BACKGROUND:
Corporate Meetings are very crucial part of business activities. Corporate Meetings thus turn out to be a place where various aspects of business management are discussed- the performance of the company, the mission and vision of company, the weaknesses of company, the obstacles faced and how to overcome them. This article would be divided into two series, one for General meetings and second for Board Meetings.
MCA vide circulars dated April 8, 2020 and April 13, 2020 allowed holding of Extra ordinary General Meeting through Video Conferencing (VC) or Other Audio Video Means (OAVM). Further MCA on May 05, 2020 provided relaxation to companies to conduct the Annual General Meeting (AGM) of their members through Video Conferencing (VC) or Other Audio Visual Means (OAVM), during the calendar year 2020 and for holding AGM, procedural compliances prescribed in all the aforesaid circulars issued by MCA, to the extent applicable, shall be complied.
SCOPE AND APPLICABILITY
All companies which are required to provide the facility of e voting and Companies who has opted to provide the facility of e voting are Eligible for Holding AGM through VC or OAVM.
Further companies not providing e-voting facility can conduct their AGM through VC or OAVM only if the company has in its record, the email-ids of at least half of its total number 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
Note – Both the criteria needs to fulfill (a) 50% of number of members and (b) having threshold of holding of shares or voting power.
PROCESS OF CONDUCTING AGM DURING LOCKDOWN:
Compliance | Requirements under the Act & the rules, SS‐2 and SEBI regulations for Companies Providing E‐voting facility |
Notices | The Common disclosure for all companies pertaining to notice of AGM
1. AGM is being called through VC or OVAM should be in compliance of MCA Circulars and detailed structure with guideline and FAQs regarding the same shall be disclosed. 2. It shall also specify the procedures to participate and access the meeting through VC or OAVM. 3. Process for registration of Email ID for those Members whose e-mail is not registered. 4. The facility of participation at the AGM through VC shall be made available for 500-1000 total number of members on first come first served basis. 5. Large members (members holding 2% or more shareholding), Promoters, Institutional Investors, Directors, KMPs, the Chairpersons of the Audit Committee, Nomination and Remuneration Committee, Stakeholder’s Relationship Committee and Auditors can attend meeting without restriction of first come first served basis. 6. Details of contact person for any technical assistance. 7. Manner in which documents and statutory registers will be available for inspection. 8. The instructions for voting in the AGM through electronic voting and also instruction for remote e-voting need to be disclosed by those companies who has opted to provide the facility of e voting. This will be provided by VC facility provider. 9. Notice shall specify to the member to submit their questions either concurrently or in advance on the email of the company. 10. Details of Scrutinizer appointed for supervising and giving report on voting results. 11. The company to comply with Rule 18 of the Companies (Management and Administration) Rules, 2014 and the Notice of AGM may be given to the members only through the email registered with the Company or Depository Participants or Depository. |
Modes of Dispatching Notice | 1. The notice of AGM and the copies of Annual Report is being sent only by email to the members and to all other persons so entitled and who have registered their email addresses with the Company/ Depository Participant (DP)/Company’s Registrar and Transfer Agent (RTA).
2. In case company has a website, the Notice of AGM along with Annual Report need to be uploaded on company’s website. 3. Ballot paper may be sent along with the notice or assent/dissent on mail may also work but email id from which the vote will be cast, must be registered with the company. |
Advertisement | 1. Advertisement shall be published by companies as per Rule 20 (4) (v) of the Companies (Management and Administration ) Rules, 2014 and the same to be published at least once in vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and having 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.
2. The Advertisement shall have the following content: a. A Statement that AGM will be convened through VC or OAVM in compliance of the Act/Rules and MCA Circular; b. Date and time of the AGM to be conducted through VC or OAVM; c. Availability of notice of the AGM on the website of the company and the stock exchange for listed company; d. The manner in which members can get their Email ID registered; e. The manner in which the members whose email id is not registered, can cast their vote through remote e-voting or through the e-voting system during the meeting; f. The manner in which the members can register Electronic Clearing Services (ECS) or any other means mandate for receiving dividend directly in their bank accounts; g. Any other details considered necessary by the company. |
Pre-Board Meeting Measures To Be Kept In Mind | 1. The management shall keep in mind the convenience of different persons positioned in different time zones in the globe when AGM is conducted through VC or OAVM.
2. The Company shall ensure that adequate arrangement has been made for two-way communication for the ease of participation by the members. 3. The facility of remote e-voting shall be provided before the actual date of AGM as per Rule 20 of the Companies (Management and Administration) Rules, 2014. 4. The Chairman or Company Secretary (if any) 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. 5. The company shall contact all its members whose email address are not registered over telephone or any other mode of communication for registration of their email address before sending the Notice for AGM to all its members. 6. 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. |
Participation in Meeting by Members | 1. Company shall intimate the process of participation of members in notice and if possible they should generate a specific user ID and password for each member so that no third party can intervene the proceedings of the meetings. Further such unique login shall be used for purpose of attendance and identification of members.
2. The Board of Directors may mute the video of members so that their views and opinions can be expressed clearly. 3. 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. 4. Members of the Company joining through VC and OVAM shall be reckoned for the purpose of quorum under section 103 of the Act. 5. The facility to appoint proxy to attend and cast vote for the members is not available for this AGM. However authorized representatives of members may be appointed as per Sec 112 and 113 of the Act. |
Post-Board Meeting Measures to be kept in mind | 1. The entire proceedings of the meeting to be recorded and such recorded transcript shall be maintained in the safe custody by the company or company secretary shall preserve if possible and applicable. Further if the company is listed it shall record the transcript on the website of the company.
2. Voting result or any resolutions passed in the meetings needs to be declared. |
Disclosure And Inspection off Documents By The Members | 1. The companies shall ensure that all other compliances associated with the provisions relating to general meetings viz making of disclosures, inspection of related documents/certain Registers by the 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.
2. Further such documents can be uploaded on the website of the Company and a link of same can be provided in AGM notice. 3. All Resolutions passed in the AGM through VC or OAVM shall be filed in e-form MGT 14 within 60 days of meeting to the Registrar of Companies (ROC) in compliance of provisions of the Act and MCA circulars. |
Compliances to be kept in mind | 1. The Members who attend through VC or OAVM shall be counted for the purpose of reckoning quorum under Section 103 of the Act.
2. Unless the Articles of Association of the company require any specific person to be appointed as a Chairman for the meeting, the Chairman for the meeting shall be appointed as follow : ü If there are less than 50 members present, the Chairman shall be appointed in accordance with Section 104 of the Act, that is by show of hands ; and ü If there are equal to or more than 50 members present, then the Chairman shall be appointed by a poll conducted through e-voting system during the meeting. 3. The Chairman may decide to conduct a vote by show of hands if the members present in the meeting are less than fifty (50). If the demand for poll is made by any member it shall be in accordance with Section 109 of the Act. 4. Proxies as per section 105 of the Act, cannot be appointed for participation in the AGM. However, the Authorized Representative in pursuance of Section 112 and 113 of the Act are deemed to be member of the company and are entitled to exercise same rights and powers as the member could exercise and hence appointment of Authorized Representative for participating in the AGM held through VC or OAVM is allowed. 5. At least one Independent Director (where the company is required to appoint) and the Statutory Auditor / Secretarial Auditor or their authorized representative who are also qualified to be the Statutory Auditor / Secretarial Auditor, as the case may, shall attend such meeting through VC or OAVM. Further if Institutional Investors who are members of the company may attend and vote through VC or OAVM in AGM. |
Hybrid meetings | A new concept arose due to Covid-19 pandemic called Hybrid meeting. A meeting in which some members would present physically and some other member via VC or OAVM.
Company may with requisite permission from the relevant authorities may 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 Company from the relevant authorities. |
MCA Gives Direction to Extend the Due Date for Holding AGM for FY 2019-2020 | The extension provided is for three months from the due date within which the AGM is to take place, meaning the extended date is December 31, 2020 within which the companies should hold AGM. The companies can hold AGM within December 31, 2020 without filing the Form GNL-1 to the ROC. |
Technical difficulties
Since this is the first time with no prior experience of conducting a VC or OAVM meeting with too many members, the company may face certain technical difficulties like:-
- Uploading of statutory registers on the website may be a challenge for the companies. However company may opt to upload the extract of changes which took place since last AGM.
- Managing shareholder queries may be difficult considering up to 1000 members can participate.
- Excel template of details of Directors on AGM date can be uploaded in PDF
Board of Directors need to be tech friendly
Technology impacts almost every aspect of the business, as a director of the company to be well versed with the technology is one of the responsibility that they should comply with. As technologies continue to evolve, directors will likely to face more IT related responsibilities. Thus it is expected from directors to be tech friendly on a basic level. Overseeing the current situation it’s the need of an hour for the directors to put their step forward and welcome the new methods and technologies for conducting a meeting.
Conclusion:
Due to current situation of Covid-19 Pandemic and subsequent nationwide lockdown which has extended for the fourth time till May 31, 2020 and the norms of Social Distancing has encouraged the Ministry about conducting the AGM through VC or OAVM facilities. With this relaxation, the management and compliance team can plan conducting the AGM this year with clarity. MCA has also specifically mentioned that the companies who could not conduct its AGM through VC or OAVM need to apply to the Registrar for extension of time for AGM. Let’s hope that MCA relax this requirement and give such extension of time soon, otherwise this year Registrar‘s office will be flooded with such Application by companies requesting extension of time in holding AGM by December 31, 2020. However this seems quite interesting to see how this evolutionary concept will actually be implemented and experienced.
Bibliography:
https://taxguru.in/company-law/companies-meetings-board-powers-amendment-rules-2020.html
https://taxguru.in/company-law/covid-19-special-relief-measures-companies-llp.html
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Founder- Jaya Sharma & Associates [email protected] |
Associate Jaya Sharma & Associates [email protected] |
Disclaimer: Absolute care is taken to prepare this article however inadvertently if any errors occurs then the author shall not be held responsible for any such cause. The Content published is only for educational purpose and shall not be construed as rendering of any Professional Advice in any manner whatsoever. The readers must exercise their own judgments and refer the original source before any implementation. Further the content is an original work of the author and may be used only after written permission.