I need a clarification regarding issuing AGM Notice.
Eg:- A Pvt Company Approved the Draft Financials on 20/07/2022 and Forwarded the same to the Auditor for Signature. Auditor signed the Financials on 23/07/2022 and issued Auditor Report along with the Signed Financials.
Can a Company Send AGM Notice dated on 20/07/2022 along with the Draft Financials signed by Director and without signed Financials by Auditor and Auditor Report.
09 July 2024
In the scenario you've described, the process of issuing the AGM (Annual General Meeting) Notice involves several key considerations, especially regarding the financial statements and auditor's report:
### Key Considerations:
1. **Approval of Financial Statements:** - The board of directors of the private company approved the draft financial statements on 20/07/2022.
2. **Submission to Auditor:** - The approved draft financial statements were forwarded to the auditor for their review and signature.
3. **Auditor's Review and Signature:** - The auditor signed the financial statements on 23/07/2022 and issued the auditor's report along with the signed financial statements.
### Issuing AGM Notice:
- **Content of AGM Notice**: The AGM Notice typically includes important information such as the date, time, and venue of the AGM, agenda items, and the financial statements of the company.
- **Requirement for Financial Statements**: According to Section 136 of the Companies Act, 2013, the financial statements (including the auditor's report) must be circulated along with the notice convening the AGM. This ensures that shareholders have sufficient time to review the financial performance of the company before the AGM.
### Clarification and Suggestion:
Based on the sequence of events you've described:
- **Draft Financials (as of 20/07/2022)**: These are the initial approved financial statements, signed by the directors. They are considered draft until they are reviewed, signed, and finalized by the auditor.
- **Audited Financials (as of 23/07/2022)**: These are the final financial statements, signed by both the directors and the auditor, along with the auditor's report.
**Can the Company Send AGM Notice dated on 20/07/2022?**
- Technically, the AGM Notice should ideally include the finalized financial statements and auditor's report. Since these were only signed on 23/07/2022, the AGM Notice dated 20/07/2022 would have included the draft financials signed by the directors but not the final audited financial statements.
- **Suggestion**: It would be prudent to issue the AGM Notice with the finalized financial statements and auditor's report that reflect the actual financial position and performance of the company as of the date of the AGM. This ensures transparency and compliance with regulatory requirements.
- **Timing Consideration**: Ensure that shareholders receive the AGM Notice along with the finalized financial statements and auditor's report with sufficient time before the AGM date, as per statutory requirements.
### Conclusion:
While the initial draft financials approved on 20/07/2022 can be a basis for planning, the AGM Notice should include the finalized financial statements and auditor's report (signed on 23/07/2022) to provide accurate and complete information to shareholders. This approach aligns with regulatory expectations and ensures transparency in corporate governance practices. Therefore, it is advisable to issue the AGM Notice with the finalized financial statements and auditor's report rather than the draft financials.
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