Overview

MCA, in a step towards relaxing Corporate Compliance, owing to the Corona Outbreak, permits Companies to convene General Meetings via video conferencing till June 30, 2020

Introduction

The Ministry of Corporate Affairs (‘MCA’) in an attempt to reduce physical contact and limit the spread of the Covid-19 outbreak had earlier vide its Notification dated March 19, 2020 allowed companies to hold Board Meetings through Video Conferencing (‘VC’) or Other Audio-Visual Means (‘OAVM’) till June 30, 2020.

In furtherance of the Central Government’s objective of facilitating corporate compliances during the current lockdown period owing to COVID-19 and taking note of the several representations received from industry stakeholders, the MCA vide General Circular No. 14/2020 dated April 08, 2020  allowed companies to hold Extraordinary General Meetings (‘EGMs’) through VC or OAVM complemented with e-voting facility/simplified voting through registered emails, without requiring the shareholders to physically assemble at a common venue.

Analysis

The MCA in its aforementioned Circular mandates that in case an EGM is considered unavoidable, it may be conducted by following the simplified procedure detailed thereunder. It is pertinent to state there that, the relaxation granted by way of this Circular relates only to the mode of conducting the EGM and the companies availing this relaxation are still required to ensure that all other statutory compliances (as required under the Companies Act , 2013 read with the Rules framed thereunder) relating to the conducting and convening of EGMs are duly complied with.

The said procedure is briefly discussed as follows:

A. For companies which are required toprovide the facility of e-voting under the Companies Act, 2013 or any other company which has voluntarily opted for such facility –

Maintenance of Record: The companies shall ensure that a transcript of the meeting is recorded and kept in safe custody. In case of a public company, the transcript shall be duly uploaded on the website of such company.

Convenience/ease of participation to be paramount:  The companies must ensure that shareholders stationed in different time zones are able to participate effectively and hence, any such meeting should be convened using such VC/OAVM facility that offers two-way teleconferencing or webex. Further, it must also be ensured that the members are able to pose questions either concurrently or are allowed additional time in advance. Moreover, the facility must have capacity to allow at least 1000 members to participate on a first-come-first-served basis. However, before the actual date of the meeting, the facility of remote e-voting shall be provided by the company in accordance with the Companies Act, 2013 and the Rules framed thereunder.

Chairman: In case the Articles of Association (‘AOA’) of the company are silent on this aspect,  the Chairman shall be appointed by way of a poll conducted through the e-voting system during the meeting, provided that a minimum of 50 members are attending the meeting.

Attendance: Attendance of the members through VC or OAVM shall be counted for the quorum. Only those members, who are present in the meeting through VC or OAVM facility and have not already cast their vote on resolutions through remote e-voting and are otherwise not barred from doing so, shall be allowed to vote. At least one independent director, and the auditor or his authorized representative, who is qualified to be the auditor shall be mandatorily required to attend such meetings through VC or OAVM. Further, where any Institutional Investor is a member of a company, such member must also be encouraged to attend and vote at such meetings.

Voting: It shall be the duty of the Chairman to ensure that the facility of e-voting is available for the purpose of conducting a poll during the meeting, depending on the number of members. Voting is be conducted by using the e-voting system, subject to a minimum of 50 members attending the meeting.

Proxy: A Proxy is not allowed to be appointed by any member for attending a meeting being held through VC/OAVM, since the requirement of physical attendance is already dispensed with in such a case. However, in pursuance of Section 112 and Section 113 of the Companies Act, 2013, members (being the President of India or the Governor of a State or a body corporate) may still continue to appoint representatives for voting through remote e-voting or for participating and voting in the meeting held through VC or OVAM.

Notice: The Notice for such a meeting shall make disclosures with regard to the manner in which framework shall be available for use by the members and it shall also contain clear instructions for the members to be able to successfully participate in the meeting. The company shall also provide a helpline number for all members and a copy of the notice shall also be displayed on the website of the company.

 Filing with Registrar: All resolutions passed at such meetings shall be duly filed with the Registrar of Companies within 60 days of the meeting, clearly indicating therein that the mechanism/framework provided in this Circular along with all other statutory requirements were duly complied with.

B. For companies which are not required to provide the facility of e-voting under the Companies Act, 2013 ?

The procedure to be followed by companies which are mandatorily required to provide e-voting facility is slightly different in comparison to the companies which are not mandatorily required to provide such a facility. The procedural compliances which are required to be followed only by the latter, are detailed as under:

Voting via 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, other privacy issues and authenticity are to be taken care of by company. Subject to a minimum of 50 members attending the meeting, all members shall cast their vote on the resolutions only by sending emails through their email addresses which are registered with the company. 

CONCLUSION

This framework is a welcome step considering the present lockdown imposed in the country due to the COVID-19 pandemic. This allows all companies to hold EGM through VC/ OAVM without compromising on the other statutory compliances and requirements of law. The framework leverages the strengths of digitally powered India by using a combination of VC and e-Voting/simplified voting through registered emails to enable companies conduct their EGMs. This step taken by MCA exhibits its dynamism in adopting technologically intensive solutions to combat such unprecedented situations and its proactiveness towards easing corporate compliances.