ANNUAL GENERAL MEETING EXTENSION EXTENSION FOR THE YEAR 2020
Ministry of Corporate Affairs has issued a circular 28/2020 dated 17th August 2020 about the extension of holding AGM for the companies completing their financial year 31st March 2020.
The Circular states that old provision for the application of GNL-1 for extension of AGM. Ministry of Corporate Affairs extended the holding of Annual General Meeting for 9 months for the companies till 30th September 2020. Most of the companies close their Financial Year on 31st March. No relief is provided to such companies.
What is Annual General Meeting?
It is compulsory for every company (except OPC) to hold Annual General Meeting once every year as per section 96 under the Companies Act,2013.
Key points to be noted:
- If a company is registered within the date of 1st January to 31st March of any financial year, then the 1st AGM should be held within 9 months from the closure of the companies a financial year.
- The existing company AGM shall be held within 6 months from the closure of the companies a financial year.
- The time duration of 1st AGM and the next AGM should not exceed 15 days from the 1st AGM.
Extension to AGM of Companies having their F.Y. ending 31st December:
The companies having their financial year ending on 31st December 2019 were required to hold their Annual General Meeting within six months, i.e. 30th June 2020. However, due to Covid-19, the companies were facing difficulty to hold the meeting in a stipulated time. Hence the Ministry of Corporate Affairs has issued a general circular No. 18/2020 dated 21st April 2020 has given a blanket extension to hold the meeting till 30th September 2020.
No Extension of AGM to Companies having their F.Y. ending 31st March:
The companies having their financial year ending on 31st March 2020 were required to hold their Annual General Meeting within six months, i.e. 30th September 2020. However, due to Covid-19, the companies were facing difficulty to hold the meeting in a stipulated time. Hence the Ministry of Corporate Affairs has not given any extension to hold the annual general meeting.
Procedure to get an extension of AGM 2020:
Step 1: The Company shall call a board meeting for approving the proposal of extension of the annual general meeting.
Step 2: The Board of Directors should agree mutually for the extension of AGM.
Step 3: After the board approves the proposal, the next step is to make an application to Registrar in form GNL-1 till 29th September 2020.
Step 4: A true copy of Board resolution and an ample reason for Covid-19 to be attached and mentioned with GNL-1.
In case of application is made for the extension of AGM or Annual Accounts, mention the financial year-end date in respect of which the application is being filed.
Step 5: Ensure that you enter the correct date as the extension by the concerned office shall be based on this date
Step 6: The Registrar of Companies shall issue a Certificate of Extension of Annual General Meeting upon submission of all required documents.
Note: There is a provision in the act that gives power to the Registrar of Companies to extend the time for holding the AGM maximum by 3 months.
CONSEQUENCES OF NOT HOLDING AGM:
Under section 99 of the Companies Act 2013, if a company fails to hold Annual General Meeting with the due date such a company is liable for penalties.
The company and every officer of the company who is in default shall be punishable with a fine which may extend to one lakh rupees and in the case of continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues.
Connect with our expert team for any assistance in doing this compliance. Connect on Whatsapp at 7417381631 or 7017698021 for more details