September 20, 2020

Decoding extension of due date of AGM

Wide spread of COVID-19 has adversely impacted various legal compliances. Various legal compliances require individual presence of various people and therefore, it is getting difficult to complete those compliance within stipulated due date. On the same thought, an extension of due date of AGM is given by 3 months for the year ended on 31.03.2020 without any requirement of filing GNL-1

1. Requirement of holding AGM under Companies Act:

One of such similar and most crucial compliance is holding Annual General Meeting (“AGM”) by companies registered under Companies Act, 2019. Following provisions related to holding AGM are given under section 96(1) of Companies Act, 2013:

Every company, other than one person company, shall hold one Annual General meeting.
Period elapses between one AGM and the next AGM should not exceed 15 months.
First AGM must be held within 9 months from the date of closing of the first financial year. All further AGMs should be held within 6 months from the date of closing corresponding financial year.
For special reasons, the Registrar of the company may extend the due date of holding AGM, other than First AGM, by a period not exceeding 3 months.

Further, any company may apply for extension of the due date of AGM for the special reasons by filing an application in e-form GNL-1 with the Registrar of Company. Extension shall not be granted for more than 3 months.

2. Extension of due date of AGM

Registrar of the company received various representations that the company is finding difficulty in holding Annual General Meeting within the due date due to the pandemic of COVID-19.

Considering the special reasons of COVID-19 and in pursuance of power given under section 96(1) of the Companies Act, the Registrar of the company has extended the due date of holding AGM by 3 months for the year ended on 31.03.2020 without any requirement of filing GNL-1.

However, such exemption is not given to the one person company or the companies having their First Annual General Meeting due for the year ended on 31.03.2020.

3. Time Gap between 2 AGM should not exceed 15 months

As per section 96(1), the time gap between one AGM and the following AGM of the company should not exceed 15 months. No waiver has been granted by RoC for such a requirement. Therefore, for FY 2019-20, companies may hold AGM beyond 30.09.2020, however, the time gap between AGM held for FY 2018-19 and FY 2019-20 should not exceed 15 months.

Illustrations:

A Limited held its AGM for FY 2018-19 on 30th August, 2019. As per Section 96(1), For AGM of FY 2019-20, time gap from earlier AGM should not exceed 15 months. Therefore, A Limited is required to hold its AGM for FY 2019-20 by 30th November, 2020 (15 months from 31.08.2019).

A Limited held its AGM for FY 2018-19 on 30th June, 2019. Therefore, A Limited is required to hold its AGM for FY 2019-20 by 30th September, 2020 (15 months from 31.06.2019).

A Limited held its AGM for FY 2018-19 on 30th November, 2019 as it was the First AGM of the company. Therefore, A Limited is required to hold its AGM for FY 2019-20 by 31st December, 2020. In this case, the period of 15 months shall not apply as the company can’t hold AGM beyond 9 months (extended period) from 31.03.2020.

A newly incorporated company is required to hold its AGM within 9 months from end of financial year and no extension has been granted for same.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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