MCA EXTENDS ANNUAL GENERAL MEETING

Introduction:

An Annual General Meeting (AGM) is held to have an interaction between the management and the shareholders of the company. The Companies Act, 2013 makes it compulsory to hold an annual general meeting to discuss the yearly results, auditor’s appointment,s and so on. A company should follow the procedures under the Companies Act, 2013 to conduct the AGM.

Companies required to hold an AGM:

All Companies except one person company (OPC) should hold an AGM after the end of each financial year. A company must hold its AGM within a period of six months from the end of the financial year.

However, in the case of a first annual general meeting, the company can hold the AGM in less than nine months from the end of the first financial year. In such cases where the first AGM is already held, there is no need to hold any AGM in the year of incorporation. Do note that the time gap between two annual general meetings should not exceed 15 months.

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.
• A one-person company (OPC) is not required to hold the AGM.
• The 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. The 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 31.03.2022 through Video Conference (VC) or Other Audio-Visual Means (OAVM) as per respective due dates by 31st December 2022.

Accordingly, any Company can hold their AGMs/EGMs through VC till 31st 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 to the relevant timelines shall be liable for legal action under the appropriate provisions of Act.

Companies have an opportunity to hold their AGM through VC till 31st December 2022. However, Company can hold AGM after 30th September 2022, if Company has taken an extension for holding its AGM from their respective Registrar of Companies (ROCs).

What is the Agenda of an AGM?

The matters discussed or business transacted in an AGM consists of:

• Consideration and adoption of the audited financial statements.
• Consideration of the Director’s report and auditor’s report.
• Dividend declaration to shareholders.
• Appointment of directors to replace the retiring directors.
• Appointment of auditors and deciding the auditor’s remuneration.
• Apart from the above ordinary business, any other business may be conducted as a special business of the company.

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

• To Call Board Meeting;
• To Convene a Board Meeting on the specified date;
• To Pass a Board Resolution for seeking an extension for holding AGM specifying the special reason for the extension of AGM;
• To file an application to the ROC in Form No – GNL1; In GNL-1, the special reason for not holding of AGM along with other necessary information to be provided;
• To attach the Certified true copy of the Board Resolution in E Form GNL-1;
• Follow up with the office of the ROC;
• The ROC shall examine the application on specific grounds and may grant an extension if it thinks it necessary to grant the same.
• To obtain the certificate of grant of extension in holding of AGM of the company.

What are the reasons for an extension of AGM?

• 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 a financial year;
• Delay in finalizing the Financials;
• Mergers & acquisitions;
• Natural Calamity;
• Non-availability of shareholders which may result in absence of a quorum;
• Non-availability of directors on valid grounds. For instance,
• the 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.

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 a 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.

Minutes of an AGM

Every company has to prepare the minutes of the AGM compulsorily. The minutes of the AGM means the written record of the proceedings of the meeting. They state the events that took place and the resolutions passed in the AGM.

The Company Secretary will record the proceedings of the AGM. Where there is no Company Secretary, any other person duly authorised by the Board or by the Chairman will record the proceedings.

The minutes of the AGM should be signed and entered in the minute book within thirty days from the AGM. The Minutes book will be kept at the Registered Office of the company or at such other place approved by the Board. Any member/shareholder of the company, upon request to the company, can inspect the Minutes book of the AGM on paying the prescribed fee.

Upon request, the company will give a copy of the minutes of the AGM to the member within seven days of request. If the minutes are not given by seven days of the request, the company shall be liable to a penalty of Rs.25,000 and every officer of the company who is in default shall be liable to a penalty of Rs.5,000.