The Ministry of Corporate Affairs (MCA) has extended the deadline for holding up of annual general meetings (AGMs) for the fiscal year 2020-21 by 2 months, which may provide some relief to businesses, particularly small and medium-sized enterprises. In this blog you know about Companies get 2 months extension to hold AGM for financial year 2020-21.
Provisions for holding an Annual General Meeting (AGM) are as follows:-
The notification is intended for all Regional Directors and Registrar of Companies (RoCs) within the Ministry of Corporate Affairs.
According to Section 96 (1) of the Companies Act of 2013, every company must conduct an Annual General Meeting at least once a year. Every year, within six months of the end of the fiscal year, a firm must conduct an AGM. In the event of a first annual general meeting, nevertheless, the business might conduct the AGM in less than 9 months from the end of the first fiscal year.
As per Section 96 Clause 1 of the Companies Act of 2013, the upcoming Annual General Meeting (AGM) must be conducted on the earliest of the following schedule:
- 15 months from the date of the most previous Annual General Meeting; or
- 6 months after the end of the financial year.
Annual General Meetings let shareholders of a business entity to express their opinions on the company’s business or transactions. Failure to conduct an Annual General Meeting results in a penalty for the company’s directors and the Law Board of the Company has the authority to summon or require an AGM.
The Companies Act, 2013 requires that members be given 21 days’ notice of an Annual General Meeting (AGM), outlining the meeting’s agenda. However, owing to the COVID-19 epidemic, the MCA postponed the meeting. Because to the countrywide lockdown and limit on people’s time, it became impossible for companies to hold their AGMs. Furthermore, while having an AGM, social distance standards must be followed. All of these issues made it difficult for corporations to host their Annual General Meetings. As a result, MCA issued circulars extending the period for holding AGMs in order to alleviate the firms’ circumstances.
The business entities made multiple submissions to the Ministry of Corporate Affair (MCA) for an extension of the period allowed under the Companies Act, 2013 to conduct the AGM for the financial year ending March 31, 2021.
Companies will now have until the end of November 2021 to convene their Annual General Meetings as a result of this extension by the MCA. Companies are obligated by law to hold their AGM within 6 months after the end of the financial year, which is September 30, 2021.
This latest MCA action follows the Ministry’s receipt of submissions requesting an extension of time for the convening of the Financial Year21 Annual General Meeting. The representations were made while both businesses and the audit community were encountering issues as a result of the second wave of Covid-19 pandemic and the resulting lockdowns. While this notification may provide some relief to businesses, particularly small and medium-sized enterprises, some business watchers, however, believed that the 2 months extension was insufficient, considering that pandemic-induced municipal travel restrictions had hindered the audit process in many states.
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