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Holding Nepalese Public Companies' Annual General Meetings (AGM)

This article outlines the legal framework and procedural steps necessary for organizing an Annual General Meeting (AGM) of a public company in Nepal, including the time frame for holding the AGM.

1.Understanding the Annual General Meeting

An Annual General Meeting (AGM) refers to the official assembly of shareholders and directors to review and deliberate on the company's annual performance and strategies, providing a platform for shareholders to gain insights into the company's operations and outlook.

1.1. Regulatory Authority for AGM

The responsibility for overseeing AGM falls under the jurisdiction of the Office of the Company Registrar (OCR), which acts as the principal regulatory body.

1.2. Applicable Legal Framework: Chapter 5(Company Meetings) of Companies Act, 2063.

2.Timeline for Conducting an AGM

Once a public company obtains the approval to initiate operations; it must hold its first AGM within a year. Thereafter, the company is required to organize AGMs annually within six months following the end of the fiscal year.

Should the company fail to convene the AGM within three months after this deadline, the Office may issue directives mandating the meeting. If the company still does not comply, a shareholder may petition the court, which may then instruct the company to hold the AGM or issue appropriate orders.

3.  Procedure to Conduct an AGM in Nepal

Issuance of notice to the shareholder

  The company must provide a minimum of 21 days’ advance notice to its members to convene the AGM. Furthermore, the notice should be published at least twice in a national daily newspaper. This notice must specify the meeting's venue, date, and time. If necessary, the reports and statements may also be circulated through electronic means.

Setting the AGM agenda: Prior to conducting the AGM, the agenda must be finalized and shared with shareholders.

 General Agenda Items: Company’s annual financial statement

a.                 Auditor’s report

b     .     Report of the directors

Special Agenda Items:

a.                 Increasing authorized capital

b.                Reducing or modifying share capital

     Amending the company name or primary objectives:

a.                Merging with another company

b.                 Issuance of bonus shares

            c. Share buybacks

     d. Issuing shares at a discount

·       Su        b Submission of Reports to the Office Reports must be submitted to the Office 21 days before the AGM. These should cover:

a.                Total number of shares issued

b.                Number of fully paid and unpaid shares

c.     .      Details and remuneration of company executives, including directors, auditors, and managers

d.     .     Information regarding the company’s receivables/payables and related litigation, if any

e.                 Statement of management expenses for the financial year

f.                  List of unclaimed dividends

g.                 Other relevant disclosures

·       AGM   AGM Quorum Requirements
The quorum requirements for general meetings in a private company are defined by its Articles of Association.
For public companies, a minimum of three shareholders who collectively own more than 50% of the issued shares is necessary to form a quorum.

·                            Presentation of Annual Reports by the Board
At the AGM of a public company, the directors must present the audited financial statement, auditor’s report, and the directors’ report.

                Decision-Making and Voting Process
All matters put to vote during the AGM are decided by a simple majority of those present. In case of a tie, the chairperson has the authority to cast a deciding vote. Only those shareholders listed in the company’s share register are eligible to vote.

                preparation of AGM Minutes
Every company is required to maintain a written record of the proceedings and resolutions passed during the AGM in the form of meeting minutes.

·                             Submission of Post-AGM Reports to the Office
Within 30 days of the AGM, a public company must submit to the Office a return containing the number of attending shareholders, a copy of the financial statements, director and auditor reports, and the resolutions passed. A penalty will be levied if the company fails to submit these documents on time.

4. Post-AGM Compliance Requirements

Post-meeting, public companies must comply with statutory obligations by submitting returns including shareholder attendance, audited financial statements, director and auditor reports, and resolutions. Additionally, the company is mandated to provide a copy of the auditor-verified annual financial statement to the Office within six months of the fiscal year’s end.

5. Conclusion

Annual General Meetings are a legal requirement under the Companies Act, 2063 and are regulated by the Office of the Company Registrar. A public company must hold its first AGM within a year of beginning operations and annually thereafter within six months of the fiscal year end. The AGM process involves issuing formal notices, setting agendas, submitting reports, ensuring quorum, report presentations by the board, decision-making through voting, recording minutes, and submitting post-AGM reports. These procedural and compliance measures are essential for corporate transparency and accountability in Nepal.