The Ministry of Corporate Affairs (MCA) has announced an extension in the time period to hold the Annual General Meeting taking into account the difficulties created a pandemic situation in the country extended the due date for conducting the Annual General Meeting (AGM) under the provisions of Companies Act 2013.
Under the provisions of section 96 of Companies Act 2013, every company should hold AGM every year within six months from the date of closing the financial year i.e. till 30th September for the purpose of making the shareholder aware of the functioning of the company. The Annual General Meeting is required to be held at the company’s registered office or at some other place within the city, town, or village in which the company’s registered office is situated. The agenda of the AGM can be issues relating to the approval of financial statements, appointment or re-appointment of auditors, declaration of dividends, appointment and remuneration of directors, etc.
The Annual General Meeting gives an opportunity to the shareholders of a company to present their views and participates in the businesses or transactions of the company. It is noteworthy to mention here, that AGM is one of the most important compliance to be followed by the company, and a failure to conduct AGM Failure to attracts penalty to the directors of the company and the National Company Law Tribunal has the power to direct holding AGM on receipt of a request from a certain number of shareholders in the company.
Before conducting an AGM, the Companies Act mandates a prior notice of at least 21 days from the date of the actual meeting to the members stating the details of the meeting. However, observing the circumstances created by the pandemic and multiple requisitions received from companies, the MCA announced an extension in the timeline to hold the AGM for the year 2020 till 31.12.2020 instead of 30.09.2020.
Through circular vide 28/2020 issued on 17th August 2020, the MCA provided that businesses can request an extension in holding of AGM through submission of Form GNL-1 to the Registrar of Companies (ROC) before the date 29th September 2020.
The Ministry of Corporate Affairs MCA has recommended the ROC to consider the Form GNL-1 copiously and provide a postponement of further three months to hold AGM.
Nevertheless, with such an extension in the deadline to hold the AGM the companies whose financial year ends on 31st March 2020 will be able to hold their AGM by 31st December 2020 despite the normal date for holding AGM within 30th September 2020.
Likewise, the MCA Circular also provides for an option to the businesses to either conduct a meeting till 30th September 2020 or make an application for the purpose of an extension of time beyond 30th September 2020 to the ROC.
On Tuesday, the MCA issued fresh directions to all the ROC across the country to extend the time of holding AGM by companies without the filing of formal application .i.e. Form GNL-1 and payment of the fee.
For this purpose, the MCA has already issued guidelines to all the Registrars of Companies who will now be able to cover the relief of extension of time to such companies who have already filed the applications, i.e. Form GNL-1 to the ROC but whose applications have not either been approved or rejected.
Such directions have been provided by the MCA, keeping in mind the demands from various associations for extending time to hold AGM and the difficulties created by the pandemic. Continuous lockdowns and upsurge in the number of cases have made it difficult for people to physically attend meetings and for the companies to arrange them while observing social distancing. Thus, MCA issued circulars providing extension in the period to hold AGM to ease the situations of the companies.
Conclusion:
Therefore, it is for the first time the Ministry of Corporate Affairs has taken such a step to provide relief to all such companies. Such extension is for the companies whose financial year ends on 31st March 2020 and is not available to the companies who are required to hold their First Annual General meeting till Sept 30. It is also important to remember that the extension is for three months from the last date under which a company must hold its AGM i.e. 31st December 2020.
As per the Circular on 17th September 2020, the MCA has issued guidelines to all the RoCs in India to allow an extension of further three months to the companies under their jurisdiction
As of now, there are twenty-two ROCs in India under which a company falls. Therefore, where a ROC under whose jurisdiction the company comes under grants an order of extension, then the company will be eligible to hold AGM within 31st December 2020.
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