The Ministry of Corporate Affairs (MCA) vide its General Circular No 14/2020 issued earlier, on April 08, 2020, allowed the Companies to hold their Extra-Ordinary General Meetings (EGM) through Video Conferencing (VC) or Other Audio Visual Means (OAVM). Later on May 05, 2020, MCA has come up with another Circular i.e. General Circular No 20/2020 allowing the Companies for holding Annual General Meeting (AGM) through Video Conferencing (VC) or Other Audio Visual Means (OAVM) in the calendar year 2020 subject to the fulfillment of few requirements.
While the world has entered in a situation where restricting physical movements is necessary, there is no stopping the internet and the ever growing technology. As we all are aware of the ongoing circumstances of lock down, the impact of COVID-19 pandemic has brought about a new set of challenges for the economy in the world as well as for the Indian economy.
In view of this situation, MCA earlier extended the time frame for conducting Annual General Meetings by the Companies, which are following Financial Year as January 1 to December 31. The revised due date is September 30, 2020, instead of June 30, 2020.
Before knowing the process of holding AGM through VC or OAVM, we should be aware with the intentions of authorities and should be very clear with the requirements of issuing aforesaid Circular. As your are aware that the Corona virus Pandemic COVID – 19 has surpass all the historic pandemics & Crises and also has put the earth & the whole economic & business system to a halt. This pandemic has also led to temporary shutting down of millions of Corporate and industrial unit. This Circular had issued by MCA in the view of current situation of COVID – 19 and Social Distancing which led the Companies to complete shutdown or to do activities with minimum number of staff.
To add more on the list of facilitating the companies and businesses in India, The Ministry of Corporate Affairs (MCA) has now allowed companies to hold their annual general meeting (AGM) by Video Conferencing (VC) or other audio visual means (OAVM) during the calendar year 2020 amidst the COVID-19 crisis.
Procedure of Holding Annual General Meeting (AGM) through Video Conferencing (VC) or Other Audio Visual Means (OAVM)
A. For Companies mandatory require to/opted for providing e-voting facility-
1. The Notice of Holding AGM shall be dispatched to members only through e-mails registered with the Company or Depository Participant;
2. The copies of financial statements including Board’s report, Auditor’s report or other documents required to be attached therewith, shall be sent only by email to the members, trustees for the debenture-holders, and to all other persons so entitled;
3. Before sending notices of AGM and copies of Financial Statements to members, an advertisement has to be published at least once in a vernacular newspaper in principal vernacular language of the district in which the registered office of the Company is situated and at least in English Language in English Newspaper having a wide circulation in that district, preferable both newspapers having electronic editions, and shall specify the following information:
(a) statement that the AGM will be convened through VC or OAVM in compliance with applicable provisions of the Act read with applicable Circular;
(b) the date and time of the AGM through VC or OAVM;
(c) availability of notice of the meeting on the website of the company and the stock exchange, in case of a listed company;
[Author’s Suggestion: It is suggested to provide the link of website of the company and the stock exchange, if possible.]
(d) the manner in which the members who are holding shares in physical form or who have not registered their email addresses with the company can cast their vote through remote e-voting or through the e-voting system during the meeting;
(e) the manner in which the members can give their mandate receiving dividends directly in their bank accounts through Electronic Clearing Service (ECS) or any other means;
[This clause is applicable only for those companies who are declaring final dividend at their AGM.]
(f) any other detail considered necessary by the company.
4. The facility for joining the meeting shall be opened at least 15 minutes before the time scheduled for the meeting and close after 15 minutes of expiry of scheduled time of the meeting.
5. The Company shall ensure that meeting through VC or OAVM allows two way teleconferencing or webex for the ease of participation of the members and the participants are allowed to ask questions or given time to ask questions in advance on email address of the Company.
6. The Facility must have a capacity to allow at least 1,000 members to participate on the First-cum-First-serve basis.
7. The shareholders holding 2% or more shareholding, promoters, KMPs, Chairpersons of Audit Committee and Nomination & Remuneration Committee etc. may be allowed to attend the meeting without restrictions.
8. Chairperson: As specified in Articles of Association (AOA) of the Company. If AOA does not specify the name of Chairperson then-
- Where there are <50 members present : Chairperson appointed as per Section 104 of the Act;
- In all other case: Appointed by Poll conducted through e-voting.
9. Attendance of members through VC or OAVM shall be counted for quorum u/s 103 of the Act.
10. Proxies u/s 105 of the Act are not allowed to be appointed for the meeting held under this Framework. However, representative of the members u/s 112 & 113 of the Act are allowed to be appointed for the purpose of voting through remote e-voting or for participation in the meeting through VC or OAVM.
11. Participation of at least One Independent Director (Where the Company has Independent Directors) and the Auditors or his representative is mandatory for holding meeting through VC or OAVM.
12. In case the Company has received permission from relevant authorities to conduct AGM at its Registered Office, or at any other place as provided under section 96 of the Act, then the Company in addition to holding such meeting with physical presence of some members shall also provide the facility of VC or OAVM so as to allow other members of the company to participate in such meeting.
13. All members who are physically present in the meeting as well as the members who attend the meeting through the.facility of VC or OAVM shall be counted in Quorum.
14. All resolutions shall continue to be passed through the e-voting facility
B. For Companies not required to provide e-voting facility-
1. The Company can conduct AGM through VC or OAVM Facility only when it has the email addresses of at least half of its total number of members:-
|
a. |
In case of Nidhi Companies |
Who hold shares of more than Rs. 1,000/- in face value or more than 1% of the total paid-up share capital, whichever is less |
|
b. |
In case of other Companies having Share Capital |
Who represent not less than 75% of such part of the paid-up share capital of the company as gives a right to vote at the meeting |
|
c. |
In case of Companies not having Share Capital |
Who have the right to exercise not less than 75% of the total voting power exercisable at the meeting |
2. The company shall take all necessary steps to register the email addresses of all persons who have not registered their email addresses with the company.
3. The Notice of Holding AGM shall be dispatched to members only through e-mails registered with the Company or Depository Participant;
4. The copies of financial statements including Board’s report, Auditor’s report or other documents required to be attached therewith, shall be sent only by email to the members, trustees for the debenture-holders, and to all other persons so entitled;
5. The facility for joining the meeting shall be opened at least 15 minutes before the time scheduled for the meeting and close after 15 minutes of expiry of scheduled time of the meeting.
6. The Company shall ensure that meeting through VC or OAVM allows two way teleconferencing or webex for the ease of participation of the members and the participants are allowed to ask questions or given time to ask questions in advance on email address of the Company.
7. The Facility must have a capacityto allow at least 500 members or equlat to the total number of members of the Company, whichever is lower, to participate on the First-cum-First-serve basis.
8. The shareholders holding 2% or more shareholding, promoters, KMPs, Chairpersons of Audit Committee and Nomination & Remuneration Committee etc. may be allowed to attend the meeting without restrictions.
9. Chairperson: As specified in Articles of Association (AOA) of the Company. If AOA does not specify the name of Chairperson then-
- Where there are <50 members present : Chairperson appointed as per Section 104 of the Act;
- In all other case : Appointed by Poll conducted through e-voting.
10. Attendance of members through VC or OAVM shall be counted for quorum u/s 103 of the Act.
11. Participation of at least One Independent Director (Where the Company has Independent Directors) and the Auditors or his representative is mandatory for holding meeting through VC or OAVM.
12. Proxies u/s 105 of the Act are not allowed to be appointed for the meeting held under this Framework. However, representative of the members u/s 112 & 113 of the Act are allowed to be appointed for the purpose of voting through remote e-voting or for participation in the meeting through VC or OAVM.
13. Where the Company has Institutional Investors as its Member, they must be encouraged to attend and vote in the said meeting through VC or OAVM.
14. In case the Poll is required to be taken, the Company shall provide a designated email address to all members at the time of sending the notice of meeting so that the members can convey their vote.
15. During the meeting held through VC or OAVM facility, where a poll on any item is demanded, teh members shall cast their vote on such resolution only by sending emails through their email address registered with the Company.
Any member voted through any other email id not registered with Company, such vote shall be considered as Invalid.
16. Voting on Resolution(s)
- Where <50 members present : Voting by show of hands unless poll demanded
- Where >50 members present : Voting by poll through e-mail as stated in clause 15 above
17. In case the Company is unable to pay the dividend to any shareholder by the electronic mode, due to non-availability of the details of bank account, then the company shall upon normalization of the postal services, dispatch the dividend warrant / cheque to such shareholder by post.
C. The companies which are rioted covered by the General Circular No. 18/2020, dated 21.04.2020 and are unable to conduct their AGM in accordance with the framework provided in this Circular are advised to prefer applications for extension of AGM at a suitable point of time before the concerned Registrar of Companies under section 96 of the Act.
Note: However, many companies which have already approved their AGM notices will have to make suitable changes therein in line with the said circular. Further, post the issue of this AGM Circular, most of the companies will be making their debut in conducting the AGM through VC/ OAVM and it will be interesting to see smooth convening amidst the crisis. However, this is a welcome move by the MCA.
DISCLAIMER- This write-up is based on the understanding and interpretation of the author and the same is not intended to be professional advice.
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