Clarification on passing of ordinary and special resolutions by the Companies Under Companies Act, 2013/ Holding of Extra-Ordinary General Meeting Through Video Conferencing

Holding of Extra-Ordinary General Meeting Through Video Conferencing

MCA vide its general circular dated 8th April, 2020 has given its clarification on passing of ordinary and special resolutions by the Companies Under Companies Act, 2013 (“the Act”) and allows companies to take all 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.

However, the Act does not contain any specific provision for allowing conduct of members’ meetings through video conferencing (VC) or other audio visual means (OAVM). Accordingly, MCA vide its Circular prescribes the following procedure which needs to be adopted for conducting extraordinary general meeting (EGM) on or before 30.06.2020, in addition to any other requirement provided in the Act or the rules made thereunder:

While conducting EGM through VC/OAVM, Companies are required to Comply the following provisions of MCA Circular as detailed below:

1. EGM may be held through VC or OAVM (hereinafter referred to as “facility) 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.

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

3. The facility shall allow two way teleconferencing or webex and the participants are allowed to pose questions concurrently or given time to submit questions in advance on the e-mail address of the company.

4. The facility must have a capacity to allow at least 1000 members to participate on a first-come-first-served basis. Further, in case of unlisted public companies which are not required to provide the facility of e-voting under the Act, the facility must have a capacity to allow at least 500 members or members equal to the total number of members of the company (whichever is lower).

5. The large shareholders (i.e. 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 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.

7. Attendance of members through such facility shall be counted for the purpose of reckoning the quorum under section 103 of the Act.

8. Atleast 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 such facility.

9. The facility of appointment of proxies by members will not be available for such meetings. However, 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 such facility.

10. Where institutional investors are members of a company, they must be encouraged to attend and vote in the said meeting through such facility.

11. The notice for the general meeting shall make disclosures with regard to the manner in which framework provided in this Circular shall be available for use by the members and also contain clear instructions on how to access and participate in the meeting. The company should 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. A copy of the notice shall also be prominently displayed on the website of the company.

12. In case a notice for meeting has been served prior to the date of this Circular, the framework proposed in this Circular may be adopted for the meeting in case the consent from members has been obtained in accordance with section 101(1) of the Act, and a fresh notice of shorter duration with due disclosures in consonance with this Circular is issued consequently.

13. 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 alongwith other provisions of the Act and rules were duly complied with.

14. The companies shall ensure that all other compliances associated with the provisions relating to general meetings viz making of disclosures, inspection of related documents by 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.

In Addition to above, following provisions are also need to be complied by the Companies, which are as under:

A. Companies which are required to provide the facility of e-voting under the Act (i.e. all listed companies and other unlisted public companies having more than 1000 shareholders), or any other company which has opted for such facility –

1. Only those members, who are present in the meeting through such 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 or by a show of hands in the meeting.

2. Unless the articles of the company require any specific person to be appointed as a Chairman for the meeting, the Chairman for the meeting shall be appointed in the following manner:

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.

3. 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 such facility depending on the number of members present in such meeting, the voting shall be conducted in the following manner;

a. 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,

b. in all other cases, the voting shall be conducted through e-voting.

B. Companies which are not required to provide the facility of e-voting under the Act:

1. Unless the articles of the company require any specific person to be appointed as a Chairman for the meeting, the Chairman for the meeting shall be appointed in the following manner

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 in a manner provided in succeeding sub-paragraphs.

2. The company shall provide a designated email 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.

3. The confidentiality of the password and other privacy issues associated with the designated email address shall be strictly maintained by the company at all times. Due safeguards with regard to authenticity of email address(es) and other details of the members shall also be taken by the company.

4. During the meeting held through VC or OAVM facility, where a poll on any item is required, the members shall cast their vote on the resolutions only by sending emails through their email addresses which are registered with the company. The said emails shall only be sent to the designated email address circulated by the company in advance.

5. 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 such demand is made, the procedure provided in the preceding sub-paragraphs shall be followed.

6. In case the counting of votes requires time, the said meeting may be adjourned and called later to declare the result.

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