Extension of Due Date for Companies whose Financial year has ended on 31/12/2019
Considering the rapid spread of the novel Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organization and notified disaster by the Government of India and on receipt of various representations from the stakeholders in relation to holding of an Annual General Meeting of Companies whose financial year has ended on 31st December, 2019, the Ministry of Corporate Affairs vide its General Circular No. 18/2020 dated 21st April, 2020, clarifies that-
The Companies whose Financial Year has ended on 31st day of December, 2019, may hold their Annual General Meeting on or before 30th day of September, 2020, irrespective of its due date as per section 96 of the Companies Act, 2013. Also, holding the Annual General Meeting within the time as stated above shall not be considered as violation under the Companies Act, 2013 and rule made thereunder.
In relation to the above, the provisions of the Companies Act, 2013 pertaining to the definition of the Financial Year and provisions relating to holding of the Annual General Meeting are detailed below:
The term Financial Year has been defined under Section 2(41) of the Companies Act, 2013, which provides as follows:
“Financial Year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up.
Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year.
Provided further that any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Ordinance, 2019, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.
Provided also that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause.
Further, Section 96 of the Companies Act, 2013, inter alia provides as follows:
“Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:
Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year.”
Keeping in view the above cited provisions of the Act, it can be concluded that the Companies whose financial year is from January to December, shall convene their AGM on or before 30th June, i.e within six months from the closure of the financial year. However in current scenario, due to COVID-19 outbreak, Ministry has provided the relaxations to those companies who have opted their financial year to end on 31st day of December, 2019, to hold their AGM on before 30th September, 2020, instead of 30th June, 2020.
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