MCA ISSUED CLARIFICATION REGARDING EXTENSION OF AGM FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2020

MCA ISSUED CLARIFICATION REGARDING EXTENSION OF AGM FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2020

MCA on 17th August 2020 issued a circular regarding the extension of time in holding of AGM for the FY ended on 31st March 2020


As per this circular, MCA again clarified that the companies can file form GNL – 1 for seeking an extension of time in holding of Annual General Meeting for the f. y. ended on 31.03.2020 with the concerned Registrar of Companies on or before 30th September 2020. 
 

Important points of the circular

Due to the spread of Covid-19 in the country, the Government of India imposed a lockdown on all the economic and social activities of the Country before the end of the financial year i.e. before 31st March 2020. The lockdown still exists in several parts of the country.

Because of this lockdown, the companies were not able to complete the compliance applicable on them on time and one such important compliance is holding of Annual General Meeting.

  1. Several stakeholders together made a representation to the Ministry of Corporate Affairs for providing relaxations in the provisions of the Companies Act, 2013 or rules made thereunder to allow them to hold their Annual General Meeting for the financial year ended on March, 31st 2020 beyond the mandatory period as provided in Section 96 of the Companies Act, 2013.
     
  2. After receiving the representation, the MCA examined the matter and made a clarification through a General Circular No. 20/2020 [G.C. 20/2020] dated 05th May 2020. In the circular, it is stated that the companies can hold the AGM through video conferencing (VC) or other audiovisual means (OAVM) for the calendar year 2020. The MCA has also advised the companies which are unable to hold their AGM, that they can make applications for extension of AGM with the Registrar of Companies under section 96 of the Companies Act, 2013.
     
  3. The Ministry of Corporate Affairs has once again reiterated that the companies which are unable to hold their Annual General Meeting on time for the financial year ended on 31st March 2020, despite availing the relaxations provided through General Circular No. 20/2020. The MCA further directed the companies that they can file an application in E-Form GNL-1 for seeking an extension of time in holding of Annual General Meeting for the financial year ended on 31st March 2020, with the concerned Registrar of Companies on or before 29th September 2020.
     
  4. The Ministry of Corporate Affairs has asked the Registrars of Companies to consider all such applications as filed in E-Form GNL-1 keeping in mind the hardships faced by the stakeholders and to grant an extension for the period as applied for (up to 3 months i.e. 31st December) in such applications.
     

Procedure to file an E-form GNL – 1

  • To issue and send notice to the convene Board Meeting at least 7 days before the meeting, along with it the agenda of the meeting must also be sent.
  • To hold the Board Meeting on the given date.
  • To pass a resolution for making an application for seeking an extension of time in holding of Annual General Meeting and the reason for the extension of AGM must also be specified in the resolution.
  • To file e-form GNL-1 with the concerned ROC for giving effect to the passed resolution.
  • After proper examination of the form, if the Registrar is satisfied with the reason for not holding the AGM on time, will grant the extension.
     

The Company after receiving the extension from the ROC can hold the AGM on that day as specified by the Registrar.
 

Conclusion

It is advisable for those companies to follow the circular and file the applicable form for extension in the time period for holding AGM and avoid attracting any kind of penalty applicable for not holding the AGM for the given financial year.
 

Link of MCA circular –

http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo.28_17082020.pdf

 
Edited by Minu Mishra
 

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