PROCEDURE TO CONDUCT ANNUAL GENERAL MEETING (AGM) OF COMPANIES THROUGH VIDEO CONFERENCING DURING THE COVID-19 PANDEMIC

The Pandemic COVID-19 has affected the whole world, especially the Corporate sector, by shutting down the businesses to maintain social distancing and thus resulting in cessation of almost all economic activities due to which difficulties have been faced by the organisations in their operations.

One of the major difficulties faced by the Company is in the conduct of meetings of the members or directors to discuss the matters needed to be dealt with.

Given the situation, the Ministry of Corporate Affairs (MCA) has provided relaxation in the conduct of meetings vide issuance of its General Circulars for both Board Meetings and General Meetings.

This Discussion is confined to the relaxations provided by the MCA to its Stakeholders for conduct of Annual General Meeting (AGM) on account of the threat posed by COVID-19.

The MCA has issued two circulars for conduct of AGM by the Companies:

a) General Circular No.18/2020 dated 21st April , 2020

b) General Circular No. 20/2020 dated 05th May , 2020

Let’s discuss both:

(a) General Circular No.18/2020 dated 21st April , 2020 was issued by MCA to solve the issue of the Stakeholders with regard to difficulty in holding AGMs for the Companies whose financial year ended on 31st December, 2019 due to COVID-19 related social distancing norms and consequential restrictions linked thereto.

“It is noted that as per the Provisions of the Companies Act, 2013, the companies are allowed to hold AGM within a period of 6 months from the closure of financial year and not later than a period of 15 months from the date of last AGM.”

Thus, the Companies whose financial year ended on 31st December, 2019 are supposed to hold AGM till 30th June, 2020 (i.e, 6 months from the closure of financial year) but due to COVID-19 , it is impossible to do.

So, to solve this issue, the MCA vide this circular, clarified that if the Companies whose financial year (other than first financial year) has ended on 31st December, 2019 can hold its AGM for such financial year within a period of 9 months from the closure of financial year i.e, 30th September, 2020 and the same shall not be viewed as a violation.

Also, the references to due date of AGM or the date by which the AGM should have been held under the Act or rules made thereunder shall be constructed accordingly.

Thus, in nutshell, the Companies (whose F.Y. ended on 31st December, 2019) can hold AGM till 30th September without being regarded as a violation.

(b) General Circular No. 20/2020 dated 05th May , 2020 issued by MCA. 

The Stakeholders were facing many difficulties related to holding of AGM due to COVID-19 related social distancing norms and consequential restrictions linked thereto.  Therefore, to solve this issue, the MCA has issued a Circular No. 20/2020 on 05th May, 2020 allowing the Companies to conduct Annual General Meeting through Video Conferencing or Other Audio Visual Means (OVAM).

As per the Companies Act, 2013, there are no provisions of holding Annual General Meeting through Video Conferencing or Other Audio Visual Means (OVAM).

To make it convenient for the stakeholders, MCA has allowed companies to hold AGM through Video Conferencing or other audio visual means, during the calendar year, 2020 by following the procedure prescribed in this circular. 

In this circular, there are two separate procedures given:

  • For those companies which are required to provide a facility of e-voting under Section 108 of the Act, and
  • For those companies which are not required to provide e-voting facilities.  

I will be discussing both the procedures in this article.

Particulars For those companies which are required to provide a facility of E-voting under section 108 of the act, or any other company which has  opted for such facility For those companies which are not required to provide e-voting facilities
 

1. Type of companies that can hold its AGM through VC or OAVM

All companies which are required to provide the  facility of e-voting or any other company which has opted for such facility Company which has in its records, the email addresses of  at least half of its total number of members, who:

  • in case of a Nidhi, hold shares of more than Rs. 1,000 in face value or more than 1% of the total paid-up share capital, whichever is less;
  • in case of other companies having share  capital, who represent not less than 75% 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 75% of the total voting power exercisable at the meeting.
2. Business to be transacted Only those items of special business, which are considered to be unavoidable by the Board , in addition to ordinary business may be transacted at the AGM.
3. Mode of Sending  the Physical copies of the financial statements (including Board’s report, Auditor’s report or other documents etc) The Physical copies of financial statements shall be sent only by emails to the members, trustees for the debenture-holder of any debenture issued by the company and to all other persons so entitled to receive.
 

4. Payment of Dividend by Company to its Members

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.

5. Other Compliances to be kept in mind while holding AGM  The Companies shall ensure that all other compliances associated with the provisions related to general meetings viz making of disclosures, inspection of related documents/registered 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.
6. Another way to  hold AGM  The companies (other than companies whose financial year ended on December 31, 2020, and who are allowed to hold AGM upto 30th September, 2020) and are unable to conduct their AGM in accordance with the framework provided in this Circular are advised to prefer applications for extension of time for holding AGM at a suitable point of time before the concerned Registrar of Companies under section 96 of the Act.
 7. Mode of Sending of  Notice of AGM I. The notice of the Meeting may be given only through email registered with the company or with the depository participant/ depository.

II. Before sending the notices and copies of financial statements etc., a public notice by way of  advertisement be published at least once in a vernacular newspaper in the principal vernacular language of the district in which registered office of company is situated  & having a wide circulation in that district, and at least once in English language in an English newspaper having wide circulation in that district, preferably both newspapers having electronic editions, & specifying in the advertisement the following information:

  • Statement that the AGM will be convened through VC or OAVM in compliance with applicable provisions of theAct read with General Circular 14/2020 dated 08/04/2020 , Circular No.17/2020 dated 13/04/2020 and this Circular,
  • Date and Time of the AGM through VC or OVAM.
  • availability of notice of the meeting on the website of the company & the stock exchange, in case of a listed company;
  • the manner in which the members who are holding shares in physical form or who have not registered their email addresses with company can cast their vote through remote e-voting or through the e-voting system during the meeting;
  • the manner in which the persons who have not registered their email addresses with the company can get the same registered with the company;
  • the manner in which the members can give their mandate for receiving  dividends directly in their bank accounts through the Electronic Clearing Services (ECS) or any other means;
  • any other details considered  necessary by the company.

Also, the Chairman of the meeting shall satisfy himself and cause to record the same before considering the business in the meeting that all efforts feasible under circumstances have indeed been made by company to enable  to participate and vote on the items being considered in the meeting.

I. The notice of the Meeting may be given only through email registered with the company or with depository participant/depository.

II. A copy of the notice shall also be prominently displayed on the website, if any, of the company.

III. In order to ensure that all the members are aware that an AGM is being proposed to be conducted in compliance with applicable provisions of the Act read with General Circular No.14/2020 dated 08/04/2020 , Circular No. 17/2020 dated 13/04/2020 and this Circular, the Company shall:

  • Contact all those members whose e-mail addresses are not registered with company over telephone or any other mode of communication for registration of their e-mail addresses before sending the notice for meeting to all its members;
  • Where the contact details of any of members are not available with the company or could not be obtained, it shall cause a public notice by way of advertisement to be published immediately at least once in a vernacular newspaper in the principal vernacular language of the district in which registered office of the company is situated and having a wide circulation in that district, and atleast once in English language in an English newspaper having a wide circulation in that district & preferably both newspapers having electronic editions, & specifying in the advertisement the following information:

(a) That the company intends to convene an AGM in compliance with applicable provisions of the Act read with Circular No. 14/2020 dated 08th April, 2020Circular No. 17/2020, dated 13/04/2020 and  this circular  and for the said purpose it propose to send notice to all its members by e-mail after at least 3 days from date of publication of the public notice;

(b)   the details of the e-mail address along with a telephone number on which the members may contact for getting their e-mail addresses registered for participation and voting in the AGM.

Also, the Chairman of the meeting shall satisfy himself & cause to record the same before considering the business in the meeting that all efforts feasible under the circumstances have indeed been made by the company to enable to participate and vote on the items being considered in the meeting.

8. Contents of Notice of AGM (a). Shall make disclosures with regard to the manner of framework provided in this circular shall be available for use by members.

(b). Contain clear instructions on how to access and participate.

(c).The company should also provide a helpline number through RTA, technology provider or otherwise for shareholders who need assistance in use of technology.

(a). Shall make disclosures with regard to the manner of framework provided in this circular shall be available for use by members.

(b). Contain clear instructions on how to access and participate.

(c). A Designated e-mail address to all members to convey their votes.

(d). The company should also provide a helpline number through RTA, technology provider or otherwise for shareholders who need assistance in use of technology.

9. In case , if the  Company can hold AGM at its registered office or any other place
  • In case, the company has received permission from the relevant authorities to 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 hold such meeting of few members physically present at the registered office and for the remaining members, company may provide the facility of VC or OAVM, so as to allow them 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 to be passed through the facility of e-voting system.
  • As no such option is provided for the  companies which are not required to provide facility of e-voting.
10. Recording of  the AGM The Recorded transcript must be kept in the safe custody of the Company.

Also , In case of Public Company, the recorded transcript of the meeting, shall be also made available on the website (if any) of the Company.

11. Points to be kept in mind while scheduling AGM Convenience of different persons positioned in different time zones shall be kept in mind before scheduling the meeting.
12. Facilities provided in AGM through VC or OVAM
  • To ensure that such meeting shall allow two way teleconferencing or Webex for the ease of participation of the members; and
  • The participants are allowed to pose questions concurrently or given time to submit questions in advance on the e-mail address of company.
13. Capacity to avail facility of VC or OVAM Such facility must have the capacity to allow at least 1000 members to participate on a first-come-first- served basis. Such facility must have the capacity to allow at least 500 members or members equal to the total number of members of the company (whichever is lower) to participate on a first-come-first- served basis.
14. Exemption to participants from First-come -first-served Basis while availing facility of VC or OVAM
  • Large Shareholders (shareholding 2% or more),
  • Promoters,
  • Institutional investors,
  • Directors,
  • Key Managerial Personnel,
  • Chairpersons of the Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee,
  • Auditors etc.
15. VC or OVAM Facility window to join AGM
  • Facility window shall be kept open for at least 15 minutes before scheduled time of the AGM, and
  • Shall not be closed till the expiry of 15 minutes after scheduled time of the AGM.
16. E-voting System Facility Facility of remote e-voting shall be provided in accordance with the Act and the rules, before the actual date of the meeting. Not Applicable
17. If vote have not cast through remote e-voting Members who are present in the meeting through VC or OAVM and have not cast their vote through remote e-voting and not barred otherwise shall be allowed to vote through e-voting or by show of hands in the meeting. Not Applicable
18. Attendance of Members through VC or OVAM Shall be counted for ascertaining quorum under section 103 of the Act.
19. Chairman of the AGM Chairman shall be appointed in following manner unless the articles of the company require any specific person to be appointed as chairman:

(a). If members present at meeting, are less than 50, then shall be appointed in accordance with Section 104 of the Act

(b). In all other cases, shall be appointed by a poll through e-voting during the meeting.

Chairman shall ensure that the facility of e-voting system is available for the purpose of conducting a poll during the meeting held through VC or OAVM

Chairman shall be appointed in following manner unless the articles of the company require any specific person to be appointed as chairman:

(a). If members present at meeting, less than 50, then shall be appointed in accordance with Section 104 of the Act

(b).  In all other cases, shall be appointed by a poll through sending emails from registered email ids to the designated email id circulated by company in advance.

20. Voting in AGM a.If Members present are less than 50 at the meeting, then either by e-voting or by show of hands.

b. In case poll is demanded under section 109 of the Act or in any other cases, then through e-voting only,

a. If Members present are less than 50 at the meeting by show of hands.

b. If poll is conducted on any item, then members shall send email from their registered email ids on the designated email id of the company.

The Company shall provide a designated email id to all members at the time of sending notice of the meeting.

Also, Due safeguard  with regard to the confidentiality of the password and other privacy issues associated with designated email id of company and authenticity of email addresses and other details of members must be taken by the company.

21. Counting of Votes Not Applicable If counting of votes requires time, the said meeting may be adjourned and called later to declare the result.
22. Proxy Since meeting is held through VC or OAVM, the requirement of physical attendance of members in meeting has been dispensed with, therefore facility for appointment of proxies will not be available for such meeting. Since meeting is held through VC or OAVM, the requirement of physical attendance of members in meeting has been dispensed with, therefore facility for appointment of proxies will not be available for such meeting.
23.Authorised Representative As per section 112 and 113 of the Act, authorised representatives of the members may be appointed for remote e-voting or for participation and voting in the meeting held through VC or OAVM. As per section 112 and 113 of the Act, authorised representatives of the members may be appointed for participation and voting in the meeting held through VC or OAVM.
24.Mandatory Participations apart from Quorum
  • At least one Independent Director (if required to be appointed) and
  • Auditor or his authorized representative, who is qualified to be auditor shall attend meeting through VC or OAVM.
  • At least one Independent Director (if required to be appointed) and
  • Auditor or his authorized representative, who is qualified to be auditor shall attend meeting through VC or OAVM.
25. Participation  of Institutional Investors, if members of the company Must be encouraged to attend and vote in such meeting. Must be encouraged to attend and vote in such meeting.
26. If notice of meeting issued prior to the date of this circular The framework proposed in this circular may be adopted for the meeting.

Fresh notice of shorter duration may also be issued with due disclosure in consonance with this circular, if consent in accordance with section 101(1) has been obtained from members.

The framework proposed in this circular may be adopted for the meeting.

Fresh notice of shorter duration may also be issued with due disclosure in consonance with this circular, if consent in accordance with section 101(1) has been obtained from members.

27.Filing with Registrar of Companies (a) Resolutions passed in accordance with this mechanism shall be filed with the Registrar of Companies within 60 days of the meeting,

(b) It should be clearly indicated that the mechanism provided in the General Circular No.14 dated 08/04/2020 , and this Circular along with other provisions of the Act and rules were duly complied with during such meeting.

(a). Resolutions passed in accordance with this mechanism shall be filed with the Registrar of Companies within 60 days of the meeting,

(b). It should be clearly indicated that the mechanism provided in the General Circular No.14 dated 08/04/2020 and this Circular along with other provisions of the Act and rules were duly complied with during such meeting.

References: (1) General Circular No. 14/2020 dated 08th April, 2020

(2) General Circular No. 17/2020 dated 13th April, 2020

(3) General Circular No.18/2020 dated 21st April , 2020

(4) General Circular No. 20/2020 dated 05th May, 2020

Author Bio

Qualification: Student - CA/CS/CMA
Company: N/A
Location: New Delhi, New Delhi, IN
Member Since: 08 Jun 2020 | Total Posts: 1

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