Sec 96 of the Companies Act, 2013
Introduction:
In order to comply with the provisions of the Companies Act, 2013, every company other than the One Person Company is required to hold annual general meeting or AGM within the due date. Defaulting which may attract penalties & complications.
But in case where a company due to unavoidable circumstances is not able to hold an AGM within the timeline can still comply with the provision by requesting an extension.
Extension of AGM time limit (sec 96)
What if annual general meeting is not held within the time limit required by the act?
Remedy: Registrar of companies may extend the timeline for holding of AGM for a maximum of three months provided there is a special reason given for not holding the meeting [Third proviso of sub-section (1) of Section 96 of the Act].
Special reasons for extension may include:
1. Unpreparedness of financial statements due to loss of financial data, the occurrence of natural disasters, etc.
2. Absence of directors or members of the company on justifiable grounds.
3. Consequences like death or insanity of directors which reduces the statutory limit for the minimum number of directors of a company.
4. Un-signed financial statements by Auditors due to death, resignation or incapacity to sign or any other valid ground.
5. Merger and amalgamation.
6. Or any such other special reasons which Registrar may deem fit & justified.
Note: The time period for first AGM can not be extended.
When to take permission for extension: The reason for not holding the AGM may be available with the company at an early stage (mostly before issue of notice of actual AGM), thus it is necessary to file for an extension in sufficient time before the arrival of due date of actual AGM.
Form to be filed for extension:
e-form: GNL-1
Attachments: Certified true copy of board resolution citing reason & period of extension required along with prescribed fees.
What if 1st AGM is not held?
Remedy: There is no provision for the extension of time limit from Registrar beyond the time specified in the act for holding of 1st AGM. However such company can seek remedy under section 97 that is, default in holding of AGM in order to avoid penalties later on.
Conclusion:
The Companies Act, 2013 provide reasonable safeguard to protect genuine defaulters & help avoid severe penalties and punishments. AGM is the occasion to build trust and bring transparency of company’s financial performance & future business prospective among company members & stakeholders.
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