Special reasons for extension of agm
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
24 September 2013
Dear Sir/Mam,
Can you please give some Special reasons for extension of AGM other than the following:
1. Mergers & acquision.
2. Delay in finalising the Financials, or delay in audit reports.
3.Due to virus/ system problem.
4.Natural Calamity.
5.Change in financial year
Can you please give some Special reasons for extension of AGM other than the following:
1. Mergers & acquision.
2. Delay in finalising the Financials, or delay in audit reports.
3.Due to virus/ system problem.
4.Natural Calamity.
5.Change in financial year
24 September 2013
Requirement for holding Annual General Meeting where there is delay in finalising the accounts of the company:
If it is not possible to hold an annual general meeting by the due date in terms of section 166 and section 210, extension in time should be sought from the Registrar for holding the annual general meeting. The main reason for seeking extension in time may be delay in finalising the accounts due to unavoidable circumstances.
In such situation the best course for a company is to hold the annual general meeting by the due date and get approval of members for reappointment of directors in place of those retiring by rotation and on other matters if any may be taken. As the annual accounts are not ready, the said meeting may be adjourned to a date not exceeding three months up to which the Registrar can grant extension in time. In Bejoy Kumar Karnani v Assistant Registrar of Companies (1985) 58 Comp Cas 273 (Cal), the Court did not approve the holding of an adjourned annual general meeting beyond the period of the extended date which can be allowed by the Registrar under the second proviso of section 166(1). The court ruled that if a statute envisages that a meeting is to be held within a specified period, it follows by necessary implication that it must be completed within the said period.
In the case of T.V. Mathew v Nadukkara Agro Processing Co. Ltd. (2002) 46 CLA 101 (Ker), the High Court had given certain directions to be complies with within 3 months. But there were no directions in that order that before the AGM was convened the AGM should be deferred. The company had bona fide believed that convening the meeting before complying with the directions would be against the spirit of the judgment. Clearly, failure to convene the AGM was a continuing offence for which consequences are also provided under the Companies Act, 1956.
The Department of Company Affairs also revised their earlier clarification, dated 2-2-1974 by their Circular No. 2/85, dated 25-3-1985. In the latter circular the Department has unequivocally stated that it is no doubt open to a company to adjourn an annual general meeting called and held by the due date to a subsequent date for laying the accounts and that the adjourned meeting must be held within the time extended by the Registrar. The text of the Circular, dated 25-3-1985 of the Department is quoted below for information:
"I am directed to invite your attention to this Department's Circular No. 4/74, dated 2-2-1974 and to say that the defaults under sections 159, 166, 210 and 220 of the Companies Act, are separate offences. A plea has been raised that in accordance with the aforesaid Circular, dated 2-2-1974 it is possible for a company to adjourn the annual general meeting in case the accounts are not ready, without complying with the requirements of section 210 of the Act. In this connection, it may be stated that it is mandatory on the part of the board of directors of the company to lay the accounts at every annual general meeting within the statutory period laid down in sub-section (3) thereof. In case the annual general meeting is held in accordance with the provisions of section 166 of the Act and the accounts are not placed thereat, the same not being ready, it is no doubt open to the company concerned to adjourn the said annual general meeting to a subsequent date for laying the accounts but then, the adjourned annual general meeting must itself be held within the statutory period (including the period of extension thereof, if any allowed) as provided in section 166(1). That being so, procedure of adjourning the annual general meeting cannot be so adopted as to bypass the provisions of section 210 of the Act. Thus, in case the accounts are not placed at the annual general meeting or the adjourned annual general meeting, in either case, within the statutory period laid down in sub-section (3) of section 210 of the Act, the delinquent directors are liable for prosecution under sub-section (5) thereof. In this connection, a reference may be made to a decision of the Division Bench of Calcutta High Court in Bejoy Kumar Karnani and Others v Asstt. Registrar of Companies (88 CWNP 1073), wherein it has been held that if the said Circular, dated 2-2-1974 is to be literally construed divorced of the provisions of sections 166 and 210 of the Act, such adjournments may go on ad infinitum and in such an event not only the provisions of section 166 but also the provisions of sections 168 and 210 of the Act would be rendered nugatory, leading to chaos and confusion in the matter of enforcement of the relevant provisions of the Act by the Registrar of Companies."
Requirement for holding Annual General Meeting where there is delay in finalising the accounts of the company:
If it is not possible to hold an annual general meeting by the due date in terms of section 166 and section 210, extension in time should be sought from the Registrar for holding the annual general meeting. The main reason for seeking extension in time may be delay in finalising the accounts due to unavoidable circumstances.
In such situation the best course for a company is to hold the annual general meeting by the due date and get approval of members for reappointment of directors in place of those retiring by rotation and on other matters if any may be taken. As the annual accounts are not ready, the said meeting may be adjourned to a date not exceeding three months up to which the Registrar can grant extension in time. In Bejoy Kumar Karnani v Assistant Registrar of Companies (1985) 58 Comp Cas 273 (Cal), the Court did not approve the holding of an adjourned annual general meeting beyond the period of the extended date which can be allowed by the Registrar under the second proviso of section 166(1). The court ruled that if a statute envisages that a meeting is to be held within a specified period, it follows by necessary implication that it must be completed within the said period.
In the case of T.V. Mathew v Nadukkara Agro Processing Co. Ltd. (2002) 46 CLA 101 (Ker), the High Court had given certain directions to be complies with within 3 months. But there were no directions in that order that before the AGM was convened the AGM should be deferred. The company had bona fide believed that convening the meeting before complying with the directions would be against the spirit of the judgment. Clearly, failure to convene the AGM was a continuing offence for which consequences are also provided under the Companies Act, 1956.
The Department of Company Affairs also revised their earlier clarification, dated 2-2-1974 by their Circular No. 2/85, dated 25-3-1985. In the latter circular the Department has unequivocally stated that it is no doubt open to a company to adjourn an annual general meeting called and held by the due date to a subsequent date for laying the accounts and that the adjourned meeting must be held within the time extended by the Registrar. The text of the Circular, dated 25-3-1985 of the Department is quoted below for information:
"I am directed to invite your attention to this Department's Circular No. 4/74, dated 2-2-1974 and to say that the defaults under sections 159, 166, 210 and 220 of the Companies Act, are separate offences. A plea has been raised that in accordance with the aforesaid Circular, dated 2-2-1974 it is possible for a company to adjourn the annual general meeting in case the accounts are not ready, without complying with the requirements of section 210 of the Act. In this connection, it may be stated that it is mandatory on the part of the board of directors of the company to lay the accounts at every annual general meeting within the statutory period laid down in sub-section (3) thereof. In case the annual general meeting is held in accordance with the provisions of section 166 of the Act and the accounts are not placed thereat, the same not being ready, it is no doubt open to the company concerned to adjourn the said annual general meeting to a subsequent date for laying the accounts but then, the adjourned annual general meeting must itself be held within the statutory period (including the period of extension thereof, if any allowed) as provided in section 166(1). That being so, procedure of adjourning the annual general meeting cannot be so adopted as to bypass the provisions of section 210 of the Act. Thus, in case the accounts are not placed at the annual general meeting or the adjourned annual general meeting, in either case, within the statutory period laid down in sub-section (3) of section 210 of the Act, the delinquent directors are liable for prosecution under sub-section (5) thereof. In this connection, a reference may be made to a decision of the Division Bench of Calcutta High Court in Bejoy Kumar Karnani and Others v Asstt. Registrar of Companies (88 CWNP 1073), wherein it has been held that if the said Circular, dated 2-2-1974 is to be literally construed divorced of the provisions of sections 166 and 210 of the Act, such adjournments may go on ad infinitum and in such an event not only the provisions of section 166 but also the provisions of sections 168 and 210 of the Act would be rendered nugatory, leading to chaos and confusion in the matter of enforcement of the relevant provisions of the Act by the Registrar of Companies."
24 September 2013
Contradiction in the provisions in sections 166 and 210 and clarifications issued by the Department
Section 166 allows holding of an annual general meeting within fifteen months of the last AGM. If company proposes for change in the accounting year (permissible period of not less then nine months and not more than 18 months), this may at times result that a company not being able to hold the annual general meeting within six months from the end of the financial year as envisaged in section 210(3)(b). In order to ensure smooth working of companies, the DCA has advised all companies vide its Circular No. 8/45(166)/64-PR, dated 12-1-1965 that the sections 166 and 210 should be read together so as to get a harmonious construction and if a breach of the provisions of one or the other of the two sections is to be avoided an annual general meeting should be held on the earlier of the three relevant dates prescribed under the said two sections as under:
Earlier of the following dates:—
(a) 6 months of the close of the financial year.
(b) Within 15 months from last AGM.
(c) Last date of next calendar year.
The full text of the Circular, dated 12-1-1965 is given below for reference:
"With reference to the correspondence resting with your letter No. Sec. 166/5694, dated 20-7-1964 on the above subject, I am directed to say that the question raised by you has been carefully examined in the Department.
From the strictly legal point of view, the time within which an AGM of a company is required to be held is governed solely by section 166 of the Companies Act, 1956 and the date on which an AGM is required to be held has no direct relationship with the financial year of a company. Accordingly, the Registrar's powers to grant extension of time under the second proviso to section 166(1) does not become exercisable if the extension sought by the company is for holding the meeting falling within the time-limits mentioned in the said section 166 and is asked solely on the ground that it has not been able to prepare the accounts for the period mentioned in section 210(3). Notwithstanding the legal provision aforesaid, the Board is of the view for administrative and practical consideration where a company approaches for the grant of extension of time for holding the annual general meeting in terms of the proviso to section 166(1) of the Act, the Registrar may continue to give the required extension for the holding of AGM beyond the period of six months from the close of the financial year of the company as contemplated under section 210(3) even though the time-limit for holding the meeting as per section 166 may not have reached. It is considered that apart from facilitating the smooth working of companies, such a practice would be administratively desirable as well. It was also in this context that the Department had earlier advised the field officers and companies which sought clarification on the point that sections 166 and 210 should be read together and if a breach of the provisions of one or the other of the two sections is to be avoided, an annual general meeting should be held in the earliest of the three relevant dates prescribed under these two sections (vide item No. 27 of interpretation, explained above: Circular No. 8/16(1)/61-PR, dated 25-2-1961) However, when it comes to determining for purposes of legal proceedings or levy of additional fees as to whether there has been a default in holding the AGM it would no doubt be necessary for the Registrar to continue the provisions of section 166 strictly in the manner indicated above. For this purpose the financial year of a company
or the provision of section 210 is irrelevant. In other words, where a company holds its AGM within the time prescribed under section 166, though such a meeting is held after the expiry of six months from the close of its financial year and the company files its annual return within 42 days of the holding of the said meeting (now extended to 60 days), no action should be taken against the company for default of section 159 or 166 nor additional fee be levied in such a case in respect of the filing of the annual return and audited accounts."
Contradiction in the provisions in sections 166 and 210 and clarifications issued by the Department
Section 166 allows holding of an annual general meeting within fifteen months of the last AGM. If company proposes for change in the accounting year (permissible period of not less then nine months and not more than 18 months), this may at times result that a company not being able to hold the annual general meeting within six months from the end of the financial year as envisaged in section 210(3)(b). In order to ensure smooth working of companies, the DCA has advised all companies vide its Circular No. 8/45(166)/64-PR, dated 12-1-1965 that the sections 166 and 210 should be read together so as to get a harmonious construction and if a breach of the provisions of one or the other of the two sections is to be avoided an annual general meeting should be held on the earlier of the three relevant dates prescribed under the said two sections as under:
Earlier of the following dates:—
(a) 6 months of the close of the financial year.
(b) Within 15 months from last AGM.
(c) Last date of next calendar year.
The full text of the Circular, dated 12-1-1965 is given below for reference:
"With reference to the correspondence resting with your letter No. Sec. 166/5694, dated 20-7-1964 on the above subject, I am directed to say that the question raised by you has been carefully examined in the Department.
From the strictly legal point of view, the time within which an AGM of a company is required to be held is governed solely by section 166 of the Companies Act, 1956 and the date on which an AGM is required to be held has no direct relationship with the financial year of a company. Accordingly, the Registrar's powers to grant extension of time under the second proviso to section 166(1) does not become exercisable if the extension sought by the company is for holding the meeting falling within the time-limits mentioned in the said section 166 and is asked solely on the ground that it has not been able to prepare the accounts for the period mentioned in section 210(3). Notwithstanding the legal provision aforesaid, the Board is of the view for administrative and practical consideration where a company approaches for the grant of extension of time for holding the annual general meeting in terms of the proviso to section 166(1) of the Act, the Registrar may continue to give the required extension for the holding of AGM beyond the period of six months from the close of the financial year of the company as contemplated under section 210(3) even though the time-limit for holding the meeting as per section 166 may not have reached. It is considered that apart from facilitating the smooth working of companies, such a practice would be administratively desirable as well. It was also in this context that the Department had earlier advised the field officers and companies which sought clarification on the point that sections 166 and 210 should be read together and if a breach of the provisions of one or the other of the two sections is to be avoided, an annual general meeting should be held in the earliest of the three relevant dates prescribed under these two sections (vide item No. 27 of interpretation, explained above: Circular No. 8/16(1)/61-PR, dated 25-2-1961) However, when it comes to determining for purposes of legal proceedings or levy of additional fees as to whether there has been a default in holding the AGM it would no doubt be necessary for the Registrar to continue the provisions of section 166 strictly in the manner indicated above. For this purpose the financial year of a company
or the provision of section 210 is irrelevant. In other words, where a company holds its AGM within the time prescribed under section 166, though such a meeting is held after the expiry of six months from the close of its financial year and the company files its annual return within 42 days of the holding of the said meeting (now extended to 60 days), no action should be taken against the company for default of section 159 or 166 nor additional fee be levied in such a case in respect of the filing of the annual return and audited accounts."
Querist : Anonymous
Querist :
Anonymous
(Querist)
01 October 2013
Thanks Sir
01 October 2013
My Pleasure..........
Querist : Anonymous
Querist :
Anonymous
(Querist)
01 October 2013
Sir can you please tell me whether in a Private Company a Director can be appointed for a specific term/period after which he/she shall be ceased to be a director automatically. If yes, then please provide with the procedure.
01 October 2013
Yes, if you are appointing additional director then he will autometically resigned from the post as on date of upcoming AGM. There after you will file Form-32 with ROC about his resignation.
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