PRACTICALITY OF COMPOUNDING OF ANNUAL GENERAL MEETING
INTRODUCTION
Companies are expected to comply with the Law applicable to them. In the context of the Annual General Meeting as per Section 96 of the Companies Act, 2013 every Company is required to convene the Annual General Meeting of the Company within:-
- six months from the end of the Financial year. i.e 30th September
- Nine months from the end of the Financial year. i.e 31st December
CONSEQUENCE OF NON-CONVENING OF ANNUAL GENERAL MEETING WITHIN STIPULATED TIMELINE
As per section 99 of the Companies Act, 2013, if a Company fail to convene Annual General Meeting within a specified timeline (Except where the company has taken Extension approval):-
| Company | The Company shall be punishable with fine which may be extended to:-
|
| Officer in Default | Every Officer in default shall be punishable with fine which may be extended to:-
|
Note:- Each officer in default is counted separately for calculating fine under this section.
For example: – XYX Ltd. Having two Director Mr. A and Mr. B and the Company fail to convene Annual General Meeting within 6 months of Annual General Meeting the fine shall be levied as follow:-
| Company |
|
| Mr A |
|
| Mr B |
|
WHAT IS COMPOUNDING
Compounding of an offence is an opportunity given to companies to make good the non-compliance
committed by them. The concept of compounding of offences was incorporated as a measure to avoid the long-drawn process of prosecution, which would save both cost and time in exchange of payment of a Fine.
APPLICABLE PROVISION:-
Section 441 of the Companies Act 2013, deal with the Compounding of offence
DEFINITION
Compounding is not defined in the Companies Act 2013. As per the Black’s Law Dictionary, to “Compound” means “to settle a matter by a money payment, in lieu of other liability.”
WHICH OFFENCES CAN BE COMPOUNDED
Any offence punishable under this Act not being an offence:-
- punishable with imprisonment only
- punishable with imprisonment and the Fine may be compounded.
WHO ARE THE COMPOUNDING AUTHORITIES
The following are the two compounding authorities:
- Regional Director: Where the maximum amount of fine which may be imposed for an offence is upto 25Lakh
- National Company Law Tribunal:- where the amount of offence is exceed 25 Lakh
Process of Compounding
As discussed above, the Compounding of offence is an opportunity given by law to make good Non-Compliance. In the context of the Annual General Meeting following are the brief steps for Compounding of offence.
| Steps | Particular |
| Step 1 | Convening of Annual General Meeting of the Company |
| Step 2 | Filing of all Annual Filing form i.e AOC-4 and MGT-7 with Registrar within 30 and 60 day from the date of Annual General Meeting. |
| Step 3 | Call for a Board Meeting to decide the following matter :-
1. Approval for filing of Application for Compounding of an offence under section 441 of the Companies Act, 2013 2. Arrive at the amount of the fine involved in the offence. 3. Provide necessary authorisation for compounding. |
| Step 4 | Preparation of Compounding application and file with Registrar of the Companies in e-form GNL-1 |
| Step 5 | Submit three Copies with the Registrar of the Companies (RoC). |
| Step 6 | On receipt of the application, RoC will write its comments and send the same to RD/NCLT (concerned authority). |
| Step 7 | On receiving of the Copies, the Concern Authority will call for a hearing and decide the amount of Fine to be levied and pass the Compounding Order. |
| Step 8 | On the receiving of order, the company shall pay the amount of fine through www.mca.gov.in |
| Step 9 | The company shall file a copy of the order with concerned Registrar of Companies in form INC-28. |
CS Akash Verma | Managing Partner|Switch2Legal | Email:- [email protected]
Author Bio
