FAQs of Passing of Urgent Resolutions during Lock Down Period – Circular 14/2020 Issued by Ministry of Corporate Affairs

Introduction:

1.This Circular will not have any impact to Section 108 and Section 110 of the Companies Act, 2013;

2.By following the modalities of the Circular No 14/2020 only EGM can be convened and Unavoidable and Urgent Resolutions can only be passed.

3.Therefore, by using this Circular  Annual General Meeting can not be conducted. Also Resolution which has no urgency need not follow the Circular.

4.Only if it is Unavoidable, than only a Company shall follow the Circular to conduct the EGM and pass resolution.

5.Convenience of different persons positioned in different time zones shall be Kept in mind before scheduling the meeting

6.The Circular has provided modalities for following companies :

(a)Company which are required to provide  e voting facility (Section 108)

(b) Company which are not required to provide e voting facility (Not covered under Section 108)

(a)Procedure for Companies, which are required to provide  e voting facility to it’s members under Section 108:

Sl. No Topic Explanation
1 Type of Meeting can be convened by following framework of the Circular EGM only can be conducted on or before 30.06.2020;
2 Period of Applicability of this Circular:

 

By following the framework of this Circular,EGM for passing resolution(s) during Lock down period, and upto 30.06.2020 can be conducted

However, if Meeting was called before issuing this circular, and the meeting date is during lock down period but before 30.06.2020- than the company has following options :

(a)   If the resolution proposed is not urgent in nature and can be delayed without much harm to the Company , than the meeting can be postponed or cancelled;

(b)  Alternatively, the Company can conduct the meeting through VC or OAVM by following  of the framework of this Circular.

However a fresh Notice by stating the method of attending the meeting through VC or OAVM need to be mentioned,

3 Mode of Conducting Meeting For passing unavoidable/urgent resolution(s), an EGM by following the Circular can be called and meeting can be conducted through VC or ORVM for passing urgent resolution(s).

Further Section 108,Section 110 of the Companies Act, 2013 to be followed. 

4 Notice of the Meeting Section 101, 108 of the Companies Act 2013 to be followed;

Notice shall disclose that framework provided in Circular 14 shall be made available to the members;

Helpline No. to be provided for extending help doubt clearance of the members;

Public Company shall paste a copy of the the Notice to their Website;

Listed Company shall submit a copy of the Notice  to the Stock Exchange

5 Type of Resolution can not be passed Following resolutions can not e passed:

(1)Resolution pertaining to Ordinary Business;

(2)Resolution where any person has a right to be heard;

Further please note that only Urgent and Unavoidable resolutions can be passed by following this modalities;

6 Compulsory features of VC or ORVM Ease of participation must be taken care of.

It must allow two way teleconferencing or webex facility;

Such facility  must allow at least 1000 members to participate;

The VC or OAVM shall be capable to record the meeting shall be

Recorded Transcript of meeting to be maintained;

Public Companies shall upload the Transcript at their website; 

7 Participation

 

Participation must me allowed first come first serve basis.

Facility to join the meeting shall start at least 15 minutes the schedule time of meeting to 15 minutes after the schedule time of meeting

Following Individual must be allowed to participate without any obstructions:-

  • Large Institutional Investors (i.e., holding at least 2% or more shareholding)
  • Promoters
  • Institutional Investors Chairman
  • Directors
  • KMPS
  • Chairman of the Audit Committee, Nomination Remuneration Committee, Stake Holders Relationship Committee, Auditors;

One Independent Director and Auditor or representative of Auditor must attend the meeting through VC or OAVM

However, it is the responsibility of the Company  to facilitate them to attend the meeting through VC or OAVM facility. However, if still they don’t join the meeting it will not invalidate the meeting , otherwise the whole reason to call the meeting , i.e. to pass very urgent resolution, will not fulfill. 

8 Quorum:

 

Members attended through VC or OAVM must be counted to Quorate the meeting;

Section 103 of the Companies Act, 2013 to followed. 

9 Voting Remote e voting facility to be given in line with Section 108 of the Company Act, 2013;

Those who have voted through Remote E-voting may be allowed to attend through VC OR OAVM, but can’t vote.

Members attended through VC OR OAVM and has not casted their vote through remote e-voting may vote by show of hands of through e voting, as the case may be, by following the framework of this Circular.

Voting of meeting shall be conducted as below:

-If less tan 50 members are attended than by show of hands or by e voting.(However if poll is demanded under section 109 e voting will take place.

-In other cases by e voting

10 Chairman:

 

  • If the Articles of the Company specify any particular Individual to be the Chairman, than the same person to be Chairman.
  • In other cases the Chairman shall be appointed as below:

a. where there are less than 50 members present at the meeting, the Chairman shall be appointed in accordance with section 104:

b. in all other cases, the Chairman shall be appointed by a poll conducted through the e-voting system during the meeting 

11 Key Responsibilities of the Chairman 1.It is the primary responsibility of the Chairman to conduct the meeting;

2.The Chairman will ensure the following:

> Attendance of the members are proper and roll call shall be taken

> E Voting facility are provided for conducting poll

> Separate email id may be given to the members to raise their question in advance;

3.To identify the member the Chairman can check the ID Card or he can try other genuine means,

4.To declare the result of the voting;

12 Scrutinizer:  Section 108 to be followed; 
13 Proxy Question of Proxy does not arise as the meeting will be conducted through VC or OAVM.

However, for remote e-voting member can appoint proxy.

14 Filing of Resolution with the Registrar:

 

The Company hall file the resolution with the ROC within 60(in place of normal time period of 30 days) days through E Form MGT 14 with prescribed fees.

For belated filing of this this resolution CFSS scheme can be availed

 (b)Procedure for Companies, which are not required to provide  e voting facility to it’s members:

Sl. No Topic Explanation
1 Type of Meeting can be convened by following the Circular EGM can only be conducted on or before 30.06.2020 by following the Circular.
2 Period of Applicability of this Circular:

 

Conducting EGM for passing resolution during Lock down period and upto 30.06.2020.

However if Meeting was called before issuing this circular, and the meeting date is during lock down period but before 30.06.2020- than the company have following option :

(c)    If the resolution proposed is not urgent in nature and can be delayed without much harm to the Company than the meeting can be postponed or cancelled;

(d)  Alternatively, the Company can conduct the meeting through VC or OAVM by following  of the framework of this Circular.

However a fresh Notice by stating the method of attending the meeting through VC or OAVM need to be issued.

3 Mode of Conducting Meeting: For passing Unavoidable resolution, an EGM by following the Circular can be called and meeting can be conducted through VC or ORVM for passing urgent resolution(s).

Further Section 108,Section 110 of the Companies Act, 2013 to be followed. 

4 Notice of the Meeting Section 101, 108 of the Companies Act 2013 to be followed;

Notice shall disclose that framework provided in Circular 14/2020 shall be made available;

Helpline No. to be provided to extend help/doubt clearance of the members;

5 Type of Resolution can not be passed Following resolutions can not e passed:

(1)Resolution pertaining to Ordinary Business;

(2)Resolution where any person has a right to be heard;

Further please note that only Urgent and Unavoidable resolutions can be passed by following this modalities;

6 Compulsory features of VC or OAVM Ease of participation must be taken care of.

It must allow two way teleconferencing or webex

Such facility  must allow at least 1000 members to participate;

The VC or OAVM shall be capable to record the meeting;

Recorded Transcript of meeting to be maintained;

7 Participation

 

Participation must me allowed first come first serve basis.

Facility to join the meeting shall start at least 15 minutes the schedule time of meeting to 15 minutes after the schedule time of meeting

Following Individual must be allowed to participate without any obstructions:-

  • Large Institutional Investors (i.e., holding at least 2% or more shareholding)
  • Promoters
  • Institutional Investors
  • Chairman
  • Directors
  • KMPS
  • Chairman of the Audit Committee, Nomination Remuneration Committee, Stake Holders Relationship Committee, Auditors;

One Independent Director and Auditor or representative of Auditor must attend the meeting through VC or OAVM

Doubt:

However, it is the responsibility of the Company  to facilitate them to attend the meeting through VC or OAVM facility. However, if still they don’t join the meeting it will not invalidate the meeting , otherwise the whole reason to call the meeting , i.e. to pass very urgent resolution, will not fulfill. 

8 Quorum:

 

Members attended through VC or OAVM must be counted to Quorate the meeting;

Section 103 of the Companies Act, 2013 to followed. 

9 Voting Those who have voted through Remote Evoting may be allowed to attend by VC OR OAVM, but can’t vote.

Members attended through VC or OAVM and has not casted their vote through remote voting may vote by show of hands of through e voting, as the case may be.

Voting of meeting shall be conducted as below:

-If less tan 50 members are attended than by show of hands or by e voting.(However if poll is demanded under section 109 e voting will take place.

-In other cases by e voting.

10 Chairman:

 

  • If the Articles of the Company specify any particular Individual to be the Chairman, than the same person to be Chairman.
  • In other cases the Chairman shall be appointed as below:

a. where there are less than 50 members present at the meeting, the Chairman shall be appointed in accordance with section 104:

b. in all other cases, the Chairman shall be appointed by a poll conducted through the e-voting system during the meeting

11 Key Responsibilities of the Chairman 1.It is the primary responsibility of the Chairman to conduct the meeting

2.The Chairman will ensure the following:

> Attendance of the members are proper and roll call shall be taken

> E Voting facility are provided for conducting poll

> Separate email id may be given to the members to raise their question in advance;

3.To identify the member the Chairman can check the ID Card or he can try other genuine means,

4.To declare the result of the voting;

12 Proxy Question of Proxy does not arise as the meeting will be conducted through VC or OAVM.

However, for remote e-voting member can appoint proxy.

13 Filing of Resolution with the Registrar:

 

The Company hall file the resolution with the ROC within 60(in place of normal time period of 30 days) days through E Form MGT 14 with prescribed fees.

For belated filing of this this resolution CFSS scheme can be availed

     

Note: ‘VC’ here means Video Conferencing And ‘OAVM’ means Audio -Visual Means

Disclaimer

This article is for informational purposes only. Readers are requested also to read the Circular No. 14 /2020 to have a correct view. 

Please feel free to contact the undersigned in case you require any further  explanation/ information/ clarification/advice on the above article. 

Author : CS SIDDHARTHA BANIK – Email: pj_law_solution@yahoo.in

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