As per section 96 of the Companies Act, every company other than the OPC or One Person Company is required to hold an AGM for transacting on items of ordinary or special business. AGM shall be held once in every financial year.
In the case of a company, the first AGM shall be held within 9 months from the closing of the first financial year, so we can say that the company need not hold AGM in its first year of incorporation. Say a company is starting its operation on January 1, 2021, then the end of the financial year with respect to this company can be taken as March 31, 2022. Then the due date for holding the AGM for this company will be 31st December 2022. But if the company decides to close its financial year on 31st March 2021, then the due date shall be 31st December 2021, as it is a new company.
But any subsequent AGM shall be held by a company within 6 months from the closing of the relevant financial year. Say, the FY in question is 2020-21, then the due date for holding AGM shall be 30th September 2021, which is 6 months from 31st March 2021.
It is to be further noted that the time period between two AGMs held by the company shall not exceed 15 months, and this shall be considered between the date of one AGM and that of the next.
Extension of AGM
Proviso 3 to Section 96 states that, if a company is of the opinion that it cannot hold AGM within 6 months from the end of the relevant financial year, then such a company shall apply for an extension of the date of AGM. The registrar shall, for such special and specific reason, extend the time for holding such AGM, other than the first AGM, for a period no longer than 3 months.
Specific reasons due to which the company certification may request an extension of the date for holding AGM would be as follows:
- Non-availability of Auditors for the signing of financial statements due to resignation, death, incapacity to sign, or such other reason.
- The non-availability of financial statements due to certain valid reasons and difficulty pertaining to the Auditors or the company itself.
iii. non-signing of the financial statements by the Managing Director as he or she was not available for signing the same.
- Non-availability of the Director of the company.
- Death, disqualification, or such other reasons caused a casual vacancy in the office of directors, resulting in the availability of directors going below the statutory limit.
- Or such other reasons which might be accounted as valid or justified.
Procedure for Extension of AGM
In case a company wants to get the extension for holding AGM pertaining to a particular financial year, it should follow the procedures below:
Calling a Board Meeting:
- The company shall call a meeting of the board as per section 173 to discuss the reasons why it is not possible to hold AGM within the due date pertaining to the relevant financial year in question.
- The Board of Directors shall then pass a Board Resolution for filing of application with ROC for extension of AGM and the authorisation of any director to sign such application.
Preparation of Application:
Once the Board Resolution has been passed, an application for approval of ROC for extension of AGM shall be prepared by the company, which would cover the following points:
- Details about the company,
- Reason for non-possibility of holding AGM within the due date specified by the Companies Act,
- Attach the Memorandum of Association (MOA) and Articles of Association (AOA) of the company along with such application made for the extension of AGM.
Preparation & Filing of e-form:
Form GNL-1 should be prepared by the company for filing of the application with the Registrar of Companies or the ROC, by
- Mentioning the name of the company,
- Selecting the reason for the application,
- Affixing the DSC of the authorised director,
- And filing it with the ROC.
Once the filing is done, the ROC will check the facts and details furnished by the company regarding its status through the prescribed form and ensure the validity of the same. And on the basis of this, a decision regarding the extension shall be granted by the ROC for any period but not more than a period of 3 months.
Penalty in case of Default
The company and every officer of the company who is in default shall be held liable. It would be charged with the fine, which may extend to INR 1,00,000, and if the default continues, a further fine will be charged, which may extend to INR 5,000 for every day during which the company and its officers commit such default.
