As per MCA’s announcement dated 8th September 2020, a big relief has been given to over 12 lakh companies as the timeline for holding their first AGM has been extended to 31st December 2020 from 30th September 2020. This has been done keeping in view the COVID-19 pandemic.
As per MCA's announcement dated 28th September 2020, it has been decided to allow companies to conduct their EGMs through VC or OAVM or transact items through the postal ballot in accordance with the framework provided in the aforesaid Circulars up to 31st December 2020.
AGM is the Annual General Meeting, so the nomenclature itself suggests that it needs to be held every year i.e. annually.
Section 96 of the Companies Act 2013 says that AGM should be held in 9 months from the closing of the Financial Year in case of FIRST AGM. In any other case, it should be held within a period of 6 months from the date of closing of the Financial Year. Hence benefit is given only in the first year, and in any other year, there is no exception.
If in subsequent years, a company is not able to call the AGM within the due date, the extension needs to be applied with the Registrar of Companies. No extension is given in the case of the first AGM.
For subsequent AGM extension can be given maximum for a period of 3 months.
Now everywhere the time limit is calculated from the end of Financial Year, so it’s important to understand the definition of “Financial Year” as per Companies Act, 2013.
As per section 2(41) of the Companies Act, 2013 Financial year means the period ending on the 31st day of March. And where the Company is incorporated on or after the 1st Day of January in a year, the financial year will end on the 31st day of March of the following year.
Hence the time limit of 6 months or 9 months needs to be calculated from the end of March Month.
Here, we can understand the same with an Example
1. Suppose the Company is incorporated on 19.01.2019, it has the option to close the FY in March 2019 or March 2020, as it is incorporated on or after the 1st day of January.
So if the Company opts to close the FY in March 2019 then the AGM due date will be 31st December 2019.
And if it opts to close the FY in March 2020 then the AGM due date will be 31st December 2020.
2. If the Company is incorporated on 15.06.2018, then the only option it has is to close the FY in March 2019 and the AGM due date will be 31st December 2019.
Above were some know how's on AGM. I hope this article was beneficial to you.