In what could come as some respite for companies, especially small and medium ones, the Ministry of Corporate Affairs (MCA) has extended the due date for holding annual general meetings (AGMs) for the financial year 2020-21 by two months.
This extension would mean that companies now have time till the end of November 2021 to hold the AGM. Under company law, corporates are required to hold AGM within six months from the date of completion of the financial year — i.e September 30.
This latest MCA move comes in the wake of representations received by the Ministry seeking extension of time for holding of AGM for FY21. The representations were made as both companies and the audit fraternity faced difficulties due to the second wave of Covid and consequent lockdowns.
Some corporate observers however felt that the extension of the due date by two months may still be inadequate given that the audit processes have been hampered due to pandemic-induced local travel restrictions in many States.
Relief for companies
Ashish Chhawchharia, Partner and National Head - Restructuring Advisory at Grant Thornton Bharat said, “Given the turbulent impact that the second wave of Covid-19 has had, this proposed move has come in as much-needed relief. This was something several corporates had sought after since in the normal course of business, their functioning had been hampered. The tax authorities have also extended the deadline for tax filing, so this proposed extension will help align the compliance requirements.”
Aseem Chawla, Managing Partners, ASC Legal, said, “The prescription of extension is welcome and much-anticipated respite considering that normalization of proper bookkeeping and record maintenance is somewhat still distant. The prelude to this reprieve is the extension of dates for income tax filings and tax audits announced recently. This put together would alleviate some hardship.”
Khazat Kotwal, partner, Deloitte India, said that MCA’s decision to extend the reporting timelines for holding AGMs due to the COVID19 related disruptions during 2020-21 is a welcome relief for corporate India. “This is especially helpful for SMEs and our start-ups since they have been facing several difficulties including business disruptions, changes in operating models, work from home, and availability of people”, Kotwal said.