The Corporate Affairs Ministry (MCA) has now allowed companies that have not been able to hold annual General meetings (AGMs) for the financial year ended March 31, 2020, more time to hold such meetings as long as they file a separate application for this purpose.
No general extension for the due date of holding AGM for financial year 2019-20 has been given, but such companies can file an application with their Registrar of Companies (RoC) on or before September 29 in a specified form (GNL-1) for seeking extension of time in holding of AGM for the financial year ended March 31, 2020.
The MCA has now in a circular directed the RoCs to consider all such filed applications “liberally” in view of the hardships faced by the stakeholders during the current Covid-19 times and grant extension for the applied period (up to three months) in such applications.
Under the Companies Act 2013, the AGM has to be conducted within six months of the end of the financial year and not later than a period of 15 months from the date of last AGM. In the wake of Covid-19 induced lockdown, the MCA has, from time to time, been giving several relaxations as regards regulatory compliances.
It had, among other things, provided relaxations on holding of AGMs by companies whose financial year ended on December 31, 2019. It had allowed holding of AGM through video conferencing or other audio visual means.
Harish Kumar, Partner, L&L Partners, a law firm, said, “Amidst ongoing Covid crisis, this MCA clarification for not extending the due date of AGM for the financial year 2020, would in turn pose a practical burden on the Registrar of Companies to examine various applications made by companies seeking extension of AGM on priority basis and approve those basis merits. Instead, it would perhaps have been a better approach to grant general extension for holding AGM till December 31, 2020, given practical challenges caused by Covid-19”.
Partner & Leader-Transaction Tax, BDO India, said that the continued lockdown has resulted in significant challenges for corporates (especially in the MSME space) to prepare and audit their financial statements for the year ended March 31, 2020. “In view of this hindrance, it was inevitable for the government to grant further relaxations in holding AGMs”, he said.