The General Circular 19/2021 dated 8 December 2021 caused a little confusion among the public. The circular says it is decided to allow the companies whose AGMs are due in the year 2021 to conduct their AGMs on or before 30 June 2022 following the requirements laid in General Circular 20/2020 dated 5 May 2020 that is by video conference or other audio-visual means.
The Circular permits companies to have their AGM for the year 2021 until 30 June 2022 without extending the period. All Registrar of Companies has granted a General Extension for holding Annual General Meeting until 30 November 2021, which date already expired. All Registrar of Companies after that granted case-to-case basis extensions to most companies that applied for additional extensions. Registrar of Companies has no power to extend this period beyond three months ending on 31 December 2021. So, this circular does not extend the period to hold Annual General Meeting.
We have a clear understanding Annual General Meeting of a company is an essential requirement. The law provides a specific period to have an Annual General Meeting and consider the default of the compliance as an offence. But it does not mean that it is impossible or legally unwarranted to have an annual general meeting after the statutory specific period. Not holding Annual General Meeting for three or more years may result in the ending of corporate life. Otherwise, not holding Annual General Meetings or delaying holding Annual general meetings beyond a statutory specific period are offences punishable with a fine. The delay is a compoundable offence.
Present circular facilitates companies that may not hold their annual general meeting within a permitted or extended period. These companies may have their annual general meeting till 30 June 2022 by video conference or other audio-visual means. Where these companies hold their annual general meeting after 30 June 2022, they shall have their annual general meeting in physical mode (unless this period is further extended).
The circular itself clarify this circular shall not be construed as conferring any extension of time for holding annual general meetings by the companies under the Companies Act, 2013. The companies which have not adhered to the relevant timelines shall be liable to legal action.
Thus, companies holding their annual general meetings after 31 December 2021 for the year ended on 31 March 2021, these companies should apply for compounding of offence. Please note, there is one precondition of compounding of offence; a similar offence should not have happened in the last three years.
Many companies hold their annual general meetings for the year ended on 31 March 2020 after extended time expired on 31 December 2020. The Ministry or Registrar of companies has yet not initiated any legal action. It seems the Government is taking a lenient view against these companies. However, by this general circular government signalling companies to have their annual general meeting within time failing which opt for compounding of offence, if possible. Otherwise, the Registrar will take appropriate legal action under the law.