Clarification And Impact Regarding Extension of AGM, CFSS And Filing of Financial Statements & Annual Returns

In order to provide relaxation in compliance of various provisions of the Companies Act, 2013 due to the outbreak of Coronavirus, the Ministry of Corporate Affairs had extended the Companies Fresh Start Scheme, 2020 and the LLP Settlement Scheme, 2020 vide General Circular Nos 30/2020 & 31/2020 dated September 28, 2020 and in the same month all the jurisdictional RoCs granted a general extension in the time limit for holding AGM for the year 2020. As the deadline of the Schemes are nearing, many questions are arising related to extension of AGM and the scheme. This write up makes an attempt to provide a suitable solution to all those questions.

Q. Is 31st December, 2020 the “general due date of AGM” for all companies? 

Ans. No.c Section 96(1) and the first proviso, the AGM shall be held within 15 months from the date of last AGM or within six months from the closure of the financial year (i,e 30th September, 2020) whichever is earlier. Due to COVID-19 outbreak, on 8th September all the ROCs granted extension of the due date by further three months from the original due date. For example, ABC Limited held its AGM on 15th July, 2019 in the previous calendar year, the due shall be earlier of 14th September, 2020 or 30th September, 2020, and that comes 14th September, 2020, and after considering the extension by ROC, company can hold AGM is 14th December, 2020. So, the due date will differ for all companies.

Q. Whether there will be any further extension in the time limit for holding the AGM? Or can any company may apply for extension of the time limit of AGM beyond the extended time limit?

Ans. Due to the outbreak of COVID-19 the RoCs have allowed a common extension for all companies, to hold AGM till the end of three months from the due date of AGM which is the maximum extension that can be granted under Section 96, so the extension of time limit beyond the already extended time period is not possible.

Q. What is the consequence if the AGM is not held even till the expiration of the extended time limit of AGM?

Ans. If any company is not able to held AGM till the extended time limit, it shall be an offence under Section 99 of the Act and the company and every officer in default may be prosecuted and fine of upto Rs 1 lakh may be imposed and if the offence is a continuing one with an additional fine of Rs 5,000 per day may be imposed during which the offence continues. Apart from this, Section 97 empowers the members of the company to apply NCLT to direct the company to hold AGM, and one of the important features of Section 97 is that even a preference shareholder of the company not having any voting right may also file an application to NCLT under Section 97.

Q. Can a company claim non-finalisation of annual financial statements as a reason for not holding the AGM till the extended due date of AGM?

Ans. One of the most common queries coming is what if annual accounts are not finalised till the extended time limit of holding AGM? Well, non finalisation of accounts can be reason on whose basis any company seek extension of time for holding AGM from jurisdictional ROC, but in the current situation extension powers of ROC is already exhausted and no further extension is possible and in such case the company would also become a defaulter, in case of non-finalisation under Section 129(7) and Section 134(8) apart from Section 99. Section 129 (2) read with Section 134(3) mandates all companies to lay annual financial statements and Directors’ Report at each AGM and in case of any default, it becomes a punishable offence. So, non-finalisation of annual accounts is no more cause for not holding AGM till the extended due date.

Q. If any company has 31st December, 2020 as its extended due date and holds AGM on that date, does the company require to file Form CFSS for Forms AOC-4/CFS/XBRL, MGT-7 and ADT-1 (if applicable) in January?

Ans. For companies planning to hold AGM on 31st December, 2020, such companies are not required to file the Form CFSS for filing its financial statements, annual return & auditor appointment (if applicable), as their due date of filing falls in January only. But in case any company having the  extended due date of AGM on 30th November, 2020 or earlier, they need to file the Form CFSS if they filed financial statements, annual returns and auditor appointment after the due date provided the filing shall be completed till 31st December, 2020.

Q. What if any company filed Form GNL-1 for AGM extension and ROC granted a common extension and form is still pending?

Ans. The extension orders contain clear explanation to the effect that all pending applications seeking time extension for holding AGM and rejected applications shall be covered under the “common extension order”.

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  1. A Mishra says:

    If the AGM is held within the extended period of December 20 and Part of the Agenda is approved except passing of the Audited Accounts & Durector’s report, and the Meeting is adjourned for next few days, will it meet the requirement please

    1. Tejas_7619 says:

      Thank you reader for the query.
      As you have questioned that, AGM was called and held within the extended time period (December 20 in your question), and all the items of the Notice calling such meeting was taken and resolved except the adoption of Annual Accounts/Financial Statements and the reports of the Directors’ and the Auditors’ on such accounts/financial statements, consequently the meeting was adjourned to a future date will definitely meet the requirements provided that the adjourned meeting is held and concluded within the extended time limit i.e the last day of the year, as allowed under the provisions of Sections 96 read with Section 129 of the Act. This view is held in the judgment of Bejoy Kumar Karnani v. Assistant Registrar of Companies [1985] 58 Comp. Cas. 293 (Cal), confirming that if AGM is required to be held within a particular period, it implies that the meeting should be COMPLETED within that period, that means if in any case the AGM is adjourned, the adjourned AGM shall be concluded till the maximum time allowed for convening the AGM under the provisions of Section 96. Further, the same view has been expressed by ICSI in its Guidance Note on SS-2 for General Meetings. Hence, it is valid if you are adjourning AGM on the reason that Annual Accounts are not ready for laying in such AGM, then its valid provided the adjourned AGM is concluded before 31st December.

  2. Shubham says:

    Tax audit and compines act are independent. Is it possible to file companies tax audit report before presenting the financial to the shareholders in agm ?

    1. Tejas_7619 says:

      Yes, of course, filing/non-filing of Tax Audit Report won’t affect the compliance under the Companies Act, in fact even the filing of Tax Audit Report prior to the signing of financial statements by the Board of Directors of a company is absolutely fine.

  3. ANUP KR SARAF says:

    In one of your FAQ it was given that if a company held AGM in July 2019 then as per section 96(1) the company has to held its AGM by 14th dec after considering 3 month covid extension. But time under the saId section is 15 month plus 3 month covid extension takes it to 14th Jan,2021. Hence AGM due date comes to 31st Dec2020

  4. Anup Kumar Saraf says:

    As per your article in tax guru, if last AGM held on 15th July 2019 then under section 96 the AGM due date to be 14th October,2020 i.e 15 months plus 3 months covid relaxation. So the due date should be 31st Dec instead of 14 the Dec. Please clarify

  5. Gautam Sharma says:

    What if the Last year the company got approval to conduct the AGM after 30-Sept-2019 Let say on 15th November 2019 the AGM was conducted. What will be the due date for AGM for 2019-20.

  6. Seeta Iyer says:

    In one of the FAQ you have mentioned that the annual filings of the company has to be done before 31.12.2020, if the AGM is held before 31.12.2020. In the year 2019, most of the companies might had their AGM on 30.9.2019. Accordingly the 15 months criteria the last date to hold the AGM will be 29.12.2020 and as per FAQ the company has to file all its annual return on or before 31.12.2020. Although the said understanding won’t be applicable to companies who have taken extension for holding AGM in 2019 and had their AGM after 30.9.2019. Is my understanding correct?

    1. Tejas Patel says:

      Thanks for the query, it will help other readers too.
      If, as you said, suppose AGM is held on 29.12.2020, then we don’t need to file the Financial Statements/Annual Return till 31.12.2020, because the due date of filing automatically falls in January. So, if any filing is getting due in the month of January’s any day, the CFSS doesn’t apply to that, but suppose if AGM is held on 29th or 28th September, 2020 in that case the due date of filing Financial Statements/Annual Return will definitely fall before 31.12.2020, not for Form MGT-7 but definitely Form AOC-4 due date will be 27.12.2020 and in case you’ve filed AOC-4 on 31.12.2020 the MCA system won’t charge any additional fees due to the CFSS, so might be there are chances of a psychological negligency about CFSS applicability. We might feel that we have filed on time. I am insisting all my professional colleague to ensure that even a single day delay in any filing CFSS gets applied to us and CFSS Form shall be filed for such delayed filing. If Form AOC-4 due date is 28.12.2020 and we have filed on 30th or on 31st, definitely we have to take immunity through CFSS for that Form. So, please check in any of your case, this won’t happen, there are chances of skipping the CFSS, because a single day delay we won’t be feeling that we have delayed. Psychologically we can easily skip.

      (CS Tejas Patel)

      1. Gautam Sharma says:

        What if the Last year the AGM of the Company was held on 15-Nov 2019 after getting extension approval. What will be the final date for FY 2019-20 to conduct the AGM for such company?

        1. Tejas_7619 says:

          Hello Gautam,

          Thanks for the query, it will definitely help other readers to expand their knowledge base. In your question, in 2019 Company held its AGM on 15-November-2019. As per Section 96(1) read with the first proviso, the date on which the AGM in the year 2020 shall be held is, 15 months from the previous date of AGM or 30-September-2020 (i.e six months from the closure of financial year 2019-20), if I assume you have April to March as your financial year. So the AGM in 2020 shall be 14-January-2021 or 30-September-2020, whichever is EARLIER, and it is very much obvious that your last date upto which AGM shall be held is 30-September-2020, by adding the extension period of three months allowed by ROC, the due date of holding AGM for the year 2020 comes to 31-December-2020. Moreover, just to add a minor point in your question, if you have held your previous AGM on 15-Nov-2019 and the maximum gap of 15 months expiring in 2021, if in the first proviso to Section 96 the condition of holding AGM within 6 months of the closure of financial year would not have been there, still it would have violated Section 96, as the language of the Section itself says that “Every company other than a OPC shall in EACH YEAR hold in addition to any other meeting as its AGM…” so the expression “EACH YEAR” implies that no calendar year can be left without holding AGM, over to this the first proviso has put a condition that AGM shall be completed within 6 months from the closure of financial year, i,e 30-September every year if financial year is April to March and upto 30-June-2020 if the financial year is January to December.

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