As demanded by most corporate professional and compliance professionals, Ministry of Corporate Affairs has clarified the mode of conducting general meetings for corporates in the era of the outbreak of Coronavirus. This circular is for passing of resolution in general meeting which are of ‘Urgent Nature‘.
Legally companies Act 2013 doesn’t specify any provisions for allowing the conduct of members’ meetings through video conferencing (VC) or other audio-visual means.
Now, MCA has issued a General Circular Circular No 14/2020 dated April 08, 2020 vide which Clarification on Passing Ordinary and Special Resolutions by Companies – on account of threat posed by Covid-19 has been issued.
A. Applicability:
This circular is appliable on all type of Companies. (like Small, Private, Public, Listed, Nidhi etc).
B. Type of Meeting:
This is in relation to all type of Extra Ordinary General Meeting. This scheme is not applicable on Annual General Meeting.
1. Whether Companies can hold AGM through VC as per requirement of above mentioned circular?
This circular of MCA doesn’t facilitate holding of AGM through VC. However, Companies can’t hold AGM under this Scheme.
2. Whether company can pass resolution for ordinary business through this Circular?
As per this circular, Company can’t pass resolution for ordinary business. Ordinary business can’t be discussed through this circular.
C. Conditions for above facilities:
√ EGM must be held on or before 30th June, 2020 under this Scheme. If EGM held after 30th June then this circular is not applicable.
√ Allowed only in case when passing of resolution in EGM is unavoidable/ urgent.
√ When passing of resolution through postal ballot not feasible.
D. Filing of MGT-14:
If any resolution is passed for which company is required to file MGT-14. Then MGT-14 can be file with in 60 (Sixty) days of passing of resolution along with a declaration that provisions of Circular and rules has been complied with.
Conditions/ provisions for holding of EGM through VC
A. Notice of Meeting:
The notice for the general meeting shall make disclosures with regard to the manner in which framework provided in this Circular shall be available for use by the members and also contain clear instructions on how to access and participate in the meeting. The company shall also provide a helpline number through the registrar & transfer agent, technology provider, or otherwise, for those shareholders who need assistance with using the technology before or during the meeting. A copy of the meeting notice shall also be prominently displayed on the website of the company and due intimation may be made to the exchanges in case of a listed company
B. Quorum:
Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act
3. Whether shareholders attending through VC or OAVM will count for quorum?
Shareholder attending EGM through VC or OAVM shall be count for quorum.
C. Proxy:
The facility of appointment of proxies by members will not be available for such meetings. However, in pursuance of Section 112 and Section 113 of the Act, representatives of the members may be appointed for the purpose of voting through remote e-voting or for participation and voting in the meeting held through VC or OAVM.
4. Whether Proxy can appoint if egm held through Video conferencing?
The facility of appointment of proxies by members will not be available for such meetings. Therefore, Proxy can’t appoint.
D. Recording of Meeting:
EGMs, wherever unavoidable, may be held through VC or OAVM and the recorded transcript of the same shall be maintained in safe custody by the company.
Publication on Website: In case of a public company, the recorded transcript of the meeting, shall as soon as possible, be also made available on the website (if any) of the company
Duration: The duration for maintaining the safe custody has not been specified by MCA
E. Participation of Members:
√ All care must be taken to ensure that such meeting through VC or OAVM facility allows two-way teleconferencing or webex for the ease of participation of the members and
√ the participants are allowed to pose questions concurrently or
√ given time to submit questions in advance on the E-mail address of the company.
√ Presence of atleast 1000 Members: Such a facility must have a capacity to allow at least 1000 members to participate on a first-come-first-served basis.
(However FIFO (first come first served) may not apply in certain case stated below)
The large shareholders (i.e. shareholders holding 2% or more shareholding), promoters, institutional investors, directors key managerial personnel the chairpersons of the Audit Committe Nomination and Remuneration Committee and Stakeholders Relationship Committee, auditors etc. may be allowed to attend the meeting without restriction on account of first-come- first-served principle.
F. Other Points:
Time for joining of Meeting: The facility for joining the meeting shall be kept open at least 15 minutes before the time scheduled to start the meeting and shall not be closed till the expiry of 15 minutes after such scheduled time. (i.e Pre and Post Meeting 15 Minutes Requirements)
Attendance of Members: Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.
Presence of Independent Director: At least one independent director (where the company is required to appoint one), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.
Time Zone: Convenience of different persons positioned in different time zones shall be Kept in mind before scheduling the meeting.
G. Voting Facility:
Remote e-voting: In case of Companies listed on stock exchange or having at-least 1000 members, remote e-voting facility shall be provided which shall remain open for not less than three days and shall close at 5.00 p.m. on the date of preceeding the date of the General Meeting.. listed on stock exchange or having less than 1000 members, the e-voting shall be taken through registered email from members on designated mail id of the company, which shall be secured.
Note: The Chairman present at the meeting shall ensure that the facility of e-voting system is available for the purpose of conducting a poll during the meeting
Other Mode of Voting:
a) where there are less than 50 members present at the meeting, the voting may be conducted either
– through the e-voting system or
– by a show of hands,
– unless a demand for poll is made in accordance with section 109 of the Act, in which case, the voting shall be conducted through the e-voting system;
b) in all other cases, the voting shall be conducted through e-voting system
5. What is meaning of e-voting for companies other than Listed Companies?
e-voting means, voting through e-mail by the members on registered e-mail id of the Company.
H. Chairman:
√ The Meeting shall be chaired by person as specified in AOA
√ If AOA doesn’t provide for the same and
– members present at meeting are 50 or more, the Chairman shall be elected by taking poll or
– if members present are less than 50, the chairman shall be elected by sow of hands;
6. Whether Private Company can held EGM through VC or OAVM under this Circular?
All type of Companies including Small, Private, Public, Listed etc can hold EGM through VC or OAVM.
7. Private Limited Company having 2-50 members required to provide e-voting facility?
If there is less than 50 members present in the meeting, EGM can provide either facility of show of hand or e-voting. It is not mandatory to provide e-voting facility in this case.
6. In case of private limited company having website, is it mandatory to publish recording of Meeting?
In case of Public Company having website, it is mandatory to publish recording of meeting. Therefore, it is not mandatory for private company to publish recording.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore.
Author Bio
If there are only eight members in Public company out of that 4 are from same family and if they want to conduct EGM, is it mandatory to hold the EGM through VC. or Can they show meeting physically.