DVC and Delayed AGM
The introduction of Document Verification Codes (DVCs) for audit reports in Bangladesh has brought a positive change by enhancing the authenticity of financial statements. However, this has also presented a new challenge for companies – the potential for delayed Annual General Meetings (AGMs) due to the time required for DVC issuance.
Why Might an AGM Be Delayed?
Under Section 81 of the Companies Act, 1994, companies must hold AGMs within a specific timeframe. However, with DVCs, backdated audit reports are no longer an option. This can lead to delays if the audit report and DVC are not finalized before the AGM deadline.
What Happens if an AGM is Delayed?
If your company is unable to hold its AGM on time due to an incomplete DVC-verified audit report, filing the annual return with the Registrar of Joint Stock Companies and Firms (RJSC) becomes impossible. Failure to hold the AGM within the stipulated timeframe not only hampers compliance but also exposes the company and concerned officers to fines for each day of delay. In such scenarios, companies traditionally approach the High Court Division for permission to hold a delayed AGM under section 81(2) and 85(3), praying for relief for the companies and responsible persons from fines.
Navigating a Delayed AGM: A Step-by-Step Guide
Here’s a detailed roadmap to navigate a delayed AGM due to DVC requirements:
1. Consult a Qualified Company Law Lawyer: A lawyer specializing in company law can meticulously assess your company’s unique situation and provide tailored advice. They can explain the legal options available, including the appropriate course of action to obtain necessary permissions for a delayed AGM (while adhering to ethical guidelines).
2. Gather Relevant Documentation: Your lawyer will advise on the specific documents required to support your case for a delayed AGM or adopting alternative ways if any in his opinion.
3. File the Application and Follow Due Process: Your lawyer will prepare and handle the official filing of the application with the appropriate court and ensure adherence to all legal procedures.
4. Hold a Compliant AGM: Once permission is granted, your company can finally convene the AGM. Ensure the meeting adheres to all legal requirements and proper documentation is maintained.
Proactive Measures to Prevent Delays
- Maintain Clear Communication with Auditors: Regular communication throughout the year with your auditors helps identify potential delays and ensure a smooth audit process.
- Plan Your Calendar: Schedule your audit well in advance, considering DVC processing times, to leave ample buffer before the AGM deadline. Some law firms, like Ainpal, also provide calendar maintenance and reminders for company-related legal matters.
Remember: Early intervention is key. Seeking legal guidance as soon as you foresee a potential delay can significantly expedite the process of obtaining permission for a delayed AGM and ensure compliance with the law.
Disclaimer: This article provides general information only and does not constitute legal advice. Please consult with a qualified lawyer for specific guidance tailored to your company’s situation.
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