Extension of Annual General Meeting (AGM) 2022

Extension Of Annual General Meeting (AGM)

Before going through the procedure for seeking extension for holding AGM, I would like to talk about relevant provisions and circulars related to AGM/EGMs for the financial year 2021-22. Here we will get to know about how to seek extension for holding AGM. What if Companies do not hold their AGMs within due time or hold without taking ROC approval.

Annual General Meeting (AGM)

Section 96 of the Companies Act, 2013 (Act) talks about the provisions relating to the AGM.

• Every company is required to hold a general meeting each year. One person company (OPC) is not required to hold the AGM.
• First AGM should be held within nine months from the end of the first financial year. However, in any other case, the AGM should be held within six months from the end of the financial year and the gap between AGMs of 2 consecutive years shall not be more than 15 months.
• Registrar may extend the AGM for any special reason, by a period not exceeding three months. First AGM can’t be extended.

MCA Clarification on AGM 2022

• The present article briefs the MCA Clarification on Holding Annual General Meeting (AGM) 2022.
• Holding an Annual General Meeting is a yearly procedure to be followed by every company. The Ministry of Corporate Affairs vides a General Circular No. 2/2022 & 3/2022 dated May 5, 2022, issued a clarification on holding of Annual General Meeting (AGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM).
• With these circulars MCA announced that it has been decided to allow companies to organize the AGM in 2022 for the financial ending before on 31.03.2022 through Video Conference (VC) or Other Audio-Visual Means (OAVM) as per respective due dates by 31^st December, 2022.
• Accordingly, any Company can hold their AGMs/EGMs through VC till 31^st December, 2022
• It is clarified that this Circular shall not be construed as conferring any extension of time for holding of AGMs by the Companies under the Act. The Companies which have not adhered the relevant timelines, shall be liable to legal action under the appropriate provisions of Act.
• Companies have an opportunity to hold their AGM through VC till 31^st December 2022. However, Company can hold AGM after 30^th September, 2022, if Company has taken extension for holding its AGM from their respective Registrar of Companies (ROCs).

If Company does not hold its AGM till 30^th September, 2022, without extension for holding of AGM from ROC, then it shall be considered as non-compliance. Then Company will have go for Compounding.

PROCEDURE TO FILE APPLICATION FOR SEEKING EXTENSION FOR HOLDING ANNUAL GENERAL MEETING:

1. To Call Board Meeting;

2. To Convene a Board Meeting on the specified date;

3. To Pass a Board Resolution for seeking extension for holding AGM specifying the special reason for extension of AGM;

4. To file an application to the ROC in Form No – GNL1;

5. In GNL-1, the special reason for not holding of AGM along with other necessary information to be provided;

6. To attach the Certified true copy of the Board Resolution in E Form GNL-1;

7. Follow up with the office of the ROC;

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

9. To obtain the certificate of grant of extension in holding of AGM of the company.

FEW REASONS FOR EXTENSION OF AGM:

• Delay in finalizing the Financials;
• Mergers & acquisitions;
• Natural Calamity;
• Loss of data in computer due to virus/system problem;
• Delay in audit reports due to non-availability of auditors because of resignation, death, incapacity to sign or such other valid reason;
• Change in financial year;
• Non availability of shareholders which may result in absence of quorum;
• Non-availability of directors on the valid grounds. For instance, sudden death of Directors and consequence of this the limit of directors goes below the minimum requirements of directors;
• Confiscation of Books of accounts by Income Tax Department, Serious and Fraud Investigation Cell or any other Government officials.

APPLICATION MUST BE FILED WELL IN ADVANCE BEFORE THE DUE DATES (i.e. before 30^th September, 2022, if Company follows the Financial Year).

The Company may file an application for extension for holding of AGM. But it is to be noted that the date of filing of an application must be in advance. Otherwise Company will have to go for Compounding.

PENALTY IN CASE OF DEFAULT BY THE COMPANY/ DIRECTORS

The Company and every officer of the Company who is in default shall be punishable with fine which may extend to Rs. 1 Lakh and in case of continuing default with a further fine which may extend to Rs. 5000/- for every day during which such default continues.

COMPOUNDING IN CASE AGM IS NOT HELD OR HELD AFTER DUE DATE WITHOUT SEEKING THE APPROVAL FROM CONCERNED ROC:

If the AGM is not held within the due date mentioned above or held after the due date without taking approval of ROC for an extension then the Company will have to go to Regional Director (RD) for compounding.

CONCLUSION:

The MCA has already extended the dates for holding of AGM through VC till 31^st December, 2022. And the Companies are waiting this year also that MCA may extend the dates for holding of AGM for the FY 2021-22.

This year, there are lowest cases of COVID-19 in India. Everything is getting normalize. Offices are getting opened and it does not seem that MCA may issue any circular for extension of AGM for this year.

So it is advisable to seek extension for holding AGM well in advance.

Author –M/s Sazid & Associates, Company Secretary in Practice (Delhi NCR) For any further assistance, you may contact us- Email: sazidandassociates@gmail.com, Mobile: 9654490581/8178445363