The Ministry of Corporate Affairs vide its General Circular No. 14/2020 dated 8th April, 2020 has clarified that the companies are allowed to conduct Extra Ordinary General Meeting (EGM) for passing ordinary and special resolutions of urgent nature requiring approval of members (except items of ordinary business and items where any person has a right to be heard) through Video Conferencing (VC) or Other Audio Video Means (OAVM) due to lockdown by Government of India for COVID 19 outbreak.
In continuation of the above referred Circular, the Ministry has clarified the framework for conducting the EGM through VC or OAVM by another General Circular No. 17/2020 dated 13th April, 2020.
Let’s analysis both the circulars through FAQs:
Q 1. Which companies are allowed to provide facility of VC or OAVM for conducting EGM?
Ans: The companies on which the provisions of Section 108 pertaining to voting by electronic means or Section 110 pertaining to postal ballot is applicable and such other companies on which the referred Sections 108 and 110 of the Companies Act, 2013 are not applicable can also take the advantage of passing resolutions in EGM which are of urgent nature through VC or OAVM. Hence, all companies such as Listed, Private, Public, Small etc. are allowed to provide facility of VC or OAVM for conducting EGM.
Q 2.What is the time period upto which the companies are allowed to conduct the EGM through VC or OAVM?
Ans: The Companies are allowed to conduct EGM through VC or OAVM upto 30.06.2020. Such Companies shall ensure that all compliances associated with the provisions relating to general meetings viz making of disclosures, inspection of related documents by members, or authorisations for voting by bodies corporate etc. as provided in the Act and the articles of association of the company are made through electronic mode.
Q 3. Whether companies are allowed to conduct Annual General Meeting through VC or OAVM?
Ans: The Companies are not allowed to hold Annual General Meeting (AGM) through VC or OAVM.
Q 4. How the recorded transcript of the meeting shall be maintained?
Ans: The recorded transcript shall be recorded in the safe custody of the company. In case of a public company on which the requirement to provide the facility of e-voting is applicable or which has opted to the facility for e-voting shall publish the recorded transcript on the website (if any) of the company as soon as possible.
However, for a Private Limited Company, there is no requirement to publish the recorded transcript of the VC or OAVM even if the company have a website.
Q 5. What shall be the duration for opening and closing of the meeting?
Ans: The facility for joining the meeting shall be kept open at least 15 minutes before the time scheduled to start the meeting and shall be closed till the expiry of 15 minutes after such scheduled time.
Q 6. How the quorum shall be ascertained for such meetings?
Ans: Attendance of Members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.
Q 7. Who are allowed to vote and how will they vote for the resolutions of the meeting?
Ans: In case of companies which are required to provide the facility of e-voting or any other company which has opted for such facility, only those members, who are present in the meeting through VC or OAVM facility and have not cast their vote on resolutions through remote e-voting and are otherwise not barred from doing so, shall be allowed to vote through e-voting system.
Before the actual date of the meeting, the facility of remote e-voting shall be provided in accordance with the act and the rules.
However, in case of companies which are not required to provide the facility of e-voting, The Company shall provide a designated e-mail address to all members at the time of sending the notice of meeting so that the members can convey their vote, when a poll is required to be taken during the meeting on any resolution, at such designated email address.
The confidentiality of the password and other privacy issues associated with the designated e-mails shall be strictly maintained by the company at all times. Due safeguards with regards to authenticity of email address(es) and other details shall be taken by the company.
Q 8. Whether the members can cast their vote through poll by way of e-mail before the start of meeting?
Ans: For Companies which are not required to provide e-voting facility, Poll by way of sending email should be done only when the resolution is called out for members at the time of meeting, i.e. suppose, Resolution No.1 is called for voting, members should send their voting (assent or dissent) immediately on the designated email address provided by the company for the Poll and should not send their poll through email, before the start of meeting.
Q 9. How the chairman of the meeting shall be elected?
Ans:
The Chairman for the meeting shall be appointed in the following manner, unless the Articles of the company require any specific person to be appointed as chairman of the meeting:
1. where there are less than 50 members present at the meeting – the Chairman shall be appointed in accordance with Section 104 of the Act;
2. in all other cases (where there are more than 50 members present) – the Chairman shall be appointed by a poll conducted through the e-voting system during the meeting.
(This is applicable for companies which are required to provide the facility of e-voting or any other company which has opted for such facility)
3. in all other cases (where there are more than 50 members present) – the Chairman shall be appointed by a poll conducted through show of hands.
(This is applicable for companies which are not required to provide the facility of e-voting)
Q 10. How the voting shall be conducted?
Ans: The chairman present at the meeting shall ensure that the facility of e-voting system is available for the purpose of voting during the meeting held through VC or OAVM, in case of companies which are required to provide the facility of e-voting or any other company which has opted for such facility.
However, in case of companies which are not required to provide the facility of e-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. Once demand for poll is made, the procedures of voting through designated e-mail by the members on registered e-mail ID of the Company is to be followed.
In case the counting of votes requires time, the said meeting may be adjourned and called later to declare the result.
Q 11. Whether a proxy shall be allowed to attend and vote at such meeting on behalf of a member who is unable to attend?
Ans: Since general meetings under this framework will be held through VC or OAVM where physical attendance of members in any case has been dispensed with, there is no requirement of appointment of proxies. However, in pursuance of section 112 and 113 of the Act, representatives of the members maybe appointed for the purpose of voting through remote e-voting or for participation and voting in the meeting held through VC or OAVM.
Q 12. Who must attend such meetings?
Ans: At least one independent director (where the company is required to appoint one), and the auditor or his authorised representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.
However, If the provisions of appointment of Independent Director is not attracted to a Company, then the requirement to attend meeting by an Independent Director can be waived off. Though the auditor or his authorised representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.
Q 13. Are institutional investors are required to attend and vote in the said meeting?
Ans: Where institutional investors are members of a company, they must be encouraged to attend and vote in the said meeting through VC or OAVM.
Q 14. The provisions of Rule 20 of Companies (Management and Administration) Rules, 2014 seems contradictory to the General Circular 14/2020 dated 08.04.2020 in connection to sub paragraph A-IX of Para 3. What clarification has been sought by the Ministry in this regard?
Ans:
For companies which are required to provide the facility of e-voting or any other company which has opted for such facility:
Sub Paragraph A-IX of Para 3 of the General Circular 14/2020 dated 08.04.2020 has allowed to pass resolutions through show of hands. However, as per Rule 20 of Companies (Management and Administration) Rules, 2014 and General Circular dated 17.06.2014, show of hands and provisions related to demand for poll are not allowed in case of e-voting system.
Therefore, the said sub-paragraph was substituted by –
“IX. The chairman present at the meeting shall ensure that the facility of e-voting system is available for the purpose of voting during the meeting held through VC or OAVM.”
The extract of Sub Paragraph A-IX of Para 3 of General Circular 14/2020 dated 08.04.2020 is reiterated herein below for ready reference:
“IX. 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 held through VC or OAVM. Depending on the number of members present in such meeting, the voting shall be conducted in the following manner:
1. 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;
2. in all other cases, the voting shall be conducted through e-voting system.”
Q 15. Under the present circumstances, how will the companies pass resolutions through postal ballot without convening EGM?
Ans:
For companies covered in Para 3 A of the General Circular 14/2020 dated 08.04.2020 that is to say companies which are required to provide the facility of e-voting or any other company which has opted for such facility, the requirements of Rule 20 of the Companies (Management and Administration) Rules, 2014 as well as the framework provided in the General Circular 14/2020 dated 08.04.2020 and General Circular 17/2020 dated 13.04.2020 shall be applicable mutatis mutandis while transacting any item only by Postal Ballot, upto 30.06.2020.
One can also refer Rule 22(15) of the Companies (Management and Administration) Rules, 2014 which provides:
“The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandis to this rule in respect of the voting by electronic means.”
Key points to be considered while passing resolutions through postal ballot:
1. The Company would send notice by e-mail to all the members who have registered their e-mail addresses with the company or depository participant/depository
2. It shall be the duty of the company to provide a process of registration of e-mail addresses of members and state so in its public notice
3. The communication of assent or dissent of the members would only take place through the remote e-voting system, as no meeting will be required to be called.
Q 16. What are the modes of issue of notices to the members before convening the General Meeting?
Ans:
1. SERVING NOTICES ON ONLY REGISTERED E-MAILS:
Notices of EGM are allowed to be circulated through e-mail only which are registered with the company or with the depository participants/depository as per the accordance with the provisions of Rule 18 of the Companies (Management and Administration) Rules, 2014 pertaining to Notice of the Meeting.
2. PUBLISHING ADVERTISEMENT:
Public Notice by way of advertisement to be published immediately on completion of sending of notices to registered e-mails atleast 21 days before the date of general meeting, 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 country-wide circulation.
(This is applicable only in case of companies which are required to provide the facility of e-voting or any other company which has opted for such facility)
3. WEBSITE:
A copy of the notice shall also be displayed on the website of the company and due intimation may be made to the exchanges in case of a listed company.
(In case of companies which are not required to provide the facility of e-voting, displaying of notice on the website shall be mandatory only if the company is maintaining a website)
Q 17. What is the manner of issue of notices to the members before convening the General Meeting?
Ans:
(A) For companies which are required to provide the facility of e-voting or any other company which has opted for such facility:
In addition to the matters specified in Rule 20(4)(v) of the Companies (Management and Administration) Rules, 2014, the Circular provides that the following matters are also to be included in the advertisement:
1. A statement that the EGM has been convened through VC or OAVM in compliance with applicable provisions of the Act read with General Circular 14/2020 dated 8th April, 2020 and General Circular 17/2020 dated 13th April, 2020;
2. The date and time of the EGM through VC or OAVM;
3. Availability of notice of the meeting on the website of the Company and the stock exchanges;
4. The manner in which the members who are holding shares in physical form or who have not registered their e-mail addresses with the company can cast their vote through remote e-voting or through the e-voting system during the meeting;
5. The manner in which the members who have not registered their e-mail addresses with the company can get the same registered with the company;
6. any other detail considered necessary by the company.
Let’s see the matters that are already prescribed by the Companies Act, 2013 for inclusion in the advertisement as per Rule 20(4)(v) of Companies (Management and Administration) Rules, 2014:
“The following matters shall be specified in the advertisement:
1. statement that the business maybe transacted through voting by electronic means;
2. the date and time of commencement of remote e-voting;
3. the date and time of end of remote e-voting;
4. cut-off date;
5. the manner in which persons who have acquired shares and become members of the company after the dispatch of notice may obtain the login ID and password;
6. the statement that –
-
- remote e-voting shall not be allowed beyond the said date and time;
- the manner in which the company shall provide for voting by members present at the meeting; and
- a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again in the meeting; and
- a person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting;
7. website address of the company, if any, and of the agency where notice of the meeting is displayed; and
8. name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means:
Provided that the public notice shall be placed on the website of the company, if any, and of the agency.”
(B) For companies which are not required to provide the facility of e-voting:
The Company shall in order to ensure that all the members are aware that a General Meeting is proposed to be conducted through VC or OAVM:
1. CONTACT THE MEMBERS OVER TELEPHONE OR OTHER MODE OF COMMUNICATION:
Contact all those members whose e-mail addresses are not registered with the company over telephone or any other mode of communication for registration of their e-mail addresses before sending the notice for meeting to all its members; or
2. PUBLISH PUBLIC NOTICE BY WAY OF ADVERTISEMENT:
Where the contact details of any of members are not available with the company or could not be obtained, it shall cause a public notice by way of advertisement to be published immediately atleast once in vernacular newspaper in 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 atleast 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:
- The company intends to convene the general meeting in compliance with applicable provisions of the Act read with General Circular 14/2020 dated 8th April, 2020 and General Circular 17/2020 dated 13th April, 2020, and for the said purpose it proposes to send notices to all its members by e-mail after, atleast 3 days from the date of publication of the public notice;
- The details of the e-mail address along with a telephone number on which the members may contact for getting their e-mail addresses registered for participation and voting in the EGM.
Q 18. What disclosures are to be made at the notice of the meeting?
Ans: The notice for the general meeting shall make disclosures with regard to:
1. manner in which framework provided by both the circulars shall be available for use by the members;
2. 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.
Q 19. In case notice of meeting is duly served before circulation of both the circulars, then does there any requirement to issue fresh notice for convening the meeting through VC or OAVM?
Ans: Yes, a fresh notice of shorter duration with due disclosures in consonance with the circulars is to be issued in case a notice for meeting has been served prior to the date of circulation of both the circulars with disclosing the fact that the framework proposed in the circulars may be adopted for the meeting, in case the consent from members has been obtained in accordance with section 101(1) of the Act.
Q 20. Is there any time line with regard to filing of resolutions passed in the meeting held through VC or OAVM?
Ans: All resolutions passed 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 herein along with other provisions of the Act and rules were duly complied with during such meeting.
Q 21. What would be the place of holding the meeting to be documented in preparing or drafting the minutes of such meeting?
Ans: In the circulars issued by the Ministry, the place for holding the meeting is nowhere specifically mentioned.
However, Secretarial Standard (SS-2) on General Meeting provides that General Meetings (not AGM) may be held at any place within India and hence, one can opine that for the purposes of preparing the minutes of such meetings conducted through VC or OAVM, we can consider the place from where the Chairman of such meeting is attending the meeting as venue of such meeting.
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