Under the purview of the Companies Act 2013, the Annual General Meeting (AGM) holds significant importance in the governance and compliance structure of companies, especially for budding enterprises stepping into the realm of corporate operations.
As per Section 96 and Secretarial Standards 2 issued under section 118(10) of the Companies Act 2013, every company other than One Person Company is required to conduct an AGM by considering the following provisions:
- AGM shall be conducted in each calendar year.
- There shall be a maximum gap of fifteen months between two AGM.
- AGM shall be held within a period of six months from the date of closing of the first financial year of the company i.e. 30th September.
Provided that newly incorporated companies shall hold their first AGM within a period of nine months from the date of closing of the first financial year of the company i.e. 31st December and it is not necessary for the company to hold any AGM in the year of its incorporation.
Provided also that the Registrar may, for any special reason, extend the time within which annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months.
Latest Update for AGM by MCA Department
- The MCA general circular no 09/2023 for the clarification on holding the AGM via a video conference and OAVM. Read Circular
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Read Also: Due Dates of Filing ROC Annual Return Forms
Please Note: No extension is granted for companies conducting their AGM for the first time for the new company. Extension granted can be a maximum for a period of 3 months with the approval of the Registrar.
AGM is an annual requirement directed by law for all the ROC-registered companies in India. The time limit calculated by legal authorities is from the end of each Financial Year.
What is FY in Case of a Newly Incorporated Company Under the Companies Act 2013?
As recorded in section 2(41) of the Companies Act 2013, the Financial Year is the term ending on 31 March. If a company is commencing after 1 Day of January then the financial year for that company will end on March 31 of the next year. The 9-month time limit for conducting AGM is calculated from the end of March Month. Below is an example depicting the same:
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If the company is willing to close the FY in March 2020 then the time limit for AGM will be on or before 31 December 2020 and if the company opts for closing FY in March 2021 then the due date to conduct AGM is 31 December 2021.
The Purpose Behind the Extension of AGM
There are numerous motives due to which it seems unworkable for the organizations to keep the AGM by the expected time span also, one of the situations is COVID-19. In the last 12 years of work, the organization met with multiple hassles in the following situations –
Here is the various purposes behind the extension of the AGM have been furnished here –
- Due to unaudited/ delayed financial statements.
- Due to the non-availability of Auditors because of various reasons including sudden demise, disqualification of auditor, casual vacancy, when the independence of the auditor is affected, etc.
- Due to the non-availability of directors to sign the financial statement because of various reasons including sudden demise, director disqualification, casual vacancy, etc.
- Due to the non-availability of shareholders, the requirement of quorum is not fulfilled or the resolution has not been passed with the requisite approval.
- Due to corporate restructuring such as mergers, acquisitions, etc.
- Due to Seizure of Books in accounts by the Income Tax Department,
- Serious Fraud Investigation Office (SFIO), or other Government officials.
- Due to any other emergency situation including natural calamity, strike, pandemic, or any other special reason because of which it was impossible to conduct the AGM within the due date.
Steps to File Application to Registrar for Seeking an Extension in Holding AGM
- The chairperson / Director of the organization would call for a meeting of the board of directors for which 7 days prior notice must have been sent before conducting the Meeting of the Board.
- To Pass a board resolution for an extension of the time limit for keeping the annual general meeting defining the unsettled reason for an extension of the AGM;
- File form GNL-1 specifying special reason for extension with the Registrar
- Attach Certified True Copy (CTC) of the Board Resolution in E Form GNL-1
- The registrar would check the application on the precise grounds and may grant an extension if he thinks it’s important to grant the same.
- The Registrar will grant a certificate of extension for holding the AGM.
The Application Should be Filed Properly Prior to the Last Due Date
An organization must file an application to the Registrar for an extension of holding the AGM before the due date of holding the AGM. However, it is important that the date of filing of an application should be in advance of the due date of holding of AGM.
Penal Provisions for Default by the Company / Directors
Section 99 of the Companies Act, 2013 provides that where any default is made in holding an AGM of the company, then the company and every officer of the company who is in default shall be punishable with a fine which may extend to Rs. One lakh and in the case of a continuing default, with a further fine which may extend to Rs. Five thousand for every day during which such default continues.
When AGM is not Held within Due Dates and also no Extension has been Granted by the Registrar
In case the AGM has not been conducted on the last date as specified above and no application for extension of holding AGM has been made to
the Registrar, then the company should apply for Compounding of the offence under Section 441 of the Companies Act, 2013 with the National Company Law Tribunal (NCLT).
