First annual general meeting & financial year

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Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Company formed on 14.11.2008.
Now in this case, I would like to know what will be the first financial year ending (periods of accounts) and also the date of AGM. Kindly give your suggestions as soon as possible. Thanks in advance

Ganeshbabu K

Ganeshbabu K (Expert)
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09 December 2013 the first annual general meeting of the company must be held with in 18 month from the date of incorporation or within 9 months from the close of its first financial year, whichever is earlier.
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First financial year ending 31st march 2009
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first agm should complete with in 31.12.2009

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Sir, please verify your answer as company formed on 14.11.2008.

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Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 First you check your First Boar minutes for deciding your first financial year. So the FY will decide your first AGM date.

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013

TIME-LIMIT FOR HOLDING THE FIRST ANNUAL GENERAL MEETING
A new company which is registered under the Act, shall hold its first annual general meeting latest within a period of eighteen months from the date of its incorporation, namely, the date on which the Registrar has issued the certificate of incorporation to the company. If the first annual general meeting is so held, it is not necessary for the company to hold another annual general meeting in the year of its incorporation or in the following year. It may also be noted in this connection that the accounts placed before the first annual general meeting shall be for the period beginning from the date of incorporation and ending on a day of financial year, which will not precede the first annual general meeting by more than nine months from the close of the first financial year of the company — section 210(3). This may be illustrated by the following example:
Date of incorporation of company 23-10-2010
Date by which the first annual general meeting ought to be held 22-04-2012
The holding of the first annual general meeting shall comply with the following criteria of the Act:—
(i) The gap between the last date of the accounting period and the meeting shall not exceed 9 months, and
(ii) The second annual general meeting shall be held during the third year of incorporation.
Therefore, in the above example assuming that the first accounts shall be for the period from
23-10-2010 to 31-3-2012
The first AGM was to be held on or before (within a gap of nine months) 31-12-2011
The accounts for next period will end on 31-03-2012
The second AGM will be held on or before (namely the third year after incorporation) 30-09-2012
In the above example, since it was proposed to close the first accounts as on 31-03-2011, the first annual general meeting could be held before 31-12-2011 and the second annual general meeting could be held during the third year of incorporation.
As explained above there is no need to hold annual general meeting in the first calendar year of its incorporation, i.e. 2010

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Ajay Sir,

The company has not prepared anything, it will be prepared now, so no board meeting held, and its pvt company nd family owned business.

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Query is open

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 Hi

It is mandatory to decide first financial year in your first Board Meeting.

If you have not finalize first financial year then I will suggest to make your first financial year from 14.11.2008 to 31.03.2009.

And conduct your first AGM on or behore 31.12.2009. to comply the provision of section 210 of the Companies Act, 1956.

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Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 I also want to says query is open for other...

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Thank you sir for your reply. I also have a doubt, whether financial year can be from 14.11.2008 to 13.03.2010 (15 months from incorporation) and hold first agm before 18 months i.e on 13.05.2010. Then second financial year will be from 14.03.2010 to 31.03.2011. Will it be possible...pls advice.

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 Your financial year should be end on March 31, every year.

If your FY end on 13.03.2013 then it is more than 15 months which is not acceptable under the Companies Act, 1956.

In terms of the Income-tax Act, 1961, it is mandatory for companies to follow uniform accounting
year, i.e., ending 31st March.

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 The expression 'Financial year' defined under section 2(17) means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not. A company is at its liberty to follow any financial year whether or not it ends on 31st March. However, for the purpose of Income Tax, accounts will have to be made on 31st March.
The period to which the balance sheet and profit and loss account to be laid before a company in Annual General Meeting relate is called a "financial year".
Section 210(4) provides that a financial year may be less or more than a calendar year, but it shall not
exceed fifteen months. The financial year may extend to eighteen months, where special permission has been granted in this connection by the concerned Registrar of Companies [Proviso to section 210(4)]. Thus, annual accounts may be prepared for a period up to eighteen months with the special permission of the
Registrar on the application submitted in the new e-Form 61 electronically with the Registrar [prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006. [previously no form was prescribed for that
purpose]

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Ganeshbabu K

Ganeshbabu K (Expert)
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09 December 2013 as per sec.210 first financial year should consist of not more than 15 months
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with permission of ROC can be extended to 18 months
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so in general
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first financial year ending-31.03.2009
first agm should complete with in 31.12.2009

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Thank you sir, If i end the financial year on 12.03.2010 which is less then 15 months. Then can i proceed...?

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 Dear Ganeshbabu

Financial year can not be extended by 18 months.

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Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 No, always financial year end on March 31.

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 ok Ajay sir but sec 210 (4) says that " The period to which account aforesaid relates is referred to in this Act as a financial year and it may be less or more than a calender year but it shall not exceed 15 months " I am confused cos of this sentence.

Ganeshbabu K

Ganeshbabu K (Expert)
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09 December 2013 Dear ajay sir,

reference Section 210 clause 4 of companies act 1956
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extract:---
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(4) The period to which the account aforesaid relates is referred to in this Act as a" financial year"; and it may be less or more than a calendar year, but it shall not exceed fifteen months: Provided that it may extend to eighteen months where special permission has been granted in that behalf by the Registrar.
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so in general first financial should be for not more than 15 months in general but can extend to 18 months with roc permission
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kindly correct me if i am wrong

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 Yes, you financial year will be maximum extended to 15 months but it should be ended with March 31.

So you can not end it on 13.03.2010 or 12.03.2009.

It should always end on March 31.

If your are not sure then take advise of your other professionals.

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Yes Ajay sir, I agree with you, So to avoid further consequences, better to end financial year in 2009 itself , (no matter One AGM may be conducted extra). Thank you so much for your patience hearing and valuable response. Thank you Sir Ganeshbabu.

I also have serious issue on change in auditor by rsignation. please guide me, I will post the query in sometime.

Ajay Mishra

Ajay Mishra (Expert)
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09 December 2013 Now you have given your correct answer.

It will be extended with special permission for 18 months by ROC.

This was missing in your earlier answer.

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Annu Agarwal

Annu Agarwal (Expert)
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09 December 2013 Agreed with Ajay Sir,The financial year shall end on 31st march only.
Please refer the defination under the Companies Act 2013,It reads :
41) “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 on an application made by a company or body corporate, which is
a holding company or a subsidiary of a company incorporated outside India and is
required to follow a different financial year for consolidation of its accounts outside
India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether
or not that period is a year:
Provided further that a company or body corporate, existing on the
commencement of this Act, shall, within a period of two years from such commencement,
align its financial year as per the provisions of this clause;