Decoding MCA Relaxation on Holding Of AGM.
·
Holding of annual general meetings by
companies whose financial year has ended on 31st December, 2019.
·
Overview
Ministry of Corporate
Affairs vide General Circular No. 18/2020, F. No.2/4/2020-CL-V dated 21st
day of April, 2020 has issued Clarification on Holding
of annual general meetings by companies whose financial year has ended on 31st
December, 2019.
·
Several representations have been received
from stakeholders with regard to difficulty in holding annual general meetings
(AGMs) for companies whose financial year ended on 31st December, 2019 due to
COVID-1 9
·
these are related social distancing norms and
consequential restrictions linked thereto
·
These representations have been examined and
it is noted that the Companies Act, 2013 (Act) allows a company to hold its AGM
within a period of six months (nine months in case of first AGM) from the
closure of the financial year and not later than a period of 15 months from the
date of last AGM.
Ø Relaxation given:
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 9 months from the closure of the financial year (i.e. by 30th September,
2020), the same shall not be viewed as a violation. The references to due date
of AGM or the date by which the AGM should have been held under the Act or the
rules made thereunder shall construed accordingly.
· Decoding this MCA
Circular:
Ø As per 2 (41) of the
Companies Act, 2013:
"financial
year", in relation to any company or body
corporate, means the period ending on the 31st day of March every year, and
where it has been incorporated on or after the 1st day of January of a year,
the period ending on the 31st day of March of the following year, in respect
whereof financial statement of the company or body corporate is made up:
Provided that where a company or body
corporate, which is a holding company or a
subsidiary or associate company of a company incorporated outside India
and is required to follow a different financial year for consolidation of its
accounts outside India, the Central Government may, on an application made by
that company or body corporate in such form and manner as may be prescribed,
allow any period as its financial year, whether or not that period is a year:
That Means Companies which is a holding company or a
subsidiary or associate company of a company incorporated outside India post
approval of Central Government, can decide any period as its financial year.
Ø As per Section 96 of
the Companies Act, 2013:
Except in case of First AGM, in any other case, Company has to Convene AGM within
a period of six months, from the date of closing of the financial year.
Conclusion:
As per interpretation of both the Sections 2 (41) and 96, it
is hereby clarified that:
·
Companies whose Financial year has been
changed stated above are allowed and relaxation provided to them to convene AGM
till 30.09.2020 instead of 30.06.2020.
·
Company whose financial year is from
January to December, has to has to Convene AGM within a period of six months,
from the date of closing of the financial year i.e. on or before 30.06.2020.
·
The revised due date is September 30,
2020, instead of June 30, 2020.
Kindly
note that: not applicable for Companies for first financial year.
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WITH THE USE OF THIS INFORMATION.
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