The Ministry of Corporate Affairs (MCA) vide its general circular no. 14/2020 dated April 8, 2020 has issued a clarification for passing special and ordinary resolutions by companies under the Companies Act, 2013 (Act) and rules made thereunder on account of threat posed by COVID-19.
MCA vide this clarification allows the companies to take all the decisions of urgent nature requiring the approval of members, other than items of ordinary business or business where any person has a right to be heard, through the mechanism of postal ballot/ e-voting in accordance with the provisions of the Companies Act, 2013 and rules made thereunder, without holding an extraordinary general meeting (EGM), which requires physical presence of members at a common place.
As the Act doesn’t contain any specific provision allowing convening of general meetings through video conferencing (VC) or through other audio visual means (OAVM) this circular allows the holding of an EGM by any company, where it is considered unavoidable, for conducting such EGM on or before 30th June, 2020 by adhering to the following conditions in addition to the requirements of the Act:
|No.||Particulars||For companies which are required to provide the facility of e-voting or any other company which has opted for such facility||For companies which are not required to provide the facility of e-voting|
|1||Applicability||Any company can hold EGM wherever unavoidable through VC or OAVM and the recorded transcript of the same shall be maintained in safe custody by the company. 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.|
|General Comment||This Circular allows the convening of EGM through VC or OAVM NOT ANNUAL GENERAL MEETING (AGM)|
|2||Essential Care to be taken by the company||a) Convenience of different persons positioned in different time zones shall be kept in mind before scheduling the meeting.
b) To ensure that such meeting allows two way teleconferencing or webex for the ease of participation of the members; and
c) The participants are allowed to pose questions concurrently or given time submit questions in advance on the e-mail address of the company.
d) 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.
e) Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.
f) The facility of appointment of proxies by members will not be available for such meeting.
g) At least one independent director (where the company is required to appoint), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.
h) Where institutional investors are members of a company, they must be encouraged to attend and vote in the meeting through VC or OAVM.
i) In pursuance of sections 112 and 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.
|3||Participants||The facility provided by the company should have the capacity to allow 1000 members to participate on first come and first served basis.||The facility provided by the company should have the capacity to allow 500 members or members equal to the total number of members of the company (whichever is lower) to participate on first come and first served basis.|
|General Comment||Although the guidelines aim to simplify the procedures however, they are additional and primary provisions of the Act are to be mandatorily followed. Practically, connecting so many members is going to be a task for all the companies who lack such infrastructure and there are chances many members (retailers) won’t be able to connect because of the principle first come first served.|
|4||Exceptions to the First come first serve principle||The following persons are excluded from first-come-first-served principle:
|General Comment||Scrutinisers have not been included in the list by the MCA|
|5||Chairperson of the Meeting||Unless the Articles of the Company specifically provide for the appointment of Chairperson of the meeting, the chairperson will be appointed in the following manner:
||Unless the Articles of the Company specifically provide for the appointment of Chairperson of the meeting, the chairperson will be appointed in the following manner:
|6||Proxy||Section 105 provides the facility of appointment of proxies by members to attend and vote in the meeting. As this meeting will be convened through VC or OAVM, the facility of proxies will not be available for such meeting.|
|7||Notice||All the companies are required to adhere to this circular in addition to the requirements of the Act. Accordingly, no relaxation has been provided and notices have to be sent in accordance with the provisions of the Act.
The following things shall be mentioned in the notice of general meeting:
A copy of the notice shall also be prominently displayed on the website of the company and due intimation may be made to the stock exchanges in case of a listed company.
In case a notice for meeting has been served prior to the date of MCA Circular (i.e. 08th April, 2020), the framework proposed in the Circular may be adopted for the meeting, by sending a fresh notice of shorter duration with due disclosures in consonance with the Circular subject to receipt of shorter consent in accordance with Section 101(1) of the Act.
|General Comment||Considering the practical difficulties involved in the process, MCA may consider to grant some relief in this respect otherwise holding of meeting in such manner would be practically impossible.|
|8||Attendance||Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.|
|General Comment||Counting of members who are attending the meeting will be a cumbersome task. It is better if the companies come up with a method for e-attendance.|
-If number of present is less than 50, then by way of e-voting or show of hands
– In all other cases, by e-voting
|10||Necessary Fillings||All resolutions passed (whether ordinary or special) in accordance with this mechanism shall be filed with the Registrar of Companies within 60 days of the meeting, clearly indicating therein that the mechanism provided in the MCA Circular dated 08th April, 2020 alongwith other provisions of the Act and rules were duly complied with during such meeting.|
In these tough times MCA giving relaxations to convene meetings through VC or OAVM is certainly a boon as it will provide the companies an aid to conduct their matters on regular basis in this lockdown. This scheme is providing time upto June 30, 2020 and in case companies choose to follow this method to convene the meetings they have to comply with these guidelines in addition to the provisions relating to the general meeting . The provision of conducting meeting through the VC or OAVM for urgent matters is another major relief. For any clarification or advise, please write back to us at [email protected].
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