Just a few days earlier, we made a case here for a general extension for holding Annual General Meeting. The way Government responded through General Circular 28/2020, (presently not accessible) dated 17th August 2020, was not appreciated by Industry and Professional. Now, the Ministry of Corporate Affairs allowed all Registrar of Companies to pass general orders for a general extension for holding Annual General Meeting. Why am I not truly satisfied with these orders?
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THE ORDER
All these orders hosted here have identical language. The Registrars issued these Order under the Third Proviso to Section 96(1) of the Companies Act, 2013:
Provided also that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first Annual General Meeting, shall be held, by a period not exceeding three months.
Each Order is correct under the law. We all know the special reason:
Several companies are finding it challenging to hold AGM for the financial year ended on 31.03.2020 due to difficulties faced because of the COVID – 19 pandemic.
All registrars framed a considered opinion that due to such unprecedented special reason, the time within the AGM for the financial year ended on 31.03.2020 is required to be held as per provision of sub- section (1) of Section 96 ought to be extended in terms of the third proviso to section 96(1).
THE EASE
All Registrars of the companies comes to a fair and reasonable conclusion to extend the time to hold the AGM, other than the first AGM, without requiring the companies to file applications for seeking such extension by filing the prescribed Form No. GNL – 1.
This conclusion is unprecedented for Indian bureaucracy in a manner where they suo – moto take cognizance in its Order (consider, this is not an order of the Government by way of Notification).
The relaxation so granted covers all applications filed (approved or yet to approved or rejected) for the extension.
THE HARDSHIP
Now we come to the hardship. The extension comes on 8th September 2020. The reasonable date to send the notice for AGM is also the same 8th September 2020. This Order arrived on the last of the reasonable moment. We urge the Government for some ease of planning and peace of mind.
THE BLOCKAGE
With this well-praised move, the Government blocked the future course of action.
In case the Ministry came out with circular (usual option) or Notification (better option) or Amendment Act (the Best Option), all companies would have an opportunity for seeking a further extension from their jurisdictional Registrar of Companies.
Presently, no company shall have an option to file Form GNL – 1 for further extension but to make default. This process will further burden the Government with Compounding Proceeding.
Government now created an ease of Governance issue. Any future Extension by the Ministry by way of Circular or Notification shall be a drafting dilemma and short administrative sight.
It is prudent to urge the Government, do not opt for an extension of time for filing a form with forcing companies to predate their financials. The logic is to extend the AGM date and not to extend the filing date.
Aishwarya Mohan Gahrana
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