Section 99 Companies Act, 2013: Compounding of Offence for AGM Delay or Default u/s 96

Section 99 Companies Act, 2013: Compounding of Offence for AGM Delay or Default u/s 96. Compounding of Offence under Section 441
Under the Companies Act, 2013, every company, except a One Person Company, is statutorily required to convene an Annual General Meeting (AGM) within the prescribed timelines. Any failure to hold the AGM in accordance with the provisions of the Act constitutes a statutory default. Such default, however, is not criminal in nature. The Act provides a remedial mechanism through compounding of offences under Section 441.
Delay or default in holding the AGM amounts to a contravention of Section 96(1) and attracts penal consequences under Section 99 of the Companies Act, 2013. The offence is treated as a continuing default until the AGM is duly held. Compounding under Section 441, read with Sections 96 and 99, enables the company and the officers in default to regularise the non-compliance by payment of a monetary fine, thereby avoiding prosecution and prolonged legal proceedings.
Convening an AGM is a core corporate governance requirement. While a company may hold multiple general meetings during a financial year, one such meeting must be designated as the AGM for transacting the mandatory business prescribed under the Act. In terms of Section 102(1)(a), matters ordinarily transacted at the AGM are classified as ordinary business, while all other matters constitute special business. The Board of Directors is empowered to determine the date, time, and venue of the AGM and may authorise the Managing Director or any other Director to ensure its proper convening and conduct.
Companies that fail to hold the AGM within the statutory period are in violation of Section 96 and are liable to fines under Section 99, applicable to both the company and every officer in default. The liability continues for each day of default until compliance is achieved.
It is important to clearly distinguish between different AGM-related non-compliances:

Sections 96 and 99 relate to failure to hold the AGM and are compoundable under Section 441.

Section 92 (Form MGT-7) and Section 137 (Form AOC-4) are governed by the MCA adjudication mechanism and are not compoundable.

Relief under Section 446B may be available for Small Companies and Startups in respect of adjudicated penalties under Sections 92 and 137, subject to eligibility.

Section 96 – Holding of Annual General Meeting
Section 96 of the Companies Act, 2013 mandates that every company, other than a One Person Company, shall convene an Annual General Meeting each year and AGM is required to be held within six months from the close of the relevant financial year. In the case of a newly incorporated company, the first AGM may be held within nine months from the end of its first financial year. Further, the interval between two Annual General Meetings shall not exceed fifteen months, except where otherwise permitted under the Act.
Section 99 – Punishment for Default
Section 99 of the Companies Act, 2013 prescribes the penal consequences for non-compliance with the provisions relating to the holding of general meetings. Where a company makes a default in holding a meeting in accordance with Sections 96, 97, or 98, or fails to comply with any directions issued by the Tribunal, both the company and every officer who is in default become liable to penalty. Such default is punishable with a fine which may extend to one lakh rupees, and in the case of a continuing default, with an additional fine which may extend to five thousand rupees for every day during which the default continues.
Who Can Apply for Compounding
Under Section 441 of the Companies Act, 2013, the application for compounding of an offence may be made by the company and by every officer who is in default, including directors and key managerial personnel, as applicable. Since a company is a juristic person, the compounding application is required to be filed through an authorised director, pursuant to a valid resolution of the Board of Directors authorising such filing and representation before the competent authority.
Authority for Compounding

If the maximum fine does not exceed Rs.25 lakh, compounding is done by the Regional Director (RD).

For higher fines, approval of National Company Law Tribunal (NCLT) is required.

AGM-related defaults are generally handled by the Regional Director.
Procedural Aspects of Compounding of AGM Default under the Companies Act, 2013
Step-1: Identification of Default
 The first step in the compounding process is to establish that a statutory default has occurred. This involves confirming that the Annual General Meeting was not held within the time limits prescribed under Section 96 of the Companies Act, 2013. The period of default is calculated from the statutory due date of the AGM until the actual date on which the AGM was held.
Step-2: Authorisation by the Board
 Once the default is identified, the Board of Directors must pass a resolution authorising the filing of a compounding application under Section 441 of the Act. The resolution should also authorise a director or officer to sign, submit, and represent the company before the Registrar of Companies and the Regional Director.
Step-3: Filing of Compounding Application (Form GNL-1)
The compounding application is required to be filed with the jurisdictional Registrar of Companies in Form GNL-1, along with the prescribed filing fee and supporting documents explaining the nature of default and the reasons for the delay.
Step-4: Forwarding of Application to the Regional Director
 Upon receipt of the application, the Registrar of Companies examines the same and forwards it to the Regional Director, who is the competent authority for compounding AGM-related defaults where the prescribed fine falls within the statutory limits.
Step-5: Hearing Before the Regional Director
 The Regional Director may grant an opportunity of hearing to the company and the officers in default. Such hearing may be conducted either in person or through virtual mode, allowing the applicants to make submissions and clarifications regarding the default.
Step-6: Passing of Compounding Order
 After considering the application and submissions made during the hearing, the Regional Director passes a compounding order under Section 441, determining the amount of fine payable by the company and each officer in default in accordance with Section 99 of the Act.
Step-7: Payment of Compounding Fine
 The fine imposed by the Regional Director must be paid within the time period specified in the compounding order. Timely payment is essential to ensure closure of the compounding proceedings.
Step-8: Filing of Order with Registrar of Companies
 In accordance with Section 441(4) of the Companies Act, 2013, the company is required to file the compounding order along with proof of payment of the fine with the Registrar of Companies within seven days from the date of receipt of the order. Upon such filing, the default stands regularised and no further prosecution can be initiated for the same offence.
Fine Applicability
Statutory structure and Discretion of Authority-RD MCA
Although the Companies Act, 2013 prescribes the maximum limits of fine for defaults relating to the holding of the Annual General Meeting, the Regional Director is vested with discretionary powers to determine the actual quantum of fine at the time of compounding, based on the facts and circumstances of each case and may imposed minimum fine too.
Factors Considered While Determining Fine
In exercising such discretion, the Regional Director generally considers the duration of the default, the nature and size of the company, the existence of any bona fide or unavoidable reasons for the delay, and the past compliance history of the company and its officers.
Separate Liability of Company and Officers in default 
The fine is imposed separately on the company and on each officer in default. The Regional Director (”RD”) may levy a fine ranging from the statutory minimum to the maximum permissible amount, depending on whether the default is viewed as technical, inadvertent, or continuing in nature, and the extent of non-compliance until rectification.
Compounding Application Process – Timeline
 The compounding application process under the Companies Act, 2013 generally takes approximately 60 to 90 days from the date of filing, subject to procedural and administrative factors.

By Registrar of Companies: The initial timeline depends on the scrutiny and processing of the application by the jurisdictional Registrar of Companies, including preparation of the RoC report and forwarding of the application to the Regional Director.

By Regional Director: The duration may further vary based on the hearing schedule of the Regional Director, the complexity of the case, and whether any objections or clarifications are raised, requiring written submissions or replies from the company.

Therefore, prompt and complete submission of all requisite documents and responses by the company plays a major role in expediting the compounding process and avoiding unnecessary delays. 
Important Declarations Before Proceeding with Compounding
Status of Investigation or Inspection
Before initiating a compounding application under Section 441 of the Companies Act, 2013, it must be confirmed that no inspection, inquiry, or investigation has been initiated or is pending against the company or the officers in default in respect of the same offence.
Non-Applicability of Repeat Compounding
The applicants must confirm that the same offence has not been compounded within the preceding three years, as repeat compounding for an identical default within this period is not permitted under the Act.
Full and True Disclosure
All facts, explanations, and documents submitted in the compounding application must be complete, accurate, and truthful. Any misstatement or suppression of material facts may result in rejection of the application or initiation of further proceedings.
Undertaking to Comply with Compounding Order
The company and the officers in default must expressly confirm their willingness to comply with the order passed by the Regional Director, including timely payment of the fine and filing of the compounding order with the Registrar of Companies. 
How Compliance Calendar LLP Assists in AGM Compounding and MCA Adjudication Matters
Compliance Calendar LLP is supported by a team of seasoned Company Secretaries with extensive experience in handling compounding of offences and MCA adjudication matters under the Companies Act, 2013. Each matter is evaluated carefully with a detailed review of facts, statutory provisions under the Companies Act 2013 including rule made thereunder, and regulatory precedents to allow a well-reasoned and compliant process.
Our CCL team focuses on presenting the case effectively before the Registrar of Companies (ROC) and the Regional Director (RD), highlighting bona fide reasons, mitigating circumstances, and the company’s compliance track record. Through structured representations and timely responses, Compliance Calendar LLP endeavours to assist clients in securing the minimum possible fine within the statutory structures, subject to the discretion of the competent authority.
In addition to compounding applications under 441, Compliance Calendar LLP also provides end-to-end support in MCA adjudication proceedings, including preparation of replies, representation during hearings, coordination with regulatory authorities, and closure of proceedings through proper filing and compliance.

Compounding of Offence under Section 441

Under the Companies Act, 2013, every company, except a One Person Company, is statutorily required to convene an Annual General Meeting (AGM) within the prescribed timelines. Any failure to hold the AGM in accordance with the provisions of the Act constitutes a statutory default. Such default, however, is not criminal in nature. The Act provides a remedial mechanism through compounding of offences under Section 441.

Delay or default in holding the AGM amounts to a contravention of Section 96(1) and attracts penal consequences under Section 99 of the Companies Act, 2013. The offence is treated as a continuing default until the AGM is duly held. Compounding under Section 441, read with Sections 96 and 99, enables the company and the officers in default to regularise the non-compliance by payment of a monetary fine, thereby avoiding prosecution and prolonged legal proceedings.

Convening an AGM is a core corporate governance requirement. While a company may hold multiple general meetings during a financial year, one such meeting must be designated as the AGM for transacting the mandatory business prescribed under the Act. In terms of Section 102(1)(a), matters ordinarily transacted at the AGM are classified as ordinary business, while all other matters constitute special business. The Board of Directors is empowered to determine the date, time, and venue of the AGM and may authorise the Managing Director or any other Director to ensure its proper convening and conduct.

Companies that fail to hold the AGM within the statutory period are in violation of Section 96 and are liable to fines under Section 99, applicable to both the company and every officer in default. The liability continues for each day of default until compliance is achieved.

It is important to clearly distinguish between different AGM-related non-compliances:

Sections 96 and 99 relate to failure to hold the AGM and are compoundable under Section 441.
Section 92 (Form MGT-7) and Section 137 (Form AOC-4) are governed by the MCA adjudication mechanism and are not compoundable.
Relief under Section 446B may be available for Small Companies and Startups in respect of adjudicated penalties under Sections 92 and 137, subject to eligibility.

Section 96 – Holding of Annual General Meeting

Section 96 of the Companies Act, 2013 mandates that every company, other than a One Person Company, shall convene an Annual General Meeting each year and AGM is required to be held within six months from the close of the relevant financial year. In the case of a newly incorporated company, the first AGM may be held within nine months from the end of its first financial year. Further, the interval between two Annual General Meetings shall not exceed fifteen months, except where otherwise permitted under the Act.

Section 99 – Punishment for Default

Section 99 of the Companies Act, 2013 prescribes the penal consequences for non-compliance with the provisions relating to the holding of general meetings. Where a company makes a default in holding a meeting in accordance with Sections 96, 97, or 98, or fails to comply with any directions issued by the Tribunal, both the company and every officer who is in default become liable to penalty. Such default is punishable with a fine which may extend to one lakh rupees, and in the case of a continuing default, with an additional fine which may extend to five thousand rupees for every day during which the default continues.

Who Can Apply for Compounding

Under Section 441 of the Companies Act, 2013, the application for compounding of an offence may be made by the company and by every officer who is in default, including directors and key managerial personnel, as applicable. Since a company is a juristic person, the compounding application is required to be filed through an authorised director, pursuant to a valid resolution of the Board of Directors authorising such filing and representation before the competent authority.

Authority for Compounding

If the maximum fine does not exceed Rs.25 lakh, compounding is done by the Regional Director (RD).
For higher fines, approval of National Company Law Tribunal (NCLT) is required.

AGM-related defaults are generally handled by the Regional Director.

Procedural Aspects of Compounding of AGM Default under the Companies Act, 2013

Step-1: Identification of Default

The first step in the compounding process is to establish that a statutory default has occurred. This involves confirming that the Annual General Meeting was not held within the time limits prescribed under Section 96 of the Companies Act, 2013. The period of default is calculated from the statutory due date of the AGM until the actual date on which the AGM was held.

Step-2: Authorisation by the Board

Once the default is identified, the Board of Directors must pass a resolution authorising the filing of a compounding application under Section 441 of the Act. The resolution should also authorise a director or officer to sign, submit, and represent the company before the Registrar of Companies and the Regional Director.

Step-3: Filing of Compounding Application (Form GNL-1)

The compounding application is required to be filed with the jurisdictional Registrar of Companies in Form GNL-1, along with the prescribed filing fee and supporting documents explaining the nature of default and the reasons for the delay.

Step-4: Forwarding of Application to the Regional Director

Upon receipt of the application, the Registrar of Companies examines the same and forwards it to the Regional Director, who is the competent authority for compounding AGM-related defaults where the prescribed fine falls within the statutory limits.

Step-5: Hearing Before the Regional Director

The Regional Director may grant an opportunity of hearing to the company and the officers in default. Such hearing may be conducted either in person or through virtual mode, allowing the applicants to make submissions and clarifications regarding the default.

Step-6: Passing of Compounding Order

After considering the application and submissions made during the hearing, the Regional Director passes a compounding order under Section 441, determining the amount of fine payable by the company and each officer in default in accordance with Section 99 of the Act.

Step-7: Payment of Compounding Fine

The fine imposed by the Regional Director must be paid within the time period specified in the compounding order. Timely payment is essential to ensure closure of the compounding proceedings.

Step-8: Filing of Order with Registrar of Companies

In accordance with Section 441(4) of the Companies Act, 2013, the company is required to file the compounding order along with proof of payment of the fine with the Registrar of Companies within seven days from the date of receipt of the order. Upon such filing, the default stands regularised and no further prosecution can be initiated for the same offence.

Fine Applicability

Statutory structure and Discretion of Authority-RD MCA

Although the Companies Act, 2013 prescribes the maximum limits of fine for defaults relating to the holding of the Annual General Meeting, the Regional Director is vested with discretionary powers to determine the actual quantum of fine at the time of compounding, based on the facts and circumstances of each case and may imposed minimum fine too.

Factors Considered While Determining Fine

In exercising such discretion, the Regional Director generally considers the duration of the default, the nature and size of the company, the existence of any bona fide or unavoidable reasons for the delay, and the past compliance history of the company and its officers.

Separate Liability of Company and Officers in default

The fine is imposed separately on the company and on each officer in default. The Regional Director (”RD”) may levy a fine ranging from the statutory minimum to the maximum permissible amount, depending on whether the default is viewed as technical, inadvertent, or continuing in nature, and the extent of non-compliance until rectification.

Compounding Application Process – Timeline

The compounding application process under the Companies Act, 2013 generally takes approximately 60 to 90 days from the date of filing, subject to procedural and administrative factors.

By Registrar of Companies: The initial timeline depends on the scrutiny and processing of the application by the jurisdictional Registrar of Companies, including preparation of the RoC report and forwarding of the application to the Regional Director.
By Regional Director: The duration may further vary based on the hearing schedule of the Regional Director, the complexity of the case, and whether any objections or clarifications are raised, requiring written submissions or replies from the company.

Therefore, prompt and complete submission of all requisite documents and responses by the company plays a major role in expediting the compounding process and avoiding unnecessary delays.

Important Declarations Before Proceeding with Compounding

Status of Investigation or Inspection

Before initiating a compounding application under Section 441 of the Companies Act, 2013, it must be confirmed that no inspection, inquiry, or investigation has been initiated or is pending against the company or the officers in default in respect of the same offence.

Non-Applicability of Repeat Compounding

The applicants must confirm that the same offence has not been compounded within the preceding three years, as repeat compounding for an identical default within this period is not permitted under the Act.

Full and True Disclosure

All facts, explanations, and documents submitted in the compounding application must be complete, accurate, and truthful. Any misstatement or suppression of material facts may result in rejection of the application or initiation of further proceedings.

Undertaking to Comply with Compounding Order

The company and the officers in default must expressly confirm their willingness to comply with the order passed by the Regional Director, including timely payment of the fine and filing of the compounding order with the Registrar of Companies.

How Compliance Calendar LLP Assists in AGM Compounding and MCA Adjudication Matters

Compliance Calendar LLP is supported by a team of seasoned Company Secretaries with extensive experience in handling compounding of offences and MCA adjudication matters under the Companies Act, 2013. Each matter is evaluated carefully with a detailed review of facts, statutory provisions under the Companies Act 2013 including rule made thereunder, and regulatory precedents to allow a well-reasoned and compliant process.

Our CCL team focuses on presenting the case effectively before the Registrar of Companies (ROC) and the Regional Director (RD), highlighting bona fide reasons, mitigating circumstances, and the company’s compliance track record. Through structured representations and timely responses, Compliance Calendar LLP endeavours to assist clients in securing the minimum possible fine within the statutory structures, subject to the discretion of the competent authority.

In addition to compounding applications under 441, Compliance Calendar LLP also provides end-to-end support in MCA adjudication proceedings, including preparation of replies, representation during hearings, coordination with regulatory authorities, and closure of proceedings through proper filing and compliance.