You can compound the late holding of annual general meeting in 9 steps.

The process of compounding an offence is a mechanism by which an offence is settled by paying compounding fees to the respective authority. In the context of the Companies Act, 2013, this mechanism allows a company or its officers to avoid prosecution by agreeing to pay a specified sum. This article provides a detailed, step-by-step guide on the procedure for compounding the late holding of an Annual General Meeting (AGM).

1. Making the Offence Good:

The first step in the process is to rectify the offence. In the case of a late AGM, this means that the company should conduct its AGM as soon as possible before proceeding with the application for compounding.

2. Holding a Board Meeting:

Once the offence has been rectified, the Board of Directors of the company should hold a meeting to pass resolutions authorizing the filing of an application for compounding and granting authority to a professional to appear before the respective authorities and take all necessary actions.

3. Drafting the Application:

The company is required to draft a detailed application for compounding of the offence under Section 441 and Section 96 of the Companies Act, 2013. The application should include details such as the applicants, basic details of the company, admission of offence, reasons for default, and the relief sought.

4. Filing the Application:

The application should be filed with the Registrar of Companies (ROC) in Form GNL-1 along with the prescribed fees. The form can be used for compounding of a maximum of 8 persons excluding the company. If the number of persons is greater than 8, additional details can be provided in an optional attachment.

5. Delivery of Hard Copies:

After filing the online application, the company should deliver two hard copies of the application to the respective ROC and the respective authority such as the Regional Director.

6. Attending the Personal Hearing:

The company will receive information for a personal hearing, which should be attended by the professional representing the company and the defaulting directors. During the hearing, the original copy of the application, court fee stamp, proof of ID, power of attorney, and copy of the board resolution authorizing the professional to appear should be carried.

7. Payment of Compounding Fees:

During the hearing, the authority orders the compounding fees to be paid by all the applicants. The fees should be paid from the respective bank accounts of the parties. For example, the compounding fees for the company should be paid from the account of the company, and for the directors, it should be paid from their personal accounts.

8. Submission of Proof of Payment:

Once all the payments have been made as ordered by the Regional Director, the proof of payment i.e., the challan, should be submitted to the Regional Director along with a covering letter. This can be done online by sending an email to the respective authority or physically by visiting the office of the Regional Director.

9. Filing of Form INC-28:

As per Section 441(3) of the Companies Act, 2013, the company should give an intimation to the Registrar within seven days from the date on which the offence is compounded. This intimation should be given in Form INC-28 within seven days of passing of the said order by the authority. The form should be accompanied by the order of the respective authority and proof of payment of compounding fees.

The process of compounding concludes after the approval of Form INC-28 by the Registrar of Companies. Once the offence has been duly compounded, no authority has the right to initiate action against the applicants for the compounded offence.

This procedure is a testament to the flexibility of the Companies Act, 2013, which provides mechanisms for companies to rectify their offences and avoid prosecution. However, it's important to note that the compounding of an offence is not a right but a concession granted by the law. It is always better for companies to comply with the provisions of the Act and hold their AGMs on time to avoid the need for compounding.

In conclusion, As always, companies should strive to comply with the provisions of the Companies Act, 2013, to maintain their good standing and avoid the need for such measures.