BRIEF BACKGROUND:

Company being an artificial person cannot take decision on its own, so the owners of the company need to meet at least once in a financial year to get an overview company’s growth and to discuss yearly results of the same. The Companies Act, 2013 also mandates holding Annual General Meeting (AGM) in each financial year.

An AGM is a yearly gathering of a company’s interested shareholders and the persons who are looking for management of the company. It is no doubt is a regular and annual affair that ensures transparency between the Company and other stakeholders. The very idea behind such governance action was to ensure the rise of the concept of “shareholders activism”. An annual general meeting is a way for company to present its financial statements to the shareholders (owner). Shareholders can then ask questions about the health of the company. An AGM is therefore an important opportunity to address their concerned questions.

Blank puzzles and wooden cubes with the text AGM Annual General Meeting lie on a light blue background

As per the provisions of the Companies Act, 2013 an Annual General Meeting must be held within six months from the end of every financial year.

The professional fraternity is under the anticipation of extension by the Ministry of Corporate Affairs (MCA) to hold AGM of the company for the financial year 2020-2021. However, ICSI an esteemed professional body governing Company Secretaries through its circular dated August 28, 2021, has advised all the companies to hold the AGM for the financial year 2020-2021 within the time stipulated as mentioned in the Companies Act, 2013, i.e. September 30, 2021 either through audio or visual means.

Visual

In COVID scenario there are many questions which comes into our mind with regards to Annual General Meeting. Since the AGM for 2021 is around the corner, some of the crucial practical insights have been provided in the FAQs mentioned below:

FAQ’s ON ANNUAL GENERAL MEETING 2021:

Sr. No. Question Description
1. What should be kept in mind before sending the Notice of Annual General Meeting (AGM)?
  • AGM notice is to be sent at least 21 clear days in advance of the meeting. AGM can also be conveyed on a shorter notice with consent of the shareholders holding 95% paid up share capital of the company.
  • AGM notice must contain the business transactions which needs to be transacted in the meeting.
  • There would be clearly mention the means through which the company is holding the meeting. If company is holding its meeting through audio or visual means, a link for the same should be mentioned.
2. What needs to be kept in mind if a company is holding its AGM through Video call or other audio mean? Due to the outbreak of COVID, ICSI has advised to all the companies to hold the AGM for the year 2020-2021 within the time stipulated in the Companies Act, 2013, that is, September 30, 2021 weather through audio or visual means.

If a company is holding its AGM through audio or visual means such company will clearly mention in the notice of AGM the means of same. The company need to preserve the recording of the meeting at least till the next AGM of the company. Shareholders who join from video call shall be counted for the purpose of quorum.

3. Is it compulsory to hold Annual General Meeting through Video call for the AGM to be held in 2021? No, it is not compulsory to hold AGM through Video call. It is just an alternative given by MCA due to the pandemic situation. Thus, it can be inferred that a company can hold AGM in physical mode also.
4. Which companies can hold the Annual General Meeting through Video call and other audio mean? Every class of company (OPC, Small, Private, Public, Listed, Section-8, Nidhi etc.) can hold their AGM through audio or visual means. However public sector bank
cannot hold AGM through Video call as this circular is applicable only on companies.
5. Whether Notice and other annexures can be served through e-mail in case the AGM is held virtually? In the situation of COVID restriction, notice and other annexures i.e. board report, annual report and other required documents shall be sent through electronic mode. If the company does not have e-mail address of any member than the concern authority shall try to connect the member over call and if connection over call is not happening than such annexures shall be published in vernacular and English newspaper having vide circulation in the district in which such member resides.
6. Is it compulsory to hold AGM till September 30, 2021 according to the Companies Act? As on date it is mandatory to hold the Annual General Meeting till September 30, 2021, for every type of company as per the provisions of Companies Act, 2021.
7. Whether a member can attend AGM through teleconference? No, a member cannot attend AGM through teleconference, as attending an AGM a member would require to attend through video and audio means both cumulatively. With a single mode a member cannot attend AGM.
8. What if a company could not hold AGM within stipulated time stated in the Companies Act, 2021? If a company cannot hold AGM within stipulated time prescribed time stated in the Companies Act, 2021, action against such company would be taken under section 441. Provision of Compounding of offence shall be applicable on the company as default in holding the AGM within the time prescribed under the Companies Act 2013 is not a cognizable offence.
9. What are the remedies available to a company which is unable to hold the AGM within the time prescribed under the Companies Act, 2013? If the management of the company thinks that the company will not be able to conduct AGM within the stipulated time prescribed under the Companies Act, 2013, the company may apply for extension by filing e-form GNL-1 with the ROC. If Registrar of Companies (ROC) is satisfied with the reason specified in the form, ROC can grant maximum extension up to three months. Further, note that extension cannot be granted by ROC for the first AGM of the company.
10. What are the additional compliances required to hold a general meeting for a listed company? SEBI vide its circular dated July 23, 2021 has referred a matter on holding of AGM by top 100 listed entities by market capitalization.

This is in reference of Regulation 44(5) of the SEBI (LODR), 2015 which requires top 100 listed entities by market capitalization to hold their AGM within a period of five months from date of closing of the financial year.

Thus SEBI, in receipt of representations from listed entities and ICSI, has decided to extend the timeline for conduct of AGM by top 100 listed entities by market capitalization for holding their AGM within a period of six months from the date of closing of the financial year 2020-2021 due to the outbreak of pandemic.

11. Proxy can be appointed to attend the general meeting on behalf of the member if the meeting is being conducted through video call? A proxy cannot be appointed by the member to attend the annual general meeting if the meeting is being conducted through video call.
12. What are the disclosures requirement with respect to PoSH Act in board report? The annual board report shall provide a disclosure relating to the compliance of provisions with respect to the constitution of internal complaints committee under sexual Harassment of women at workplace( Prevention, Prohibition and Redressal) Act, 2013
13. Whether attachment of extract of Annual Return in Form MGT-9 to the Board Report is required? Pursuant to the amendments made by Ministry of Corporate Affairs vide its notification dated 5th March 2021 in Rule 12 of the Companies (Management and Administration) Rules, 2014, the requirement of attaching the extract of Annual Return in Form MGT-9 to the Board Report has been omitted and hence, the same does not form the part of this Board Report irrespective of the fact whether the company has a website or not.
14. What are the reporting requirement of CSR in board report? if the Company fails to spend the amount prescribed in Section 135(5) and unless the unspent amount relates to any on-going project.

Referred to in sub-section (6), the Company shall transfer such amount to a Fund specified in Schedule VII, within a period of 6 months of the expiry of the financial year. The applicability of this amendment is prospective and therefore the unspent amount for the financial year 2020-21 onwards shall be transferred to the fund specified in Schedule VII within six months of the expiry of the said financial year, unless the same pertains to any ongoing project.

15. What exemptions are provided to small companies and one person companies with respect to disclosure in annual board report? There are certain exemptions provided to small companies and one person companies with respect to disclosure in annual board report, which are as follow:

  • Annual Return of the Small Company can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company;
  • A small company may hold only two board meetings in a year i.e. one Board Meeting in each half of the calendar year and the gap between the two meetings is not less than ninety days;
  • A Small company need not include cash flow statement as part of its financial statement;
  • Small companies are required to provide details of aggregate amount of remuneration drawn by directors instead of providing details of remuneration of directors and key managerial personnel of the company;
  • Small companies are exempted from the requirement from mandatory rotation of auditor as per Section 139(2) of the Act, 2013 read with Rule 5 of the Companies(Audit and Auditors) Rules, 2014;
  • An Auditor of small companies are not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor’s report.
16. Which companies are required to file annual return in e-form MGT-7A? Small companies and One Person Companies are required to file e-form MGT-7A for annual return for the financial year 2020-2021 and onwards. Further it can be said that if a Small company or One Person Company wants to complete its backlog annual filing it has file e-form MGT-7A

Nothing aforesaid shall apply to-

  • A holding company or a subsidiary company;
  • A company registered under section 8; or
  • A company or body corporate governed by any special Act.
17. What are the reporting requirement in board report if a company is under IBC? Annual board report should contain the details of application made or any proceeding pending under IBC during the Financial year.
18. What are the applicability of Auditing standards for the AGM 2021 ICSI Auditing Standards are a mandatory compliance for audit engagement by an Auditor. Therefore every auditor shall comply with the same.

  • Auditing Standard on Audit Engagement

(CSAS-1)

  • Auditing Standard on Audit Process and Documentation (CSAS-2)
  • Auditing Standard on Forming of Opinion (CSAS-3)
  • Auditing Standard on Secretarial Audit (CSAS-4)

CONCLUSION:

AGM is considered as an obligatory act which needs to be performed by the company & its members as per the Companies act, 2013. This is being done to observe sheer transparency among company’s members & stakeholders. Due to COVID situation it has become difficult to conduct AGM through physical mode, as to follow the concept of ease of doing business Ministry of Corporate Affairs has taken measure to ease out the provisions relating to holding AGM.

JSA REMARKS:

Ministry of Finance, CBDT extends due dates for filing of Income Tax Returns and various reports of audit for Assessment year 2021-2022 on September 09, 2021. Companies are also expecting of extension of time to hold Annual General Meeting from MCA for the year 2021. But it would be recommended not to wait for the notification of MCA and if a company is clear that it would not be able to hold AGM withing the stipulated time, such companies should apply for extension by filing e-form GNL-1 at the earliest to avoid end moment haste.

BIBLIOGRAPHY:

http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=17500

https://www.caclubindia.com/articles/holding-of-agm-through-video-conferencing-45377.asp

https://www.icsi.edu/media/webmodules/Procedures_of_General_Meetings_during_COVID-19.pdf

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About the firm: Jaya Sharma and Associates is a firm of Practicing Company Secretaries located in Mumbai, Maharashtra, India that specializes in solving the complexities of corporate laws and company secretarial practice promptly and correctly with an attention to detail and personal services catering to pan-India and foreign clients. The peer-reviewed firm specializes and adheres to the parameters of quality control systems and guidelines as prescribed by the regulatory body. FCS Jaya Sharma-Singhania, Founder & Mentor has been listed as one of the Top Best Ten Women Legal Consultants in India 2021 by Women Entrepreneur Magazine.

Mehul Solanki Menakshi Bajaj Krupa Dodia
Mehul Solanki is a commerce and law graduate having more than four years of working experience in company law compliances, setting-up companies, compliances of listed companies and not-for-profit companies. He is currently Research Associate & Start-up Consultant at Jaya Sharma & Associates and has authored various articles on corporate and securities law related topics which have been published on various websites, blogs and professional magazines including Compliance Calendar, Taxguru, Legal Service India and journal of ICSI etc. Menakshi Bajaj is a commerce postgraduate and an aspiring Company Secretary currently undergoing her long-term training at Jaya Sharma and Associates, taking interest in understanding and interpreting complexities of the prevailing law and has panned down various articles on corporate law related topics which have been published on various websites namely: Compliance Calendar, Taxguru etc. Krupa Dodia is a commerce graduate and aspiring company secretary     who is currently undergoing her long-term training as a junior associate with Jaya Sharma and Associates. She believes in the quote of “Develop a passion for learning. If you do, you will never cease to grow”. She is willing to take interest into understanding and processing the complexities of the various laws like corporate and securities law.

 

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