SECTION 166

ANNUAL GENERAL MEETING

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

This Department 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.

*CIRCULAR NO.2/79[F.NO.8/35/159/166]/78-CL-V AND 24-38/78 CL-II] , DATED 15.9.1979.

Copy of letter referred to in clarification

From the strictly legal point of view, the time within which the annual general meeting of a company is required to be held by a company is no doubt governed solely by section 166 and the date on which the annual general meeting is required to be held has no direct relationship with the financial year of the company. Accordingly, the Registrar's power to grant extension of time under the second proviso to section 166(1) does not become exercisable if the "extension" sought by the company is for holding the meeting falling within the time limits mentioned in the said section 166 and is asked for solely on the ground that it has not been able to prepare the accounts for the period mentioned in section 210(3). Notwithstanding the legal position aforesaid, the Board is of the view that for administrative and practical consideration where a company approaches for the grant of extension of time for holding the annual general meeting in terms of the proviso to section 166(1), the Registrar, may continue to grant the required extension for the holding of annual general meeting beyond the period of 6 months from the closing of the financial year of the company as contemplated under section 210 even though the time limit for the holding of such a meeting as prescribed under section 166 may not have been reached. It is considered that apart from facilitating the smooth working of companies such a practice would be administratively desirable as well. It was also in this context that the Department had earlier advised the field officers and companies which sought clarification on the point that sections 166 and 210 should be read together and if a breach of the provisions of one or the other of the two sections is to be avoided an annual general meeting should be held on the earliest of the three relevant dates prescribed under these two sections vide Circular No.8/16(1)/61-PR, dated 25.2.1961. However, when it comes to determining for purposes of legal proceedings or levy of additional fee as to whether there has been a default in holding the annual general meeting it would, no doubt, be necessary for the Registrars to construe the provisions of section 166 strictly in the manner indicated above. For this purpose the financial year of the company or the provisions of section 210 is not relevant. In other words, where a company holds its annual general meeting within the time prescribed under section 166, though such a meeting has been held after the expiry of 6 months from the close of its financial year and the company files its annual return within 42 days of the holding of the said meeting, no action should be taken against the company for default of section 159 or 166 nor would additional fee be levied in such a case in respect of the filing of the annual return and audited accounts.

Whether annual general meeting can be held at a place within postal limits of the city in which registered office is situate though postal limits are wider than municipal limits

A question has been raised whether the annual general meeting of company can be held at a place within the postal limits of the city in which the registered office of the company is situated though the postal limits are wider than the municipal limits of the city. The matter has been carefully examined by the Department. It has been observed that as a result of rapid urbanisation, cities frequently tend to expand beyond municipal limits and in view of this, the expression "Every annual general meeting shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated" used in section 166(2) may be taken to mean both the postal limits and local body limits of the city in which the registered office of the company is situated and where the two do not coincide, the wider of the two. A company can, therefore, hold its annual general meeting at any place within the postal limits of the city in which its registered office is situated, if it is more convenient to its shareholders.

* CIRCULAR NO.1/1/80CL-V, DATED 16.2.1981.

Holding of annual general meeting whether permissible on 30th June and 31st December declared as public holidays under Negotiable Instruments Act.

In case 30th June and 31st December are declared as holidays under the Negotiable Instruments Act for the limited purpose of half yearly closing accounts of banks/treasuries, etc., these two holidays will not be treated as public holidays for the purpose of section 166.

* LETTER NO. 8/(166)/80-CL- DATED 2.3.1981.