EXTENSION OF AGM -SECTION166 OR SECTION 210 ?

Question:

How to get extension of AGM? Whether we have to read the section 166 and section 210 of the Companies Act, 1956 harmoniously for getting extension from Registrar?


At times, it is possible due to certain unforeseen reasons; the companies may not be able to hold the annual general meeting. In such circumstances, the Registrar of Companies – for any special reasons – could grant time extension to hold the annual general meeting of the company by a period not exceeding three months.

This provision, however does not apply for the first annual general meeting of the company which is required to be held within a period of not more than eighteen months from the date of its incorporation and if the first general meeting is held within that period, the company is not require to hold any annual general meeting in the year of its incorporation or in the following year

As per section 166 of the Companies Act, 1956, the companies could hold its annual general meeting within fifteen months of the last annual general meeting. So long as the companies hold annual general meeting within the above specified time limit, no approval from any of the regulator is required for holding such meeting.

Sub-section 3 (b) of section 210 specifies that the company is required to hold its annual general meeting within six months from the end of the financial year.

At times, there is a possibility of non-compliance emerging on this subject – while compliance would be in order for section 166 for holding the annual general meeting within nine months (taking into consideration of three month’s extended period of time by ROC) , there could not non-compliance under section 210 – for not holding the annual general meeting within six months from the end of the financial year - due to different timing specified in both these sections for holding annual general meeting.

To remove this difficulty in interpreting, Department of Corporate Affairs) has issued its Circular No. 8/45(166)/64-PR dated 12-1-1965 on this subject which states that both the section 166(1) and Section 210 (4) should be read harmoniously together.

Whether for purposes of section 159 the time within which is it required to be held is governed solely by section 166.

DCA has received a reference from the Regional Director, Madras about the confirmation of the views contained in this Department's Letter No.8/45(166)/64-PR, dated 12.1.1965 [copy reproduced below] which, inter alia, stated that for the purpose of section 159, the time within which the annual general meeting is required to be held is governed solely by section 166 and section 210 is not relevant in such cases. This Department has since carefully considered the matter and do not see any sufficient reason to review the above views which are again reiterated and confirmed.
The following is the solution to the issue:

Draft a letter/ application on the letter head of the company giving the back ground about date of incorporation etc and explain the reasons as to why the company cannot convene the AGM on or before 30th September. Please note that as per the Ministry of Company Affairs Circulars:-

(a) Non Completion of Audits- both Statutory & C & AG audits are not valid reasons.
(b) Non availability of Chairman's for holding the Board meeting to obtain approval for accounts & convening the AGM are also not valid reason.

1. For instance , IFCI Financial Services Ltd got the extension as its amalgamation process was at its final stage. Where merger, acquisition is under process.

2.Preparation of accounts delayed as accounts details were corrupted due to compute virus as held in
Sera Sera Productions Case:
K Sera Sera Productions Ltd has informed BSE that the date of the Annual General Meeting was fixed as September 30, 2010. But due to some unavoidable reasons Company’s server got crashed and the backup of tally got corrupted. The Board of directors of the Company has decided to make an application to Registrar of Companies (ROC) Maharashtra, Mumbai for extension of holding Annual General Meeting. Accordingly the Company has made an application to the vide SRN A92421601 on August 26, 2010 requesting for extension of time for the purpose of holding the Annual General Meeting. The said application was approved by The Registrar of Companies (ROC) Maharashtra, Mumbai on August 30, 2010. The Company has been granted an extension for holding its Annual General Meeting upto December 31, 2010.
Source: BSE
R.V.Seckar