MCA ALLOWS COMPANIES TO HOLD FIRST AGM BEFORE SEPTEMBER 30

 BY SUSHMA GOWDA

INTRODUCTION

Annual general meeting under companies act 2013.

As per Section 96 of the companies act.

Every Company, other than One Person Company (OPC), must hold a general meeting in each year apart from other meetings as Annual General Meeting (AGM). The AGM must be held within six months from the closing date of financial year. A notice of 21 days has to be sent to all members.

Every Company, apart from OPC, must have to hold in addition to other meetings, by giving a notice about the meeting, not more than 15 months in between the date of AGM to the next. A Company may hold its first AGM within the period of 9 months from closing of its first financial year otherwise in other cases within the period of 6 months. [Section 96(1) of the Companies Act,2013]. As per the above, if a company holds its meeting, then it has no need to call an AGM in the year of its incorporation.

The Ministry of Corporate Affairs (MCA) allowed companies whose financial year ended in December, to hold their first Annual General Meeting (AGMs) within the first nine months of their current fiscal or September 30, without it being viewed as a violation under the Companies Act.

The relaxation was given on account of many such companies requesting leniency on the AGM rules owing to the social distancing norms and the lockdown resulting from the Covid-19 outbreak, the ministry said in a circular released on Monday.

“On account of the difficulties highlighted above, it is hereby clarified that if the companies whose financial year (other than first financial year) has ended on 31st December, 2019, hold their AGM for such financial year within a period of nine months from the closure of the financial year (i.e. by 30th September, 2020), the same shall not be viewed as a violation,” the circular said.

APPROVAL OF FINANCIAL STATEMENTS AT AGM

According to Section 129(2), at every AGM, Board of Directors of the company shall lay before the meeting financial statement for the financial year.

Moreover, Section 129(3) says, where the company has one or more subsidiaries, then they have to prepare in addition to the statement under section 129(2) a consolidated financial statement and of all subsidiaries in same format and also present before the AGM of the Company with the prescribed statement under section 129(2).

DEFAULTING IN HOLDING ANNUAL GENERAL MEETING

If a Company not holding an Annual General Meeting as per Section 96, or not complying with any direction of the Central Government, then the Company and its every officer come in the Category under Section 99 of the Company Act, 2013 and punishable with fine which may extend to Rs. 100,000 and in case of continuing default, it may extend to Rs. 5000 for every day. Further, Section 97 of the Companies Act, 2013, provides for the power of the Tribunal to call AGM if the Company fails to hold Annual General Meeting. Any member of the company can request to NCLT for calling AGM. [Section 97(1)].