Extension of accounting period from 12 to 15 months

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Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Dear Experts,

A private limited company iS making its books of accounts for 12 months since incorporation. Now it wants to extend its accounting period upto 15 months,

(i) Do a prior approval of ROC is required for it?

(ii) what are the formalities need to be fulfilled for extension of the period upto 15 months?

(iii) Can these 15 months be reduced to 12 months again in next financial year?

Thanks

Ajay Mishra

Ajay Mishra (Expert)
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15 November 2013 Hi

Extension in time for holding annual general meeting
The power of the Registrar conferred by the second proviso to section 166(1) enabling him to grant extension of time to hold the annual general meeting is exercisable by the Registrar without restriction or qualification up to a limit of three months. He can, therefore, grant extension of time for special reasons up to the maximum limit of three months, even if such extension allows the company to hold its general meetings beyond the calendar year
The Registrar shall grant an extension of time for holding the annual general meeting of a company under the second proviso to sub-section (1) of section 166 only when the application for such extension is made to him before the expiry of the period laid down in sub-section (1) of that section. Therefore, if a company considers that it will not be possible for a company to hold the annual general meeting within six months from the conclusion of the financial year, the company shall make an application in the prescribed e-Form 61 (prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006 by the MCA) electronically with the Registrar before the due date for holding the said meeting. The application may be made by a letter giving full justification for seeking extension of time certified by the chartered accountant or company secretary or cost accountant in practice.

Ajay Mishra

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15 November 2013
Extension of time upto 3 months by Registrar — Even if it allows the company to hold its annual general meeting beyond the calendar year
The question whether the second proviso to sub-section (1) of section 166 empowers the Registrar of Companies to grant extension not exceeding three months, though the company concerned may not be able to hold its annual general meeting in a particular calendar year, has been considered by the Company Law Board.
The Board (now the Central Government) is of the view that the power of the Registrar conferred by the second proviso of the aforesaid section of the Act enabling him to grant extension of time to hold the annual general meeting is exercisable by the Registrar of Companies without restriction or qualification up to a limit of three months. He can, therefore, grant extension of time for special reasons up to the maximum limit of three months, even if such extension allows the company to hold its general meeting beyond the calendar year.
Source: Letter No. 34/11/69-CL-III, dated 13-1-1972.

Ajay Mishra

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15 November 2013
Application for extension of time under section 166(1), second proviso to be made before the expiry of the period

The Department's view is that the Registrar should grant an extension of time for holding the annual general meeting of a company under the second proviso to sub-section (1) of section 166 only when the application for such extension is made to him before the expiry of the period laid down in sub-section (1) of that section.

Source: Company News and Notes July 1, 1963 issue.

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Dear Ajay Sir,

The query was regarding extension of Financial year (Books of accounts) from 12 months to 15 months.

Ajay Mishra

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15 November 2013 My mistake..............

Ajay Mishra

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15 November 2013
A financial year is a period of twelve months and the accounts of a company for a financial year shall be placed at every annual general meeting. But in certain circumstances a financial year may be for less than a year or it may be for more than a year as in the case of the first annual general meeting but it shall not exceed fifteen months.

The Registrar has power to extend a financial year up to eighteen months in terms of the proviso under section 210(4) of the Act. The company shall make an application in the prescribed e-Form 61 (prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006 by the MCA) with the Registrar before the due date for closing of the financial year. The application may be made by a letter giving full justification for seeking extension of time. certified by the chartered accountant or company secretary or cost accountant in practice.

Where a company proposes to extend its financial year and in that process requires extension in time for holding its annual general meeting it shall make an application digitally in the e-Form 61 with the Registrar of Companies for extending financial year under section 210(4) and for granting extension in time for holding annual general meeting under the proviso to section 166(1).

Financial year extension also requires approval under the Income-tax Act, 1961. The company should apply to the concerned Assessing Officer for extending any financial year beyond twelve months.

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Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Thanks Ajay Sir,

That Means
for extension upto 15 months we dont need the prior approval of ROC.

Even if the date of AGM is extended only for 3 more months due to extension of Accounting period even then form 61 has to be filed or it would presumed to be extended automatically due to extension of Accounting period?

Ajay Mishra

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15 November 2013 No you will file for that extension. It will not be treated autometically.

Ajay Mishra

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15 November 2013
Specimen of Board resolution for extension of financial year
RESOLVED THAT subject to the permission of the Registrar of Companies, Income Tax authorities and such other approvals and sanctions as may required in this regard, an application under Section 210(4) of the Companies Act, 1956 be submitted to the Registrar of Companies for extension of financial year and for preparation of accounts covering a period of 18 months i.e. from 1st April 2004 to 30th September, 2005 and that Shri ABC, the Company Secretary be and is hereby authorised to comply with all other formalities in this regard.
RESOLVED FURTHER THAT the subsequent financial years of the company be commencing from 1st October 2005 and ending on 30th September 2006.
RESOLVED FURTHER THAT an application also be made under section 166 of the Companies Act, 1956 for obtaining the permission for extension of holding the Annual General Meeting of the Company for the calendar year 2005 up to 31st March, 2006.
RESOLVED FURTHER THAT Mr. PQR, the Director of the Company be and is hereby authorised to make application on behalf of the Company and to do all such acts, deeds and things as may be required to be done for giving effect to the aforesaid resolution including authorising any official or any other representative to represent the Company before the Registrar of Companies.
RESOLVED FURTHER THAT consent of Income Tax authorities shall also be obtained in this regard and that Mr. ABC, the Company Secretary be and is hereby authorised to obtain the consent.

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Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 Thanks Ajay Sir...........

Ajay Mishra

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15 November 2013 My Pleasure............

CA. NIRMAL SINGH

CA. NIRMAL SINGH (Expert)
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15 November 2013 This can be easily extended by passing a board resolution

Querist : Anonymous

Querist : Anonymous (Querist)

15 November 2013 As per Act due date of AGM is subject to the following condition

1. within 6 month of closing of financial year of the company
2. every calender year one AGM should be conducted
3. time gap between 2 AGM should not exceed 15 months

So in my case if the financial year is extended till 30th june then as per law the due date of AGM should be 31st December.

Even then we need to take prior permission of ROC??

Pls suggest

Thanks