(2) if the adjourned annual general meeting comes to be accidentally held on a public holiday.
Adjourned annual general meeting may be held on a public holiday:
The Department has vide Circular File No. 8/16(1)/61-PR stated that there is no contravention of section 166(2) if the adjourned annual general meeting comes to be accidentally held on a public holiday.
13 February 2013
But sir, the section nowhere states that if the meeting is held on a public holiday, it will be invalid.
Suppose if an AGM is held on a public holiday and it is attended by majority of shareholders and important business like director appointment, auditor appointment, declaration of dividend, etc is transacted and the meeting gets concluded.
So, does the meeting and all such business transacted stands invalid.
Suppose if an AGM is held on a public holiday and it is attended by majority of shareholders and important business like director appointment, auditor appointment, declaration of dividend, etc is transacted and the meeting gets concluded.
So, does the meeting and all such business transacted stands invalid.
02 August 2025
Great question! Let me clarify the **validity of an AGM held on a public holiday**, especially when business is transacted.
---
### Legal Provision:
* **Section 166(2) of the Companies Act, 1956** (relevant to your question) says:
*“Every annual general meeting shall be called on a day which is not a public holiday.”*
* **Meaning of Public Holiday:**
As per **Section 2(38)** of the Companies Act, 1956, *“public holiday”* means a public holiday within the meaning of the Negotiable Instruments Act, 1881. Certain exceptions are given, e.g., holidays declared by the Central Government after notice issuance do not apply.
* **Department’s Circulars:**
The Ministry of Corporate Affairs (MCA) has issued circulars clarifying that holding an AGM on a public holiday is **not valid** and the provision is mandatory, not merely directory.
---
### Key Points:
1. **Mandatory Provision:**
The language "shall be held on a day not a public holiday" makes it mandatory, not directory. So, the AGM *should not* be held on a public holiday.
2. **What if AGM is held on a public holiday?**
* Technically, the AGM would be **invalid** because it contravenes the statutory provision.
* However, if **business was transacted** and **majority shareholders attended**, there is a practical dilemma.
3. **Adjourned AGM Exception:**
If an adjourned AGM *accidentally* falls on a public holiday, it is considered valid as per the Department's Circular No. 8/16(1)/61-PR.
4. **If important decisions were taken at such an AGM:**
* There is a risk that these decisions could be challenged as **invalid** due to the meeting's illegality.
* It is advisable to **ratify or re-conduct the AGM** on a valid working day (not a public holiday) to avoid future legal complications.
---
### Practical Suggestion:
* **Avoid holding AGM on a public holiday.**
* If it happens inadvertently, **convene a fresh AGM** on a valid day to confirm/ratify the business transacted.
* Notify the Registrar of Companies (ROC) accordingly.
* Maintain proper minutes and document shareholder consent if possible.
---
### Summary:
| Scenario | Validity of AGM |
| ---------------------------------- | ----------------------------------- |
| AGM held on public holiday | Generally **invalid** |
| Adjourned AGM falling on holiday | Valid (as per Dept. Circular) |
| Business transacted in invalid AGM | Risk of challenge; better to ratify |
---
If you want, I can help draft a legal opinion or notice for ratification of such an AGM. Would you like that?
---
### Legal Provision:
* **Section 166(2) of the Companies Act, 1956** (relevant to your question) says:
*“Every annual general meeting shall be called on a day which is not a public holiday.”*
* **Meaning of Public Holiday:**
As per **Section 2(38)** of the Companies Act, 1956, *“public holiday”* means a public holiday within the meaning of the Negotiable Instruments Act, 1881. Certain exceptions are given, e.g., holidays declared by the Central Government after notice issuance do not apply.
* **Department’s Circulars:**
The Ministry of Corporate Affairs (MCA) has issued circulars clarifying that holding an AGM on a public holiday is **not valid** and the provision is mandatory, not merely directory.
---
### Key Points:
1. **Mandatory Provision:**
The language "shall be held on a day not a public holiday" makes it mandatory, not directory. So, the AGM *should not* be held on a public holiday.
2. **What if AGM is held on a public holiday?**
* Technically, the AGM would be **invalid** because it contravenes the statutory provision.
* However, if **business was transacted** and **majority shareholders attended**, there is a practical dilemma.
3. **Adjourned AGM Exception:**
If an adjourned AGM *accidentally* falls on a public holiday, it is considered valid as per the Department's Circular No. 8/16(1)/61-PR.
4. **If important decisions were taken at such an AGM:**
* There is a risk that these decisions could be challenged as **invalid** due to the meeting's illegality.
* It is advisable to **ratify or re-conduct the AGM** on a valid working day (not a public holiday) to avoid future legal complications.
---
### Practical Suggestion:
* **Avoid holding AGM on a public holiday.**
* If it happens inadvertently, **convene a fresh AGM** on a valid day to confirm/ratify the business transacted.
* Notify the Registrar of Companies (ROC) accordingly.
* Maintain proper minutes and document shareholder consent if possible.
---
### Summary:
| Scenario | Validity of AGM |
| ---------------------------------- | ----------------------------------- |
| AGM held on public holiday | Generally **invalid** |
| Adjourned AGM falling on holiday | Valid (as per Dept. Circular) |
| Business transacted in invalid AGM | Risk of challenge; better to ratify |
---
If you want, I can help draft a legal opinion or notice for ratification of such an AGM. Would you like that?
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