06 January 2011
What will be the consequences if I have not prepared books of Accounts in the 1st year of incorporation and how the 1st AGM shall be conducted? Please mention the solution also to avoid penalties?
06 January 2011
As per Section 210 of the companies act the P&L account in the case of first AGM shall pertain to the period beginning with the incorporation of the company and ending with a day which shall not precede the day of the meeting by more than nine months.
As per Section 166 the first AGM may be held within 18 months from the date of its incorporation and if such general meeting is held within that period, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation or in the following year.
Going by these provisions, let's take an example of a company incorporated on 1st January 2010. Here 1st AGM is to be held on or before 3oth June, 2011. Here you can have your first year accounts closing on 31st March, 2011. No need to close the accounts on 31st March, 2010. However if the FY is April to March and the company is incorporated on 1st June 2009, the company should conduct its 1st AGM on or before December 2010 and the first year accounts closing should be 31st March 2010.
In your case hold the first AGM within 18 months without adoption of accounts and apply to registrar for extension of period of account. Maximum period for which extension can be granted is 18 months. If it exceeds this time limit, I think you will have to go for compounding application.
Let's have the views of other experts also on this issue.
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