Relaxations in Conducting of Annual General Meeting (AGM) in the F.Y. 2020-2021.

Circular No-20/2020 Dated- 5th May 2020

This Circular is passed for clarification of holding AGM through Video Conferencing (VC) or Other Audio Visual Means (OAVM).

Link for the original Copy of the Circular is https://taxguru.in/company-law/mca-clarifies-holding-digital-agm-through-vc-oavm.html

As all body corporate and stakeholder are in vague w.r.t conducting and attending of Annual General Meeting to be held in FY 2020-2021, because of several restriction on movements from place to another due to Lockdown on account of Covid-19 and because of fear of outspread of Corona, The MCA had give clarification in order to mitigate the situation.

The MCA had made two categories of Companies i.e

  • Companies which are required to provide the facility of E-Voting
  • Companies which are not required to provide the facility of E-Voting
Companies which are required to provide the facility of E-Voting Companies which are not required to provide the facility of E-Voting
1. Relevant Framework provided in Para 3A EGM Circular-I & sub para (i)-A of EGM Circular II shall be applicable mutalis mutandis for conducting AGM.

2. Only ordinary business and those items of special business which are unavoidable shall be transacted.

3. Financial statements along with Auditor Report shall be sent via Email to members and trustees of Debenture holder and to all other stakeholder who are entitled.

4. A public notice shall be published before all the above, by way of advertisement in vernacular newspaper in the vernacular language and in English language in the English Newspaper having wide circulation. Both the newspaper must have Electronic Edition too.

5. Such Notice shall include the Date & timing of AGM, statement that AGM shall be conducted through VC or OAVM, availability of notice on website of the company and the stock exchange in case of listed company, 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, the manner in which the persons who have not registered their email addresses with the company can get the same registered with the company; 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;  any other detail considered necessary by the company

6. 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.

7. In case, After receiving the permission from the relevant authorities to conduct its AGM at its registered office, or at any other place as provided under section 96 of the Act, and after following any advisories issued from such authorities, the company may in addition to holding such meeting with physical presence of some members, also provide the facility of VC or OAVM. All members who are present in the meeting shall be reckoned for the purpose of quorum under section 103 of the Act. All resolutions shall continue to be passed through the facility of e-voting system.

1. AGM can be conducted through VC or OAVM only if the company has in its records, the email address of at least half of its total no of members who in case of a Nidhi, hold shares of more than one thousand rupees in face value or more than one per cent. of the total paid-up share capital, whichever is less;

in case of other companies having share capital, who represent not less than seventy-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting;

in case of companies not having share capital, who have the right to exercise not less than seventy-five per cent. of the total voting power exercisable at the meeting.

2. 2. The company shall take necessary steps to register email address of all the person.

3. Relevant Framework provided in Para 3B EGM Circular-I & sub para (i)-B of EGM Circular II shall be applicable mutalis mutandis for conducting AGM

4. Only ordinary business and those items of special business which are unavoidable shall be transacted.

5. Financial statements along with Auditor Report shall be sent via Email to members and trustees of Debenture holder and to all other stakeholder who are entitled.

6. The company shall take necessary steps for allowing the members to give their mandate for receiving dividends directly in their bank accounts through Electronic Clearing Service (ECS) or any other means; and 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.

The companies which are not yet covered above shall make applications to the concerned Registerar of companies for extension of their AGM.

Annual General Meeting

Now given below the text of the Circular, Kindly read it too.

“Several representations have been received in the Ministry for providing relaxations in the provisions of Companies Act, 2013 (the Act) or rules made there under to allow companies to hold annual general meeting (AGM) in a manner similar to the one provided in General Circular No. 14/2020, dated 08.04.2020 (EGM Circular – l) and General Circular No. 17/2020 dated 13.04.2020 (EGM Circular – ll), which deal with conduct of extraordinary general meeting (EGM).”

“ln the meanwhile, by virtue of the General Circular No. 18/2020 dt, 21.04.20 the companies whose financial year ended on 31st December,2019, have been allowed to hold their AGM by 30th September,2020.”

Hence for those Companies whose Financial Year ends on 31st Dec 2019 shall be allowed to hodl their AGM by 30th September 2020. [It is noted that the Companies Act, 2013 (Act) allows a company to hold its AGM within a period of six months (nine months in case of first AGM) from the closure of the financial year and not later than a period of 15 months from the date of last AGM.] But now it is clarified holding of AGM upto 30th September 2020 shall not be viewed as violation.

“The matter has been further examined and it is stated that in view of the continuing restrictions on the movement of persons at several places in the country, it has been decided that the companies be allowed to conduct their AGM through video conferencing (VC) or other audio visual means (OAVM), during the calend at year 2020, subjecrt to the fulfillment of the following requirements:”

A. For companies which are required to provide the facility of e-voting under the Act, or any other company which has opted for such facility –

I. The framework provided in para 3 -A of EGM circular – I and the manner and mode of issuing notices provided in sub-para (i)-A of EGM Circurlar – ll shall be applicable mutatis mutandis for conducting the AGM.

II. In such meetings, other than ordinary business, only those items of special business, which are considered to be unavoidable by the Board, may be transacted.

III. In view of the prevailing situation, owing to the difficulties involved in dispatching of physical copies of the financial statements (including Board’s report, Auditor’s report or other documents required to be attached therewith), such statements shall be sent only by email to the members, trustees for the debenture-holder of any debentures issued by the company, and to all other persons so entitled.

IV. Before sending the notices and copies of the financial statements, etc., a public notice by way of advertisement be published at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, preferably both newspapers having electronic editions, and specifying in the advertisement the following information:-

a. statement that the AGM will be convened through VC or OI\VM in compliance with applicable provisions of the Act read with this 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;

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 persons who have not registered their email addresses with the company can get the same registered with the company;

f. 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;

g. any other detail considered necessary by the company

V. 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 the bank account, the company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.

VI. In case, the company has received the permission from the relevant authorities to conduct its AGM at its registered office, or at any other place as provided under section 96 of the Act, after following any advisories issued from such authorities, the company may in addition to holding such meeting with physical presence of some members, also provide the facility of VC or OAVM, so as to allow other members of the company to participate in such meeting. 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 reckoned for the purpose of quorum under section 103 of the Act. All resolutions shall continue to be passed through the facility of e-voting system.

B. For companies which are not required to provide the facility of e-‘voting under the Act –

I. AGM may be conducted through the facility of VC or OAVM onl,y by a company which has in its records, the email addresses of at least half of its total number of members, who –

1. in case of a Nidhi, hold shares of more than one thousand rupees in face value or more than one per cent. of the total paid-up share capital, whichever is less;

2. in case of other companies having share capital, who represent not less than seventy-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting;

3. in case of companies not having share capital, who have the right to exercise not less than seventy-five per cent. of the total voting power exercisable at the meeting.

II. 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.

III. The framework provided in para 3-B of EGM Circular – | and the manner and mode of issuing notices provided in sub-para (i)-B of EGM Circular – ll shall be applicable mutatis mutandis for conducting the AGM.

IV. In such meetings, other than ordinary business, only those items of special business, which are considered to be unavoidable by the Board, may be transacted.

V. Owing to the difficulties involved in dispatching of physical copies of the financial statements (including Board’s report, Auditor’s report or other documents required to be attached therewith), such statements shall be sent only by email to the members, trustees for the debenture-holder of any debentures issued by the company, and to all other persons so entitled.

VI. 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.

“The companies referred to in paragraphs 3 (A) and (B) above, shall ensure that all other compliances associated with the provisions relating to general meetings viz making of disclosures, inspection of related documents/registers by members, or authorizations for voting by bodies corporate, etc as provided in the Act and the articles of association of the company are made through electronic mode.

The companies which are not covered by the General Circular No. 18/2020 dt, 21.04.20 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 suitable point of time before the concerned Registrar of Companies under section 96 the Act.

This issues with the approval of the competent authority.”

This newsletter ends here.

Author Bio

Qualification: CA in Practice
Company: DIVESH JAIN & CO.
Location: Delhi, New Delhi, IN
Member Since: 02 May 2020 | Total Posts: 1

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