ANNUAL GENERAL MEETING (AGM) THROUGH VIDEO CONFERENCING (VC) OR OTHER AUDIO VISUAL MEANS (OAVM)
COVID-19 pandemic has certainly shaken up entire World, health, lifestyle and economy of the countries. As India is trying its best to cope up with these crisis, Ministry of Corporate Affairs (MCA) and SEBI have taken quick and effective measures, that is most indispensable at this given point of time. One of the best options that have been provided to the companies in order to make sure that compliance requirements are met with is by enabling to conduct Board, Committee and General meetings through video conferencing and other audio visual means.
UPDATES FROM MCA:
Ministry of Corporate Affairs (MCA) vide General Circular No 20/2020, dated 5th May, 2020 (Circular) had provided relaxation to the provisions of Companies Act, 2013 (Act) by the means of which the companies are now allowed to conduct their AGM through VC/OAVM, during the calendar year 2020. The said Circular broadly classifies companies into below two categories-
(i) Which are required to provide e-voting facility under the Act; and
(ii) Which are not required to provide e- voting facilities under the Act
Note: E-voting facility under the Act is applicable to every Listed company and companies having not less than one thousand shareholders.
UPDATES FROM SEBI BOARD:
SEBI vide circular- SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated 12th May, 2020 has aligned its Regulations with the relaxations provided by MCA to convene EGM/ AGM for the calendar year 2020.
This article provides a brief note on what all requirements companies will have to meet with, in order to be in compliant to conduct their meetings through VC/OAVM.
A. Below listed are the criteria’s that the companies need to fulfill in order to convene AGM through VC applicable to entities which are required to provide e-voting facility under the Act –
√ Nature of Business to be considered at the AGM: Company providing the facility of e-voting under the Act, shall consider and transact only those items of special business which are considered to be unavoidable by the Board in addition to the ordinary business.
√ Mode of sending AGM documents: Notice and Financial Statements (including Board’s report, Auditor’s report) shall be sent only by email to all members so entitled.
√ Newspaper publication: Before sending the notices and copies of the Financial Statements, etc. a public notice of advertisement of the AGM be published at least in a Vernacular and an English newspaper preferably having electronic editions and must provide following information-
i. Statement that the AGM will be convened through VC;
ii. The date and time of the AGM through VC;
iii. Availability of notice of the AGM on the website of the company;
iv. The manner in which the members who are holding shares in physical form or have not registered their email addresses with the company can cast their vote through remote e-voting or through remote e-voting system during the meeting;
v. The manner in which the members who have not registered their email addresses with the company can get the same registered with the company;
vi. The manner in which the members can give their mandate for receiving dividends directly in their bank accounts through Electronic Clearing Service (ECS) or any other means; and
vii. Any other detail considered necessary by the company.
√ Mode of payment of dividends: In case, the company is unable to pay the dividend to any shareholder by electronic mode, due to non-availability of the details of the bank account, the company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.
√Permission to convene AGM through physical presence: If the company has been permitted to convene the AGM at its registered office which is in line with Sec 96 of the Act, then the company in addition to the physical presence of members, also provide facility for VC.
Quorum– All the members who are physically present at the AGM as well as through VC would contribute to quorum under Sec 103 of the Act and all resolutions shall continue to be passed through the e-voting system.
√ Extension of AGM: Companies which are unable to conduct their AGM in accordance with the frame work provided in the Circular are advised to make applications for extension of AGM at suitable point of time before the concerned ROC.
PROCEDURAL KEY POINTS:
√ Dispatch of Annual Report: The dispatch of Annual Reports to the shareholders in hard copies has been done away for Companies conducting AGM/ EGM in the calendar year 2020.
√ Time Zones: Convenience of different shareholders positioned in different time zones shall be kept in mind before scheduling the meeting;
√ Two Way Teleconferencing or Webex: Companies must ensure that AGM through VC facility allows two way teleconferencing or Webex for the ease of participation of the members;
√ Participation on first- come- first- served basis: Such facility of VC must accommodate at least 1000 members to participate on first- come- first- served basis. Shareholders holding more than 2 % or more, Promoters, Institutional Investors, Directors, Key Managerial Personnel and Auditors may be allowed to attend the meeting without any restriction of first- come- first- served principle.
√ Appointment of Proxy: The requirement of appointment of Proxy is not available for these meetings as members can’t physically attend these meetings. However, representatives of the members may be appointed for the purpose of attending the meetings and voting.
√ Shareholders Questions: shareholders are allowed to pose questions concurrently or be given time to submit questions in advance on the E-mail address of the Company;
√ Waiting period of 15 mins: The facility for joining the meeting shall be kept open at least 15 mins before the time scheduled to start and shall not be closed till the expiry of 15 mins after such scheduled time;
√ Remote E-voting facility: The facility for remote E-voting shall be provided in consonance with the Act;
√ Transcript of the AGM: The transcript of the AGM shall be made available as soon as possible on the website of the Company;
√ MCA filings: All resolutions passed in accordance with the mechanism shall be filed with RoC within 60 days of the meeting, clearly indicating therein that the company has complied with mechanism provided in the above said circular.
B. Below listed are the criteria’s that the companies need to fulfill in order to convene AGM through VC applicable to entities which are not required to provide e-voting facility under the Act. The criteria mentioned in point (A) are applicable in the similar manner for entities mentioned in para (ii) of the introduction. Only points that are different from Criteria A are mentioned below.
√ Eligibility: Only those entities who have in its records at least 50 % of email addresses of its total number of members are eligible to conduct the meeting though VC/ OAVM, who in case of –
a. Nidhi entities, hold shares more than Rs. 1000 in face value or more than 1% of the total paid-up share capital, whichever is less;
b. Other companies having share capital, who represent not less than 75% of such part of paid up capital of the company as gives right to vote at the meeting;
c. Other companies not having share capital who have the right to exercise not less than 75% of the total voting power exercisable at the meeting.
√ Participation on first- come- first- served basis: Such facility of VC must accommodate at least 500 members or members equal to the total members of the company, whichever is lower to participate on first- come- first- served basis. Shareholders holding more than 2 % or more, Promoters, Institutional Investors, Directors, Key Managerial Personnel and Auditors may be allowed to attend the meeting without any restriction of first- come- first- served principle.
√ Voting: where less than 50 members are present in a meeting, the Chairman may decide to conduct a vote by show of hands, unless a demand for poll is made by any member in accordance with Section 109 of the Act. Votes have to be counted and declared at the meeting and in case if counting is consuming time, then the said meeting may be adjourned and called later to declare results.
There are quite a few challenges that companies may face while conducting AGM’s as per the above procedure such as (i) identifying a good service provider to help them conduct these meetings seamlessly for large number of members of the company; (ii) questions from the shareholders must be sent either in advance or noted simultaneously while conducting the meeting, more caution must be exercised in order to address all the queries of the Shareholders; (iii) a lot of companies may not have all their shareholders email Id’s registered with them, so the companies must urge their shareholders to come forward and register their email Id’s; (iv) the provisions provide for member capacity of 1000/ 500 to attend the meetings on first- come- first serve basis, this may be little difficult for companies to manage which have larger number of members entitled to attend but may not attend due to cut off in the capacity.
Having said that, companies who desire to conduct their AGM’s during the calendar year 2020 will make the best use of these provisions and can set a trend of conducting meetings through VC and transform to pace with emerging technology.
The views mentioned in this article belong to the author alone and do not represent the opinions of the institutions affiliated with the author. The facts mentioned in this article hold best at the time of publishing the article. However, any error is regretted and the readers are requested to be vigilant before using this article in parts or entirety.