Procedure for Handling AGM when Audited Financial Statements are Delayed:
What If the Last Date for Holding the AGM is Approaching but the Audited Financial Statements Are Not Ready?
In the event that the deadline for holding the Annual General Meeting (AGM) is imminent but the audited financial statements are not yet available, the company may seek an extension from the Registrar of Companies. The Registrar has the authority to grant an extension for holding the AGM for a period of up to three (3) months, provided that the extension does not apply to the first AGM of the company.
If the Company is unable to Prepare Audited Financial Statements by the Extended Deadline:
If the company is unable to finalize the audited financial statements by the extended deadline for the AGM, the company may proceed with the unaudited financial statements in order to comply with the requirement to hold the AGM.
- The company must conduct the AGM within the prescribed timeline, including any extensions, using the unaudited financial statements.
- The unaudited financial statements, along with any other required documents, must be filed with the Registrar of Companies within thirty (30) days from the original or extended deadline for holding the AGM. These unaudited financial statements will be accepted by the Registrar on a provisional basis until the audited financial statements are subsequently adopted at an adjourned AGM.
Adjournment of AGM Due to Non-Adoption of Financial Statements:
If the audited financial statements are not available by the date of the AGM, the company must adjourn the AGM, providing a clear explanation for the failure to adopt the financial statements. The company shall propose a date and time for the adjourned AGM, which must be held within the same calendar year.
Once the audited financial statements are completed, the company must reconvene the AGM (referred to as the “Adjourned AGM”) to adopt the audited financial statements. Following the adoption of the audited financial statements, the company must file the final audited financial statements with the Registrar of Companies within thirty (30) days of the date on which they were adopted at the Adjourned AGM.
Compliance with AGM Requirement:
In accordance with applicable laws, a company is required to hold at least one AGM in each calendar year. Therefore, both the original and any adjourned AGM must be held within the same calendar year, with the adjourned AGM taking place no later than December 31st of the same year.
Consequences of Non-Compliance:
If the company fails to hold the AGM within the prescribed timeline and does not file Form AOC-4 for the unaudited financial statements, both the company and every officer in default may face penalties. Specifically:
- A fine of up to INR 1,00,000, and
- In the case of a continuing default, an additional fine of up to INR 5,000 per day of continuing default, and
- Imprisonment as per Section 137 of the Companies Act.
Therefore, it is critical that the company ensures timely submission of its financial statements and compliance with AGM requirements to avoid such penalties.
In nutshell:
The company is required to convene two Annual General Meetings (AGMs) and file two separate Forms AOC-4: one for the unaudited financial statements and another for the audited financial statements following their adoption at the adjourned AGM.