In view of the current extraordinary circumstances due to pandemic caused by COVID-19 prevailing in the country requiring social distancing, the Ministry of Corporate Affairs (MCA) has issued clarification vide General Circular No. 14/2020 dated 08th April, 2020 http://mca.gov.in/Ministry/pdf/Circular14_08042020.pdf relaxing the provisions of physical presence of the members in a meeting for passing the ordinary and special resolutions under the companies Act, 2013. Hence, the decisions of urgent nature requiring the approval of members, other than items of ordinary business are to be taken up by mechanism of ballot/e-voting in accordance with provisions of Companies Act, 2013 and rules made thereunder, without holding a general meeting.
A. PROCEDURE FOR HOLDING AN EXTRAORDINARY GENERAL MEETING:
- Applicability: It is applicable to all companies which require conducting an Extra-ordinary General Meeting.
- Effective Period: Meeting to be held on or before 30th June 2020.
- Procedure for conducting Extra-Ordinary General Meeting: In addition to other applicable provisions of Companies Act, 2013, the following additional procedures are to be complied while conduction of an EGM:
- Extraordinary General Meetings (EGM’s) may be held through video conferencing (VC) or any other audiovisual means (OAVM), transcript of the same shall be maintained. In case of public company, the recorded transcript shall also be made available on the website of the company.
- Meeting to be scheduled at such time, taking into consideration, convenience of different time zones.
- The meeting shall allow to way teleconferencing or a webex for ease of participation of members.
- The participants shall be allowed to pose questions concurrently or given time to submit the questions in advance on the email address of the company.
- At least 1000 members shall be allowed to participate in the meeting on a first-come-first-served basis except the shareholders holding 2% or more shareholding, promoters, institutional investors, directors, key managerial personnel, the chairpersons of Audit Committee, Nomination and remuneration Committee, Stakeholders Committee, auditors.
- Facility to join the meeting shall be kept open at least 15 minutes before the start of the meeting and shall be allowed up to 15 minutes from the start of the meeting.
- Companies which are required to provide e-voting facility shall before the actual date of the meeting provide remote e-voting in accordance with the provisions of the Act.
- Members attending through VC or OAVM shall be counted for the quorum.
- Members who have not cast their vote through remote e-voting shall be allowed to vote through e-voting system or by show of hands.
- Unless the Articles provide for specific manner for the appointment of the Chairman, the Chairman of the meeting shall be appointed as follows: (a) Where there are less than 50 members present, the chairman shall be appointed in accordance with section 104; (b) In all other cases, Chairman shall be appointed by poll conducted through e-voting system.
- The chairman shall ensure that facility of e-voting is available for the purpose of conducting a poll during the meeting.
- Voting shall be conducted in this manner: (a) Where there are less than 50 members, the voting shall be conducted through e-voting or show of hands; (b) In all other cases, voting shall be conducted through e-voting only.
- Since general meetings under this system are held through VC or OAVM, where no physical presence is required, there is no requirement of proxies. However, in pursuance of section 112 and section 113 of the Act representatives of members may be appointed for the purpose of remote e-voting or for participation and voting in the meeting.
- At least one Independent Director, if any and auditor or his authorized representative shall attend such meeting.
- Encourage the Institutional Investors who are members of the company to attend the meeting.
- The notice of the General Meeting shall make disclosures of the manner in which the meeting is to be conducted and contain clear instructions on how to access and participate in the meeting. The company shall also provide a helpline number through Registrar & transfer agent, technology provider if any. A copy of the notice of the meeting shall also be displayed on the website of the company, if any and intimation may be made to stock exchanges in case of the listed company.
- 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 along with other provisions of the Act and rules were duly complied with.
B. FAQ’s on Circular:
1. Can a Company conduct Annual General Meeting for the year 2020-21 through VC or OAVM?
No, the meeting through VC or OAVM can be held only for items of discussion of urgent nature and hence only special items can be discussed. Ordinary item of Businesses cannot be discussed through the mechanism mentioned under this circular.
2. Whether a private company can conduct a meeting through VC or OAVM?
Yes, the circular is applicable to all companies i.e., both the private and public company.
3. If a company has dispatched notice of EGM to its members before the issue of this circular i.e., 08.04.2020, whether the Company can opt for the mechanism mentioned in the circular?
Yes, a company can opt for the mechanism mentioned in the circular by obtaining consent from members and representing not less than ninety-five percent of the paid-up share capital of the company. If the company has no share capital, not less than ninety-five percent of the total voting power exercisable at the meeting. Further, a fresh notice of shorter duration with due disclosures as required under this mechanism is to be issued consequently.
4. Can a member appoint a proxy for the meeting held through VC or OAVM?
Physical presence of members in the meeting held through VC or OAVM is dispensed, so there is no requirement of appointment of proxies.
5. Can a member appoint a representative in pursuance to section 112 and 113 of the Act?
Yes, the members are allowed to appoint representatives in pursuance to sections 112 and 113 of the Act for voting through remote e-voting or for participation and voting in the meeting.
6. Whether all the companies are required to provide remote e-voting facility even if not required under the Act?
Companies which are required to provide the facility of remote e-voting under Act shall continue to provide such facility even if the meeting is held through VC or OAVM. Companies which are not required to provide remote e-voting facility shall provide a designated email address to all the members to convey the vote.
7. Whether the meeting held through VC or OAVM are required to be recorded?
Yes, the transcript of the meeting held through VC or OAVM shall be maintained. In case, of public companies, the same is required to be made available on the website of the company.
8. Whether the Independent Directors and the Auditors are required to attend the meeting held thorough VC or OAVM?
At least one independent director, if any and the Auditor or his authorized representative shall attend such meeting.
9. How can a member vote in a meeting held through VC or OAVM?
A member may cast its vote on any resolution by show of hands or by conveying from its registered email address to the designated email address provided by the company in the notice.
10. Whether ordinary resolutions are also required to be filed with Registrar of Companies?
Yes, every resolution passed in a meeting through VC or OAVM is required to be filed with Registrar of Companies within 60 days of the meeting clearly stating that the mechanism required under the circular along with other provisions of the Act and Rules are duly complied with.
Authors: Prashant Jain, Co-Founder & Partner; Nisha Jhawar, Associate.
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