Passing of Ordinary & Special Resolutions due to Covid-19: FAQs

RE: GENERAL CIRCULAR NO. 14/2020 DATED 8^TH APRIL 2020 ISSUED BY MCA. 

SUBJECT: FAQ ON PASSING OF ORDINARY RESOLUTIONS AND SPECIAL RESOLUTIONS BY COMPANIES UNDER THE COMPANIES ACT, 2013 DURING LOCK-DOWN IMPOSED DUE TO COVID-19

Companies are facing problem to hold general meetings of shareholders and other stakeholders to pass ordinary and special resolutions, due to lock-down imposed in wake of COVID-19 pandemic.  To enable the companies to operate and do perform their governance related matters, MCA by way of above clarification, smoothen the process of convening and conducting general meetings by way of VC or OAVM, and recording of their minutes.

In this article, we tried to quell the frequently asked queries of our readers in the form of answers. 

Q 1. What is the applicability of this circular?

Ans. This circular apply to every company to conduct General Meeting. However Annual General Meeting is not Cover under this circular. 

Q 2. Whether this circular will apply after 30^th June 2020? 

Ans. No, this circular only apply for the meetings held on or before 30^th June 2020 and not after this date. 

Q 3. What are the current provisions for conducting shareholders meetings through video conferencing (VC) or other audio-visual means (OAVM)?  

Ans. Section 108 of the Companies Act 2013 read with Rule 20 of the Companies (Management and Administration) Rules,2014 provide for listed companies and every company having not less than 1000 members to allow e-voting (including remote e-voting) in case of general meetings convened by them. 

Q 4. What are the relaxations provided under the circular?

Ans. Every Company is now allowed to hold general meetings through video conferencing or other audio-visual means. 

Requirement of Quorum for meetings under section 103 of Companies Act, 2013 are specified. In the circular count for quorum is relax so, as per the circular members attending meeting through video conferencing or other audio-visual means shall be counted for quorum. 

Q 5. Is there any requirement to appoint proxies under this circular? 

Ans. There is no requirement of appointment of proxies. General meetings under this framework will be held through VC or OAVM, where physical attendance of members in any case has been dispensed with. 

However, in pursuance of section 112 and section 113 of the Act, 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 VC or OAVM. 

Q 6. How to send intimation of this general meeting to the members who have not provided their E-mail ID’S to the Company? 

Ans. A Copy of the meeting notice shall be displayed on the website of the company. In this Notice company shall make disclosure regarding the framework of this circular and also contain clear instruction how to access and participate in the meeting. 

Q 7. What will be the validity of this general meeting in the absence of no notice send to certain members due to not having their email id’s? 

Ans. General Meeting will be valid if no notice is sent to such members for want of email id’s and closure of postal service due to lockdown;

As per section 101 (4) of the companies Act 2013 if any accidental omission to give notice to, or the non-receipt of such notice by, any member or other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting. 

Q 8. What are the requirements regarding conducting general meeting through video conferencing (VC) or other audio-visual means (OAVM)? 

Ans. VC or OAVM must provide two-way teleconferencing/ webex facility.

Facility to raise questions concurrently or given time to submit questions in advance on the e-mail address of the company

Q 9. Is it require mandatory to attend the meeting by independent director and the auditor? 

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

Q 10. What is minimum capacity to allow participants prescribed under the circular? 

Ans. Facility of video conferencing (VC) or other audio-visual means (OAVM) must have a capacity to allow at least 1000 members to participate on a first-come-first-served basis for the Companies which are required to provide the facility of e-voting under the Act.

In other case where Companies are not required to provide the facility of e-voting under the Act minimum Capacity to allow at least 500 members or members equal to the total number of members of the company to participate on a first-come-first-served basis.

However the following persons are excluded from first-come-first-served principle:

(a) the large shareholders (i.e. shareholders holding 2% or more shareholding),

(b) promoters,

(c) institutional investors,

(d) directors,

(e) key managerial personnel,

(f) the chairpersons Of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee,

(g) auditors, etc.

Q 11. How attendance of genuine members can be ensured? 

Ans.  Companies should try to avail VC or OAVM facilities which provide unique password to each member for joining the meeting. In case of closely held companies, common password can be adopted, since all the members are known. 

Q 12. What are the measures taken by the company for smooth participation of the members during the General 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 not be closed till the expiry of 15 minutes after such scheduled time. 

The company shall 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 13. How to appoint Chairperson of the 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

Chairperson shall be as per AOA. If such Chairperson is not available the Chairperson for the meeting shall be appointed in the following manner:

• Where there are less than 50 members present at the meeting, the Chairperson shall be appointed in accordance with Section 104 of the Act;
• In all other cases, the Chairperson shall be appointed by e-voting.

B. For companies which are not required to provide the facility of e-voting 

Chairperson shall be as per AOA. If such Chairperson is not available the Chairperson for the meeting shall be appointed in the following manner:

• Where there are less than 50 members present at the meeting, the Chairperson shall be appointed in accordance with Section 104 of the Act;
• In all other cases, the Chairperson shall be appointed by poll through email 

Q 14. Whether in case of poll through email, procedure prescribed in Section 109 read with Rules to be followed? 

Ans.  The Circular mentions that poll can be demanded in accordance with Section 109 but prescribes a new method for conducting the same. 

So, provisions of Section 109 read with rules, so far as they provide for procedural requirement shall not apply. 

Q 15. How voting will be done ?

Ans. A. For companies which are required to provide the facility of e-voting or any other company which has opted for such facility 

• Before the actual date of the meeting, the facility of remote e-voting shall be provided in accordance with the Act and the rules. 
• During the meeting

− If number of present is less than 50, then by way of e-voting or show of hands

−  In all other cases, by e-voting. 

B. For companies which are not required to provide the facility of e-voting

• During the meeting

−  If number of present is less than 50, then by way of show of hands unless poll is demanded

− In all other cases, by poll. 

Q 16. What are the compliances required after the VC or OAVM? 

• EGMs held through VC or OAVM need to be recorded and the transcript of the same should be maintained.
• 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.
• Copies of the resolutions passed in VS or OAVM to be filed with the ROC within 60 days of the meeting, indicating the mechanism adopted for holding the meeting, in the copy of the resolution to be filed. 

Q 17. How poll will be undertaken at the meeting? 

Ans. Poll will take place by way of email. The company shall provide a designated email address to all members at the time of sending the notice of meeting. 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.

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

Q 18. How to avail the Benefits of this scheme in case a notice for meeting has been served prior to the date of this Circular? 

Ans.  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.

However Listed Companies, who have already sent the notice of EGM, can’t avail the facility provided in the Circular.

Disclaimer

This article is for informational purposes only and is intended, but not promised or guaranteed, to be correct, complete, and up-to-date. Whitespan Advisory does not warrant that the information contained in this article to be accurate or complete, and hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause. 

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

Ms. Jaya Yadav	Ms. Trishna Choudhary	Mr. Himanshu Gupta
Jayayadav@whitespan.in	Trishna@whitespan.in	himanshu@whitespan.in