Coronavirus: Cos allowed to hold virtual AGMs, send balance sheet, auditor's report by email

The ministry of corporate affairs has allowed companies to hold their annual general meetings (AGMs) through video conference and other audiovisual means and submit balance sheets, financial statements and auditor’s reports through email.

New Delhi:In its bid to reduce the pain of compliance burden during a nationwide lockdown, the ministry of corporate affairs today allowed companies to hold their annual general meetings (AGMs) through video conference and other audiovisual means and submit balance sheets, financial statements and auditor’s reports through email.

“Because of the need for continuous adherence to the social distancing norms and restrictions on the movement of persons, it has become necessary to allow companies to hold their AGMs by video conference,” said the ministry of corporate affairs.

The government, however, clarified that this relaxation will only be applicable in calendar year 2020.

As per the law, companies are required to hold annual general meetings (AGM) of their shareholders once in a year to adopt the balance sheet and accounts, and the AGM must be held within six months of completion of a company’s financial year.

This is the second procedural relief given to the companies in 15 days.

Last month, the government extended the deadline for holding the AGM to September 30 in respect of those companies whose financial year ended in December last year.

Most of the Indian companies follow April to March financial year followed by the Government of India, however, foreign companies and other companies can adopt a different financial year by obtaining approval from the government.

Under the law, the companies, whose financial year ended in December 2019, were required to hold their annual general meetings by the end of June this year. However, the government decided to relax the criteria by three months due to a nationwide lockdown.

“The rule is that the accounts that will be presented to the board for approval at the AGM should not be more than six months old,” said a chartered accountant.

He, however, clarified that the government has not extended the deadline for holding the AGM in respect of those companies that follow April-March financial year.

“If those companies, whose financial year ended in December last year, can hold their AGMs by September this year then other companies that follow April-March financial year can also hold their AGMs by then,” he told ETV Bharat.

The government also clarified that its earlier circulars for holding Extraordinary General Meetings (EGMs) will broadly apply for conducting Annual General Meetings (AGMs) this year.

It covers both the companies who have either opted for e-voting provide the e-voting facility and those who are not required to provide e-voting facility.

Digital India

Given the restrictions on postal services, including delivery of couriers, the government also allowed the companies to send their financial statements, board reports and statutory auditor’s report and other documents through email.

The government has also asked the companies to provide their shareholders a mechanism so that they can register for electronic transfer of dividends to them.

“The measure has been taken to facilitate Companies to conduct their ordinary & special business through AGMs conducted by leveraging the Digital India platforms,” said the ministry of corporate affairs.

(Article by Krishnanand Tripathi)