Section 96 of the Companies Act, 2013 provides that every company other than a one person company shall in each year hold an Annual General Meeting of its shareholders and not more than fifteen months shall elapse between the date of one annual general meeting of the company and that of the next.
Provided that first annual general meeting of the Company shall be held within nine months of the closing of the financial year and subsequent annual general meetings shall be held within six months of the closing of the financial year.
However, if the companies feel that it is not possible to hold the Annual General Meeting within the due time period of 6 months from close of Financial Year, the company may apply for extension of date of AGM and the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, for a period not exceeding three months. That means Registrar on special circumstances, may extend the time of holding of AGM by a company, which has applied for extension, upto December 31, 2020.
REASONS FOR EXTENSION OF AGM
There may be a no. of reasons because of which it might not be possible for the companies to hold the AGM within the due period of time. Presently, Covid-19 situation is the one. In our 12 years of Practice, we have seen that the companies use to face difficulties in following circumstances also:
Some of the other reasons for extension of AGM have been provided hereunder
- Due to non-signing of financial statements due to non-availability of Auditors. Non availability may arise due to resignation, death, incapacity to sign or such other valid reason.
- Non-readiness of the financial statements due to natural calamity, due to loss of financial data, absence of Directors
- Non availability of Managing Director since the financial statements must be signed by the Managing Director of the company along with any one of the director of the company.
- Non-availability of directors on the valid grounds
- The sudden death of Directors and consequence of this the limit of directors goes below the minimum requirements of directors.
- Confiscation of Books of accounts by Income Tax Department, Serious and Fraud Investigation Cell or any other Government officials.
Such other special reasons if such reasons are valid and justified.
PROCEDURE TO FILE APPLICATION SEEKING EXTENSION OF TIME FOR HOLDING ANNUAL GENERAL MEETING
- Chairman/ Director of the company shall call for a meeting of Board of Director for which a notice must be sent at least 7 days before holding of Meeting of Board.
- To Convene a Board Meeting on the specified date;
- To Pass a resolution for extension of time limit for holding annual general meeting specifying the due reason for extension of AGM;
- The file an application to the Registrar of Companies in Form No – GNL1.
- In GNL-1, the special reason for not to be holding of AGM along with other necessary information to be provided
- To attach the Certified true copy of the Board Resolution in E Form GNL-1
- Follow up with the office of the Registrar of Company
- The registrar shall examine the application on the specific grounds and may grant an extension, if it thinks it necessary to grant the same.
- To obtain the certificate of grant of extension in holding of Annual General Meeting of the company
APPLICATION MUST BE FILED WELL IN ADVANCE BEFORE THE DUE DATES
Company may file an application for extension of time limit for holding of Annual General Meeting. But it is to be noted that the date of filing of an application must be well in advance. And the dates depend from case to case.
PENALTY IN CASE OF DEFAULT BY THE COMPANY/ DIRECTORS
Company and every officer of the Company who is in default shall be punishable with fine which may extend to Rs. 1 Lakh and in case of continuing default with a further fine which may extend to Rs. 5000/- for every day during which such default continues.
COMPOUNDING IN CASE AGM IS NOT HELD OR HELD AFTER DUE DATE WITHOUT APPROVAL FROM ROC
If the Annual General Meeting is not held within the due date mentioned above or held after the due date but without taking approval of ROC for an extension then the Company will have to go to RD for compounding.
EXTENSION OF DUE DATE OF AGM IN THE CURRENT FINANCIAL YEAR FY 2021-22
Since, the MCA extended the dates for holding of AGM in the FY 2020-21 due to the pandemic of Covid-19. Hence, the Companies are waiting this year also that MCA may extend the dates for holding of AGM for the FY 2021-22 too. But looking at the current scenario of the Covid-19, when everything is getting opened, it does not seem that MCA may issue any circular for extension of AGM this year. However, the Associations of CAs and CSs along with other Industrial Associations have filed the representation with MCA specifying the reasons of Covid-19 and non working of the website of the Income Tax.
But this is my view that MCA may issue Notification for extension of filing of Returns i.e. E Form AOC-4 and MGT-7 but it does not seem that MCA can give the blanket AGM Due date extension for all the companies.
So the companies which are unable to hold their AGMs within the due period of time, due to any of the reason, must apply to the concerned ROCs for the extension of AGM.
Disclaimer: The author is based at Jalandhar and is practicing company Secretary and a Certified CSR Professional. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Authors recommend that professional advice is sought before taking any action on specific issues.
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Tags :corporate law