In this articles, the author shall discussion provisions relating to extension of the date of holding of AGM and how the companies which could not prepare financial statements due to precarious situation created due the spread of Novel Corona Virus, can avail extension of the date of holding of AGM

Statutory provisions

According to Section 96 of the Companies Act,

1) 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 :

Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation:

Provided also that 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, by a period not exceeding three months.

Third proviso of the above act can be interpreted as follows:

If the Company is unable to hold its AGM within the date of six months within the closure of financial year, it can apply for extension of the date of AGM and the Registrar may, for any special reason (which can be due to spread of Covid-19 pandemic), extend the time which AGM, shall be held, for a period not exceeding three months. 

Points to keep in mind in respect of Application for extension of AGM

Prevention is better than cure. Likewise, Application for extension of the date of AGM must be filed well in advance of the adoption of Accounts at Board Meeting and date of holding of AGM.

Reason for extension of AGM

Non-readiness of financial statement due to spread of Novel Corona virus and consequent nationwide lockdown announced by Government of India on 24th March, 2020 at 8 pm and effective from 25th March 2020-14th April, 2020. The Lockdown was further extended till 3rd May, 2020(Lockdown 2) vide order dated 14th April, 2020 issued by Ministry of Home Affairs. It was extended by the Ministry of Home Affairs for a further period of two weeks w.e.f 4th May, 2020 to 17th May, 2020(Lockdown 3) and thereafter it was again extended upto to 31st May 2020 (Lockdown 4) and upto 30.06.2020 vide notice issued by Government of West Bengal with specified restrictions and relaxations (Lockdown 5). As per the notification dated 30th June, 2020 issued by the Government of West Bengal, the lockdown in the containment zone stands extended upto 31.07.2020.

During the lockdown, movement of people were restricted as per guidelines issued by Ministry of Home affairs. Most of the commercial and private establishment were closed and only works from home were allowed. All non-essential public and private transport were suspended. Even if few establishments were allowed to be open during Lockdown 5, due to paucity of transport, employees could not join office and visit client’s office for audit purpose. The Ministry of Home affairs issued fresh guidelines during Unlock 1 which kicked off with effect from 1st June, and allowed private offices to open but restricted the opening of metro and private bus services. In big cities, most of the employees live in outskirts of city or live in far flung areas where only transport medium is local trains or metro trains. When both of these services were suspended, most of the employees faced hardship in commuting to offices, and most of them opted for work from home. Digitisation has not become very popular in small scale industry and most of the works involves paperwork so auditing of accounts had become troublesome in these situations. Though Unlock phases are going on, but no sign of normal working conditions are seen in sight. Auditing and preparation of accounts are done mostly in the months of April to June but due to this ongoing pandemic, the same could not be finished in time.

Procedure to seeking Extension of Time to Hold AGM

1. Call a Board Meeting on a specified with an agenda to seek board’s approval for making an application for extension of time to hold AGM

2. To pass a resolution for extension of time limit for holding AGM specified the reason being COVID-19 pandemic and consequential situation

3. File an application to the ROC in Form No-GNL1

4. In GNL-1, proper grounds be mentioned and attach certified true copy of the Board Resolution

5. Follow up with the office of the ROC

6. The Registrar shall examine the application on the specific grounds and may grant an extension, if it thinks it necessary to grant the same.

7. To obtain the certificate for grant of extension in holding of AGM of the Company 

Format of Application for seeking Extension of Time to hold AGM

To,

Registrar of Companies,

__________(Region/State)

Subject: Application for the extension of Annual General Meeting

 Sir,

The the Annual General Meeting of the members of the company in respect of the year ended on 31st March, 20XX is required to be held on or before , 20XX. The company is not in a position to hold its Annual General Meeting within the stipulated time period. The main reason for this is that despite all efforts made in this direction, __________________________________________________________________________________________________________________________

The company is making its best efforts to ______________ (resolve the reason for not conducting the AGM) at the earliest. This is going to take some more time this year and by no means the accounts duly audited can be made ready to place before the Annual General Meeting on or before , 20XX (due date of AGM) . Due to this unavoidable position, the Board of Directors of the company passed the following resolution in its meeting held on, 20XX:.

“RESOLVED THAT pursuant to the provisions of Section 96 and other applicable provisions, if any, of the Companies act 2013, the company do hereby make an application with the Registrar of Companies, for extension of time for holding the Annual General Meeting for the FY 20XX-XX for a period of months (maximum 3 months) from the last date on which the Annual General Meeting of the Company should have been held”.

“RESOLVED FURTHER THAT any Director of the Company and Company Secretary of the Company be and are hereby SEVERALLY authorized on behalf of the Company to sign and file application with the Registrar of Companies, and generally to do all acts, deeds and things that may be necessary, proper, expedient or incidental for the purpose of giving effect to the aforesaid Resolution.”

In view of the unexpected, unusual and extraordinary circumstances, It is humbly submitted to seek an extension of time of months beyond , 20XX for convening the th Annual General Meeting of the company up to , 20XX by which time we hope to finalize the accounts for the year 20XX-XX duly audited and place the same before the Annual General Meeting.

It may be mentioned that the th Annual General Meeting in respect of the accounting year ended on 31st March, 20XX was convened and concluded on ,20XX (Details of previous year AGM).

A list of the Board of Directors is also enclosed for ready reference. The Registrar of Companies is humbly requested to kindly consider the aforesaid request and accord approval extending the period of Annual General Meeting in respect of the accounting year 20XX-XX by a period of months beyond , 20XX and oblige. However, we assure you that in future all care shall be taken to finalize the annual accounts and convene the Annual General Meeting within prescribed period.

(Signature of Authorized
Signatory) Designation
DIN/ Membership No.:

LIST OF THE BOARD OF DIRECTORS OF THE
COMPANY
(AS ON (Date of application))

S.No.  Name Designation DIN Address

Author Bio

Qualification: CS
Company: N/A
Location: Kolkata, West Bengal, IN
Member Since: 16 Apr 2020 | Total Posts: 6
A Company Secretary deals with merger and amalgamations, Companies Act and other secretarial matter View Full Profile

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2 Comments

  1. Kwinkle Maliwal says:

    Hi,

    Thank you for the post.

    I have a query. Is it required for a NSI-ND-NBFC to take approval of RBI before making application to ROC for extension of AGM?

    Thanks again.

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