In an effort to continue to support corporate India, the Ministry of Corporate Affairs (“MCA”) has issued yet another General Circular 14/2020 on April 8, 2020 (“Circular”) for promoting social distancing while convening of Extra-ordinary General Meetings (“EGMs”). The Companies Act, 2013 (“the Act”) does not contain any provision with respect to convening general meetings through electronic mode. Only board meetings were previously allowed to be held electronically. By this Circular, companies can now convene EGMs through video conferencing (“VC”) or any other audio-visual means (“OAVM”) without the physical presence of any shareholder. All other provisions with respect to convening of general meetings will remain the same.
The key highlights of the Circular are:
Applicability: The Circular applies only to EGMs held on or before June 30, 2020 and not to any Annual General Meeting (“AGM”). An AGM is convened once a year to transact “ordinary” and “special” business, whereas an EGM is convened whenever a shareholder approval is required for any “special” business. Ordinary Business refers to (i) approval and adoption of financial statements, auditors’ and directors’ report; (ii) declaration of dividend; (iii) appointment of non-retiring directors; and (iv) appointment or ratification or fixing of remuneration of auditors. Any business which is not “ordinary” and requires shareholder approval is deemed as “special” business, and can be undertaken at an EGM. Further, the Circular also clarifies that listed companies, who have already sent their EGM notice, cannot now use VC or OAVM facility.
Certain key procedural points:
- There is no requirement for appointment of proxies since physical attendance of members has been dispensed with;
- Members have to be given a facility to raise questions. These questions can either be raised during the meeting or can be submitted to the company via e-mail before the meeting starts;
- At least one independent director (if required to be appointed) and the auditor have to attend the meeting through VC or OAVM;
- Facility for joining the meeting shall be kept open at least 15 minutes before and after the scheduled time of meeting;
- A helpline number has to be provided for those members who need assistance with using the technology before or during the meeting;
- Facility of VC or OAVM is required to have a capacity to allow at least 1000 members to participate on a first-come-first-served basis (except shareholders holding 2% or more shareholding, promoters, institutional investors, directors, key managerial personnel, auditors and chairpersons of the audit committee, nomination and remuneration committee and stakeholders relationship committee) for the companies which provide e-voting facility under the Act. All other companies, including private companies, have to provide for at least 500 members or members equal to total number of members of the company, whichever is lower;
- With respect to voting during the meeting, the circular has the following requirements:
|For companies which are compulsorily required to provide e-voting as per section 108 read with rule 20 of the Companies (Management and Administration) Rules, 2014, or any other company which has voluntarily opted for e-voting||(a) Company having less than 50 members present at the EGM – By e-voting or show of hands; and(b) Other companies – By e-voting only|
|For companies (including private companies) which are not compulsorily required to provide e-voting as per the Act||(a) Company having less than 50 members present at the EGM – By show of hands unless poll is demanded; and(b) Other companies – By poll.In case of Poll, the members shall cast their vote on the resolutions only by sending e-mails through their registered e-mail addresses with the company. The designated e-mail address has to be circulated by the company in advance.|
- EGMs held through VC or OAVM have to be recorded and their transcripts have to be maintained. In case of a public company, the recorded transcript has to be made available on the company’s website, if any;
- All resolutions passed in such meetings should also indicate the mechanism adopted for voting;
- In the event any resolution is required to be filed with the Registrar of Companies, it has to be done within 60 days of the meeting.