The Annual General Meeting (AGM) and financial statements filing are statutory requirements for all registered companies under the Companies Act, 2013. These processes ensure transparency in a company’s financial and operational activities, providing shareholders with an understanding of the company’s performance and direction.
Purpose of AGM and Financial Statements Filing:
- Shareholder Interaction: The AGM serves as a platform for shareholders to ask questions, raise concerns, and receive updates on company performance and plans.
- Approval of Financial Statements: The company’s annual financial statements, including the balance sheet, profit and loss account, and other financial reports, must be presented and approved at the AGM.
- Decision Making: Important decisions, such as dividend distribution, reappointment of auditors, or election of directors, are made during the AGM.
- Statutory Compliance: Filing financial statements with the Registrar of Companies (ROC) is legally required to keep the company in good standing with the Ministry of Corporate Affairs (MCA).
Compliance Requirements:
- Conducting the AGM:
- The AGM must be held within six months from the end of the financial year, ideally by September 30.
- For newly incorporated companies, the AGM must be held within nine months from the end of the first financial year.
- The gap between two AGMs should not exceed 15 months.
- Agenda and Notice:
- The company must send a notice to shareholders at least 21 days before the AGM, including the meeting agenda, details of financial statements, and other items for discussion.
- Key agenda items often include approval of accounts, dividend declaration, appointment or reappointment of directors, and appointment of auditors.
- Filing Financial Statements:
- Financial statements, including the balance sheet, profit and loss statement, and cash flow statement, must be filed with the ROC.
- The filing must be done through Form AOC-4 within 30 days of the AGM.
- If any unlisted company fails to file on time, it is subject to additional fees and penalties.
- Filing Annual Return:
- An annual return detailing the company’s structure, shareholders, board of directors, and changes during the year must be filed through Form MGT-7 within 60 days from the date of the AGM.
Documentation Required:
- AGM Notice: Sent to all shareholders with details of the meeting agenda, date, and time.
- Minutes of AGM: A formal record of discussions, resolutions passed, and decisions made during the AGM.
- Auditor’s Report: An independent review of the financial statements.
- Director’s Report: Details on the company’s performance, management discussions, and disclosures.
- Financial Statements: Including balance sheet, profit and loss account, and cash flow statement.
- Form AOC-4: Filed with the ROC for financial statements submission.
- Form MGT-7: Filed with the ROC for annual return submission.
Process:
- Preparation and Approval of Financial Statements:
- Prepare the financial statements and have them reviewed by an independent auditor.
- The board of directors must approve the financial statements before presenting them at the AGM.
- Conducting the AGM:
- Issue the notice of the AGM at least 21 days in advance.
- Conduct the meeting, address agenda items, and obtain shareholder approval for financial statements and other key decisions.
- Record meeting minutes and resolutions passed.
- Filing with ROC:
- File the financial statements using Form AOC-4 within 30 days of the AGM.
- File the annual return using Form MGT-7 within 60 days of the AGM.
Charges:
- Professional Fees: ₹3,000 – ₹15,000, which can vary depending on the complexity of the company’s operations and the level of assistance required.
- Government Fees: These depend on the company’s authorized share capital. Penalties may apply for late filing.
Timeline:
- AGM Date: Must be conducted within six months after the end of the financial year.
- Filing Deadline for Financial Statements (Form AOC-4): Within 30 days of the AGM.
- Filing Deadline for Annual Return (Form MGT-7): Within 60 days of the AGM.
Penalties for Non-Compliance:
- Late Filing Fees: Companies that do not file Form AOC-4 or MGT-7 on time are subject to additional fees.
- Penalties: Continued non-compliance may lead to higher penalties and even legal action against the company’s directors.
Benefits of Compliance:
- Transparency and Credibility: Regular AGMs and timely filing of financial statements enhance the credibility of the company.
- Legal Compliance: Ensures that the company is in compliance with the Companies Act and reduces the risk of legal issues.
- Investor Confidence: Compliance with AGM and financial filing requirements helps build investor trust and confidence in the company’s governance.
This overview highlights the importance of conducting an AGM and filing financial statements. Adhering to these requirements not only keeps the company in compliance with regulatory standards but also contributes to good corporate governance.