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.
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.
What are the 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:
(a) 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.
(b) Non-readiness of the financial statements due to natural calamity, due to loss of financial data, absence of Directors
(c) 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.
(d) Non-availability of directors on the valid grounds
(e) The sudden death of Directors and consequence of this the limit of directors goes below the minimum requirements of directors.
(f) Confiscation of Books of accounts by Income Tax Department, Serious and Fraud Investigation Cell or any other Government officials.
PROCEDURE TO FILE APPLICATION SEEKING EXTENSION OF TIME FOR HOLDING ANNUAL GENERAL MEETING:
1. 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.
2. To Convene a Board Meeting on the specified date;
3. To Pass a resolution for extension of time limit for holding annual general meeting specifying the due reason for extension of AGM;
4. The file an application to the Registrar of Companies in Form No – GNL1.
5. In GNL-1, the special reason for not to be holding of AGM along with other necessary information to be provided
6. To attach the Certified true copy of the Board Resolution in E Form GNL-1
7. Follow up with the office of the Registrar of Company
8. The registrar shall examine the application on the specific grounds and may grant an extension, if it thinks it necessary to grant the same.
9. 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.