07-24-2008, 10:48 PM
Dears,
Finance Act, 2007 restricted/reduced the time limit for annual general meeting (AGM) from 4 months to 3 months, from the close of the accounting year. However, the Finance Act,2008 restored the 4 months time limit.
Finance Act for every year becomes effective from 01 July of such year. Therefore, during the last year (2007) a confusion was faced as to what those companies will do which have their accounting year ending on 30 June 2007. Clarification was sought from SECP which very rightly concluded that the companies having year-end 30 June 2007 would follow 4 months time limit as the Finance Act 2007 was effective from 01 July 2007.
Keeping in view the above clarification same legal interpretation was expected for the change made in Finance Act 2008 where such time limit has again been restored from 3 months to 4 months since the Finance Act is not applicable to the accounting year ending on 30 June 2008.
One investment bank, confused of such situation, solicited clarification from Specialized Companies Division of SECP that what time limit would now apply to the companies which have their year ending on 30 June 2008. The clarification was issued by the above-said division of SECP on 21 July 2008, addressing to the said investment bank, that Finance Act 2008 is applicable from 01 July, therefore, for the companies having year end 30 June 2008, time limit for annual general meeting is 3 months. The change made will be applicable for the next financial year. Letter No. of such clarification was SC/NBFC(1)-R/FDIBL/2008-345 (dated 21 July 2008).
Quite surprisingly, on the same date i.e. 21 July 2008, the Company Law Division (Enforcement Department) of SECP has issued quite a dissimilar circular on this issue. This clarification bearing No.Enf/D-III/Circulars/1/2008 dated 21 July 2008 states that the companies having year end of 30 June 2008 will also have a time limit of 4 months.
Now the stakeholders have two documents (one is clarification while other is circular) in their hand, both issued by the SECP departments, on the same date, on the same issue having opposite conclusions.
This has created a great chaos for which no explanation has so far been given by SECP.
This is for the knowledge of the forum members.
Regards,
KAMRAN.