All circulars for conducting AGM EGM through VC
AGM/EGM VC/OVAM
01. MCA ALLOWS COMPANIES TO HOLD EXTRAORDINARY GENERAL MEETINGS (EGMS) THROUGH VC OR OAVM [General Circular No. 14/2020]
The Ministry of Corporate Affairs on 8th April, 2020 has issued a General Circular No. 14/2020 allowing companies to hold Extraordinary General Meetings (EGMs) through video conferencing (VC) or other audio-visual means (OAVM), complemented with e-voting facility or voting through registered emails.
The MCA in its earlier notification dated 19th March 2020 has allowed all meetings of the Board of directors up to 30th June 2020, to be conducted through VC or OAVM including meetings on items where the physical presence of directors is otherwise required.
In furtherance of the Government’s objective of facilitating corporate compliances during the lockdown period and other restrictions on account of COVID 19, the Ministry through this circular has allowed companies to hold Extraordinary General Meetings. ‘Unavoidable’ extraordinary general meetings (EGMs) need to be held through video-conferencing (VCs) and a transcript of the proceedings would need to be maintained by the company. Such VCs would need to have a capacity to allow at least 1000 members to participate
Some of the important members who can be a part of EGM even if they are not the first to login include – promoters, institutional investors, directors, key managerial personnel, auditors among others. Companies will be able to hold meetings for matters such as approval of financial statements, books of accounts, approval of the board’s report and approval of matters relating to mergers and restructuring.
Further, all resolutions passed through this framework will be required to filed with the RoC within 60 days, so that such resolutions may be viewed publicly. Other safeguards have also been included in the Circular to ensure transparency, accountability, and protection of interests of investors.
However, this relaxation is not applicable for decisions of ordinary course or business where any person has right to be heard.
02. MCA HAS ISSUED CIRCULAR TO PROVIDE GREATER CLARITY ON PASSING OF ORDINARY AND SPECIAL RESOLUTIONS BY COMPANIES UNDER THE COMPANIES ACT, 2013. [General Circular No. 17/2020]
The Ministry of Corporate Affairs vide its General Circular No 17/ 2020 dated 13th April, 2020 has issued a clarification regarding issue of notices to members for conducting EGMs using electronic means. This is to ensure compliance with COVID-19 related lockdown and social distancing requirements as well as principles of shareholder democracy. Companies shall ensure that the relevant companies facilitate registration of email addresses of the members who have not done so and make suitable disclosure in this regard at the time of issue of public notice in the newspapers.
The public notice to be issued by relevant companies under rule 20(4)(v) should also specify the manner in which 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.
Further for companies that are not required to provide the facility of e-voting shall send the notice through email and a copy of the notice shall be displayed on the website.
03. MINISTRY OF CORPORATE AFFAIRS GIVES RELAXATIONS FOR HOLDING AGMS DUE TO COVID19. [General Circular No. 18/2020]
Ministry of Corporate Affairs vide General Circular No 18/ 2020 dated 21st April, 2020 has given relaxations to companies for holding AGMs.
As per norms a period of 6 months from the closure of the financial year the AGM shall be held. Several representations have been received from stakeholders with regard to difficulty in holding annual general meetings (AGMs) due to COVID-1 9 related social distancing norms and consequential restrictions linked thereto. The companies whose financial year (other than first financial year) has ended on 31st December, 2019, can hold their AGM for such financial year within 30th September 2020.
04. MCA ISSUES CLARIFICATION ON HOLDING OF ANNUAL GENERAL MEETING (AGM) THROUGH VC OR OAVM [General Circular No. 20/2020]
The Ministry of Corporate Affairs vide General Circular No. 20/2020 dated 5th May, 2020, has issued a clarification on holding of AGM through VC or OAVM.
MCA in its earlier circular dated 21st April, 2020 has allowed the companies whose financial year ended on 31st December, 2019, to hold their AGM by September 30, 2020.
However due to the representations received from stakeholders for providing relaxations in the provisions of Companies Act, 2013 or rules made to allow companies to hold Annual General Meetings (AGM) in a manner similar to the one provided in General Circular which deals with the conduct of Extraordinary General Meetings (EGM) the Ministry has issued the following clarifications:
- It said that the framework provided in the earlier circulars for holding of Extraordinary General Meeting (EGM) would be applicable making necessary changes and keeping the purpose intact for the conduct of AGMs during 2020, based on the classification of companies which are required to provide the facility of e-voting or have opted for the same, and those companies which are not required to provide such a facility.
- Owing to the difficulties in sending physical copies of the financial statements, the circular allows the companies to send the financial statements, along with the board’s reports, auditor’s reports and other documents required to be attached therewith, only through email.
- Before sending the notices and copies of the financial statements, etc., public notice by way of the advertisement is published at least once in a vernacular newspaper.
- AGM may be conducted through the facility of VC or OAVM only by a company which has in its records, the email addresses of at least half of its total number of members
- The companies shall make adequate provisions for allowing the members to give their mandate for receiving dividends directly in their bank accounts through the Electronic Clearing Service (ECS) or any other means. For shareholders, whose bank accounts are not available, company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.
05. MCA ALLOWS COMPANIES TO HOLD EGMs THROUGH VC OR OAVM TILL 30TH SEPTEMBER, 2020. [General Circular No. 22/2020]
The Ministry of Corporate Affairs vide General Circular No 22/ 2020 dated 15th June 2020 has allowed companies to conduct their EGMs through VC or OAVM or transit items through ballot upto 30th September 2020.
The MCA in its earlier circular dated 8th April 2020 has allowed listed companies or companies with 1,000 shareholders or more which are required to provide e-voting facility under the Companies Act, 2013 to conduct EGM through VC/ OAVM and e-Voting. For other companies, a highly simplified mechanism for voting through registered emails has been put in place for easy compliance.
The companies using this option are required to maintain a recorded transcript of the entire proceedings in safe custody, and public companies are also required to host this transcript on their website for greater transparency. Further, all resolutions passed through this framework will be required to file with the RoC within 60 days, so that such resolutions may be viewed publicly. Other safeguards have also been included in the Circular to ensure transparency, accountability, and protection of the interests of investors.
06. MCA CLARIFIES ISSUE ON THE EXTENSION OF AGM 2020. [General Circular No. 28/2020]
Owing to the outbreak of the COVID-19 pandemic, many companies had filed representations before the regulator seeking an extension of time to hold the AGM of companies for the financial year ended 31 March 2020.
As per Section 96 of the Companies Act, 2013 and the Rules made thereunder, a Company shall hold its AGM within 15 months from its preceding Annual General Meeting provided it is held within 6 months from the closing of the Financial Year.
While representing before the MCA, companies have cited that due to lockdown announced on account of COVID-19, completion of audit process on time and placing of accounts before the AGM will be a challenge, and requested the regulator to extend the time limit provided under section 96.
The matter has been examined by MCA, and vides General Circular No 28/ 2020 dated 17th August, 2020, it has stated that the Ministry has already examined this matter and has allowed the Companies to conduct AGMs through VC or OAVM.
The Ministry then stated that despite availing the relaxation for holding the AGM through VC and OAVM, if companies are unable to conduct the AGM within 30 September 2020, those companies 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.
Such applications seeking an extension of time in holding of AGM for the financial year ended on 31.03.2020 shall be made in form GNL-1 with the concerned Registrar of Companies on or before 29.09.2020.
The General circular also advised, the Registrars of Companies to consider all such applications (filed in Form No. GNL-1) liberally in view of the hardships faced by the stakeholders and to grant an extension for the period as applied for (up to three months) in such applications.
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