Navigating Corporate Governance: A Comprehensive Guide on Holding AGM and EGM

Introduction

Strong corporate governance is the foundation of a well-managed and transparent company. Among the key governance practices required under the Companies Act, 2017 in Pakistan are the Annual General Meeting (AGM) and the Extraordinary General Meeting (EGM). These meetings are crucial for ensuring shareholder engagement, approving financial statements, electing directors, and making major business decisions.

Whether you’re a public limited company, a private company, or a non-profit organization, this comprehensive guide will walk you through everything you need to know about holding AGMs and EGMs in Pakistan, including legal requirements, timelines, procedures, notices, resolutions, and compliance obligations.

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1. Legal Framework Governing AGMs and EGMs

AGMs and EGMs are governed by:

• Companies Act, 2017

• Companies (General Provisions and Forms) Regulations, 2018

• Memorandum and Articles of Association (MoA & AoA)

• SECP Circulars and Guidelines

• Code of Corporate Governance (for listed companies)

Failure to comply with these statutory obligations can result in penalties, director disqualification, or legal action by stakeholders.

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2. What Is an AGM?

The Annual General Meeting (AGM) is a mandatory yearly meeting of a company’s shareholders where they receive information about the company’s financial health, elect or re-elect directors, and make decisions on dividends, auditors, and governance matters.

Who Must Hold an AGM?

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3. What Is an EGM?

The Extraordinary General Meeting (EGM) is a meeting of shareholders other than the AGM, convened to discuss urgent or special business that cannot be postponed until the next AGM.

Common EGM purposes include:

• Change in share capital

• Change in company name or objects

• Appointment or removal of directors

• Alteration in Articles or Memorandum

• Approval of mergers, acquisitions, or winding-up

Both AGMs and EGMs serve as key tools for shareholder control and corporate decision-making.

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4. Statutory Timeline and Frequency

A. AGM

B. EGM

No fixed timeline. Can be convened any time by:

• Board of Directors

• Requisition by shareholders holding 10% or more voting rights

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5. Procedure for Holding an AGM

Step 1: Prepare Financial Statements

• Must be audited by a registered auditor

• Include balance sheet, profit & loss, cash flow, and notes

Step 2: Board Approval

• Board of Directors approves the financials and calls the AGM

• Passes board resolution fixing date, time, and venue

Step 3: Issue Notice of AGM

• At least 21 days’ notice in writing to:

  • Shareholders

  • SECP (for listed/public companies)

  • Auditors

• Include agenda, proxy form, and audited accounts

Step 4: Hold the AGM

• Present financials

• Elect directors and auditors (if applicable)

• Declare dividends

• Record attendance and voting

Step 5: File Resolutions and Forms with SECP

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6. Procedure for Holding an EGM

Step 1: Identify the Need

• Identify the matter requiring urgent shareholder approval

• Ensure it qualifies as “special business”

Step 2: Board Resolution

• Directors pass a resolution calling the EGM

Step 3: Issue Notice

• At least 21 days’ notice

• Include explanatory statement, proxy form, and agenda

Step 4: Conduct the Meeting

• Quorum required (per AoA or Companies Act)

• Resolutions passed by:

  • Ordinary Resolution (simple majority)

  • Special Resolution (3/4th majority of those present)

Step 5: File with SECP

• File Form C and certified copy of the resolution within 15 days

• Update company records and documents accordingly

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7. Quorum Requirements

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8. Modes of Holding General Meetings

For virtual meetings, companies must:

• Ensure technology enables real-time participation

• Authenticate identity of shareholders

• Record meeting for future verification

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9. Key Items Discussed at AGMs

✅ Approval of audited financial statements
✅ Declaration of dividend (if applicable)
✅ Appointment or reappointment of auditors
✅ Election or rotation of directors
✅ Remuneration of directors
✅ Corporate governance disclosures
✅ Any other ordinary or special business

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10. Role of SECP in General Meetings

The Securities and Exchange Commission of Pakistan (SECP):

• Receives annual filings and resolutions

• Monitors compliance with statutory timelines

• Has the power to call or postpone meetings in public interest

• Can penalize companies for failing to hold AGMs or file documents

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11. Penalties for Non-Compliance

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12. Best Practices for Conducting AGMs and EGMs

✅ Start planning at least 30 days in advance
✅ Ensure compliance with notice requirements
✅ Keep detailed minutes of proceedings
✅ Verify quorum and voter eligibility
✅ Use clear resolutions and explanatory statements
✅ File all required forms and documents on time

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13. Templates and Formats

A. AGM Notice Sample

Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of [Company Name] will be held on [Date] at [Time] at [Venue], to transact the following business…

B. EGM Notice Sample

Notice of Extraordinary General Meeting
Pursuant to Section 132 of the Companies Act, 2017, the EGM of [Company Name] will be held to approve the alteration of the Articles of Association…

C. Special Resolution Template

“Resolved that” the authorized share capital of the Company be increased from PKR 10 million to PKR 20 million by amending Clause V of the Memorandum…

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14. Frequently Asked Questions (FAQs)

Q1: Can a private company hold an AGM?
Yes, voluntarily or if required by its Articles of Association.

Q2: What is the minimum notice period for an AGM or EGM?
21 days’ clear notice is mandatory.

Q3: Can shareholders attend meetings via Zoom or Google Meet?
Yes, virtual participation is allowed if AoA permits and technological safeguards are in place.

Q4: What is the difference between ordinary and special resolutions?
Ordinary: Simple majority.
Special: 3/4th majority, used for significant decisions (e.g., capital change, MoA amendments).

Q5: Is SECP approval required for all resolutions?
Only in specific cases (e.g., Section 42 companies, amalgamation, conversion, etc.)

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15. How Sterling.pk Can Help

At Sterling.pk, we assist companies with:

✅ Drafting AGM and EGM notices, resolutions, and minutes
✅ Filing Forms A, C, and special resolutions with SECP
✅ Managing director elections and dividend declarations
✅ Facilitating virtual meeting compliance
✅ Training boards on corporate governance and statutory duties

We ensure your company remains fully compliant, transparent, and well-governed.

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Conclusion

Holding AGMs and EGMs is a vital part of corporate governance in Pakistan. These meetings uphold transparency, empower shareholders, and help companies stay on the right side of the law. As regulatory scrutiny increases and investor expectations evolve, following proper meeting procedures and documentation becomes more critical than ever.

With Sterling.pk as your compliance partner, you can conduct meetings with confidence, meet SECP timelines, and foster strong governance.