In regard to the obstacles faced by the companies due to of the COVID-19 pandemic, the Ministry of Corporate Affairs (‘MCA’) accessing the practicality of the situation, in view of continuing restrictions on the movement of persons at several places in the country issued General Circular No. 20/2020 dated 05.05.2010 allowing the companies to conduct their Annual General Meeting (‘AGM’) through modes of Video Conferencing (‘VC’) or Other Audio Visual Means (‘OAVM’)  during the calendar year 2020.

For the purpose of laying requirements that need to be fulfilled while conducting the virtual AGM, the MCA has bifurcated two different categories of companies:

A. Companies which are required to provide the facility of e-voting under the Companies Act, 2013 or any other company which has opted for such facility. These companies include:

  • All companies that have listed their equity shares on a recognized stock exchange
  • All companies having one thousand members and above

B. Companies which are not required to provide the facility of e-voting under the Companies Act, 2013. These companies include:

  • A Nidhi Company
  • Companies listed on SME exchange
  • Companies listed on Institutional trading platform without IPO

E-voting indicates a manner of exercising voting, including casting of votes and counting of votes, by electronic means.

Requirements to be fulfilled while conducting AGM through VC or OAVM by companies falling under category A:

1. Only those items of special business which are considered to be unavoidable by the Board, other than the ordinary business, may be transacted in such meetings.

2. The financial statements (Board’s report, Auditor’s Report etc.) shall be sent by email to the members, trustees for debenture-holders and all other entitled persons.

3. Before sending notices and copies of the financial statements, etc. a public notice by way of advertisement shall be published (in at least one Vernacular newspaper and one English newspaper of the district in which the registered office of the company is situated), specifying:

a. Statement that the AGM will be conveyed through VC or OAGM in compliance with applicable provisions of the act;

b. Date and time of the scheduled online meeting

c. Availability of notice of the meeting on website of the company and the stock exchange;

d. The manner of e-voting;

e.The manner in which persons who have not registered their email address can get the same registered;

f. The manner in which members can give their mandate for receiving dividends directly through electronic payment; and any other necessary details

4. In case the company is unable to pay dividend because of unavailability of bank account details of the member, the company shall send the dividend warrant/cheque by post upon normalization of postal services.

5. In case the company has received permission from relevant authorities to conduct AGM in the physical mode, the company shall also provide facility of VC or OAVM for participation of members who can’t be physically present for the meeting. All the members, whether physically or virtually present, shall be reckoned for a quorum, and resolutions shall continue to be passed through e-voting.

6. The Chairman should ensure availability of e-voting facility for the purpose of conducting a poll during such meeting.

Requirements to be fulfilled while conducting AGM through VC or OAVM by companies falling under category B:

1. AGM is to be conducted through VC or OAVM only by a company which has in its records, the email addresses of at least half of its members, who –

a. In case of a Nidhi, hold shares of more than Rs.1000 in face value or more than 1% of the total paid-up share capital, whichever is less;

b. In case of other companies having share capital, who represent at least 75% of such part of the paid-up share capital of the company as gives a right to vote at the meeting;

c. In case of companies not having share capital, who have the right to exercise at least 75% of the total voting power exercisable at the meeting.

2. The company shall take all necessary steps to register email addresses of all its members.

3. Only those items of special business which are considered to be unavoidable by the Board, other than the ordinary business, may be transacted in such meetings.

4. The financial statements (Board’s report, Auditor’s Report etc.) shall be sent by email to the members, trustees for debenture-holders and all other entitled persons.

For conducting the AGM through VC or OAVM, the companies falling under both categories, along with the above-mentioned requirements,  have to comply with the framework provided in General Circular No. 14/2020 dated 08.04.2020 (EGM circular-I) and the manner and mode of issuing notices in General Circular No. 17/2020 dated 13.04.2020 (EGM Circular-II):

1. Notice of the meeting may be given only through e-mails registered with the company or with the depository participant/depository.

2. Recorded transcript of the meeting shall be kept in safe custody and in case of a public company shall be uploaded on its website.

3. Convenience of persons positioned in different time zones shall be kept in mind.

4. Ensure that the VC or OAVM facility allows two-way conferencing so that the participants can pose questions concurrently or in advance through email.

5 .The virtual meeting facility should have the capacity to allow at least 1000 members (in case of Category B Company 500 members or the actual number of members, whichever is lower) to participate on a earliest served basis. Shareholders holding 2% or more shareholding, promoters, institutional investors, directors, key managerial personnel, the chairpersons of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee, auditors, etc. may be allowed to attend the meeting without restriction on account of first-come-first-served principle.

6. The facility for joining the meeting shall be kept open from at least 15 minutes before the scheduled time of meeting till the expiry of 15 minutes after such scheduled time.

7. Unless otherwise provided for in the articles of the company, the Chairman shall be appointed in the following manner:

  • Less than 50 members present – appointment to be made in accordance with Section 104 of the Act.
  • More than 50 members present – appointment to be made through e-voting system during the meeting (For Category B Company – Appointed by poll through e-mail).

8. The facility of appointment of proxies by members shall not be available for virtual meetings.

9. At least one independent director (where the company is required to appoint one), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.

10. Notice for the meeting shall make contain the following:

  • Framework provided under the MCA Circulars available to the members;
  • Instructions related to access and participation in the meeting;
  • Helpline numbers to provide assistance to shareholders for getting clarifications on the use of the technology

The notice shall also be displayed on the website of the company and in case of listed company intimation should be made to the stock exchange.

11. For notices for meetings issued prior to the circular dated April 08, 2020, framework issued in the MCA circulars may be adopted if the consent of the members has been obtained and a fresh notice of shorter duration with due disclosures as per the MCA circulars has been issued consequently.

12. All resolutions passed in such meeting held shall be filed with the registrar within 60 days. Such resolution should clearly indicate the mechanism followed as per the MCA Circulars and provisions of the Act and rules.

13. Category B company specific framework:

  • A designated email address shall be provided at the time of sending the notice of meeting so that e-voting and poll can be conducted through that email address
  • If less than 50 members are present for the meeting, the voting can be conducted by a show of hands, unless a demand for poll is made by any member
  • In case counting of votes is taking time, the meeting can be adjourned and called upon later to declare the result
  • To ensure all members are aware of the meeting, the company shall before sending the notice, contact all members by any mode to register their e-mail addresses with the company or where contact details of any members are unavailable, the company shall publish a notice (in at least one Vernacular newspaper and one English newspaper of the district in which the registered office of the company is situated) specifying:

(i) Intention of the company to convene a meeting as per the MCA circulars and that it proposes to send notices to all its members by e-mail at least 3 days from the publication of the said public notice.

(ii) Communication details of the company where the members can get their e-mail addresses registered

Companies falling under both categories A and B have to ensure that all other compliances associated with the provisions relating to general meetings like making of disclosures, inspection of related documents by members, or authorizations for voting by body corporates, etc. as per the provision of the Act and the Articles of Association of the company shall be made through electronic mode..

The companies which are not covered under categories A and B or are unable to conduct their AGM in accordance with the provided framework are advised to prefer applications for extension of AGM before the concerned Registrar of Companies u/s 96 of the Companies Act.

Although the pandemic has exposed major unprecedented restrictions on trade and administration throughout the country, MCA has been responsive in carrying out alternatives to deal with the situation. These measures have been introduced so that urgent and unavoidable meetings and resolutions of the company can be conducted in an uninterrupted and secured manner. It is only in the best interest of the companies to adopt the measures the MCA has or shall continue to introduce. The faster the companies digitalize themselves, the lesser would be the contingencies they have to face.

Author Bio

Qualification: CA in Practice
Company: Gupta Vijay K and Co
Location: New Delhi, New Delhi, IN
Member Since: 23 Jul 2020 | Total Posts: 13
I am Graduate in B. Com(Hons) in 2001 from Delhi University and also Law Graduate, Fellow Member of the ICSI and Fellow Member of the Institute of Chartered Accountants of India Since 2003 and into practice since then. I got rich experience in handling the matters at CIT (Appeals), High Court, C View Full Profile

My Published Posts

More Under Company Law

2 Comments

  1. Atharv Jadala says:

    Nice article

    As per circular no. 20/2020 dated 5.5.20 can a listed company conduct AGM physically through remote e-voting without VC and OAVM

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031