By virtue of the provisions of first proviso to section 96(1) of the Companies Act, 2013, every Indian Company is required to hold an Annual General Meeting (AGM), (other than its first AGM), within a period of six months from the close of the financial year. The Audited Annual Financial Statements (Balance Sheet) are also laid down in the AGM of the Company.
Further, the third proviso to section 96(1) of the Companies Act, 2013 provides that the Registrar of Companies may, for any special reason, extend the time within which any annual general meeting other than the first annual general meeting, shall be held, by a period not exceeding three months.
The due date for holding the AGM by the corporate entities and laying down of their annual audited financial statements for the FY 2019-20 was 30.9.2020.
Various representations have been received from the companies, industry bodies and professional institutes pointing out that several companies are finding it difficult to hold their AGM for the financial year ended on 31.3.2020, due to the difficulties faced in view of the Covid-19 pandemic.
However, inspite of such representations, the Ministry of Corporate Affairs has earlier issued its General Circular No. 28/2020 dated 17.8.2020, wherein it has been provided that the companies which are unable to hold their AGM for the financial year ended on 31.3.2020, despite availing the relaxations regarding the holding of AGM through video conferencing (VC) or other audio visual means (OAVM), as provided in G.C. 20/2020 dated 5.5.2020, are required to file their applications in form no. GNL-1, for seeking extension of time in holding of AGM for the financial year ended on 31.3.2020 with the concerned Registrar of Companies (ROC), on or before 29.9.2020.
It is pertinent to mention here that the due date of Tax Audits of companies u/s 44AB of the Income Tax Act, for the FY 2019-20 is 31.10.2020. Further, the due date of filing ITRs by all corporate entities have already been extended by the Ministry of Finance to 30.11.2020, in view of the corona pandemic.
Generally, the due date of Tax Audits and filing of ITRs by the corporate entities and the due date of holding AGMs and laying down of annual audited financial statements by the corporate entities coincide on one date i.e. 30.9.2020 only, and as such companies don't find it difficult to comply with these statutory requirements, under two different pieces of Legislations i.e. the Companies Act, 2013 and the Income Tax Act, 1961.
However, since the MCA in its above General Circular No. 28/2020 dated 17.8.2020, has not given any blanket extension in the time period of holding AGMs and laying down of annual audited financial statements by the companies on 30.9.2020, and have instead required the companies to file their respective applications in form no. GNL-1, with the jurisdictional ROCs, the uncertainty concerning the fate of disposal of their applications in GNL-1, by the concerned ROCs, is making redundant the relaxation granted by the Ministry of Finance in the time period of Tax Audits and the filing of ITRs by these companies.
But, the ROC, NCT of Delhi & Haryana has set up a brilliant example and vide its Order No. ROC/Delhi/AGM Ext./202011538 dated 8.9.2020, has considered and taken due cognizance of the representations received from the jurisdictional stakeholder companies and professional bodies concerning the genuine hardships being faced by these stakeholders in view of the unprecedented corona pandemic, and has accordingly extended the time period of holding of AGMs by the Delhi and Haryana based corporate entities, by three months from the due date of 30.9.2020, by virtue of the power vested under the third proviso to section 96(1) of the Companies Act, 2013.
In the said Order of ROC, NCT of Delhi & Haryana, it has further been clarified that the extension of three months shall also cover the:
(i) pending applications filed in form GNL-1 for the extension of AGM for the financial year ended on 31.3.2020, which are yet to be approved;
(ii) applications filed in form GNL-1 for the extension of AGM for the financial year ended on 31.3.2020, which were rejected.
It has also been clarified that such extension of three months in the time period of holding AGM by the Delhi & Haryana based corporate entities shall be deemed to have been granted, without any further action on the part of these companies.
In the wake of the administrative and operational hardships being faced by the corporate entities, amid this unprecedented corona pandemic, this positive gesture and decisiveness of the ROC, NCT of Delhi and Haryana, is indeed appreciable and laudable, and will indeed save the precious time, energy and resources of both the ROC and the stakeholder corporate entities which otherwise would have been wasted in preparing and filing the form GNL-1, and their adjudication and disposal by the ROC.
In order to make the ‘Ease of Doing Business' philosophy a grassroot-level reality, the scrapping of unwarranted laws and avoidable paper-work formalities, is indeed the need of the hour.
As such, a similar course of action regarding the extension of the due date of holding AGMs by three months for the FY 2019-20, should be followed by all the ROCs of all other States, and infact MCA should bring out a General Circular in suppression of its earlier Circular No. 28/2020 dated 17.8.2020, providing for the blanket extension of the time period of holding AGMs by all corporate entities in India, by three months from the due date of 30.9.2020, for the financial year ended on 31.3.2020.
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