Introduction
The COVID-19 pandemic has made the entire world standstill. Businesses are facing difficulties while making decisions. Considering the difficulties in attending meetings physically, the Ministry of Corporate Affairs (MCA) has allowed companies to hold extraordinary general meetings (EOGM) via Video Conferencing or any other audiovisual mode and allowed e-voting or via shareholders registered email id on business resolutions.
Post representation by many stakeholders regarding the difficulty, the MCA vide General Circular No. 17/2020 clarified the manner and mode of issuing notice to the members whose email id is not available, applicability of e-voting to postal ballot items.
However, the Companies Act, 2013, allows passing of ordinary and special resolution via e-voting or postal ballot, but in such crisis and social distancing being very important, postal ballot option cannot be availed by the companies.
These General Circulars provide major relief to companies, where passing resolutions is mandatory for taking major decisions and such meetings cannot be avoided. The guidelines issued by MCA covers two scenarios i.e.
1. Companies which are required to provide the e-voting facility under the Act or any other company which has opted for the e-voting and
2. Companies which are not required to provide the e-voting facility under the Act.
The guidelines issued are explained as under:
For Companies which are required to provide the e-voting facility under the Act or any other company which has opted for the e-voting
The holding of EGM and manner of maintaining the record
The companies are allowed to hold an EGM (Extraordinary General Meeting) via Video Conferencing (VC) or any other Audio Visual means (AOVM). The company shall maintain a recorded transcript of the meeting in safe custody.
Requirements of VC or AOVM
The facility should provide for:
1. two-way teleconferencing or webex for ease of participation by members
2. The participants must be allowed to post their questions on the email address of the company in advance in a given time or on a concurrent basis
3. The facility should have the capacity to allow at least 1000 participants on first come first serve basis
Note: The large shareholders (holding 2% or more), Directors, Key Managerial Personnel, Promoters, Institutional Investors, chairperson of the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Auditors etc., may be allowed to participate without first come first serve basis.
Publishing of recorded transcript
The recorded transcript of the meeting shall be made available on the website of the company as soon as the meeting is over.
Time of the Meeting
While scheduling the meeting, the company shall keep in mind the different time zones and convenience of persons located at such different time zones.
Manner and mode of issuing notice to the members
The notice for the general meeting shall make disclosures regarding the manner of framework available to the members and shall provide clear instructions on how to access and participate in the meeting.
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The Company shall send notice only through emails registered with the company or with the depository. The copy of notice shall be available on the website, if any of the company and due intimation shall be made to the Stock Exchanges in case of listed entities.
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In terms of Rule 20(4) of Companies (Management and Administration) Rules, 2014, while publishing the Public Notice, the Company shall make the following additional disclosures:
- A statement that the EGM has been convened through VC or OAVM in compliance with the applicable provisions of the Act, read with General Circular 14/2020 dated 8th April 2020 and General Circular No 17/2020 dated 13th April 2020.
- Date and TIme of the EGM through VC or OAVM.
- Availability of Notice on the website of the Company.
- The manner in which the members who have not registered their email id with the company or are holding physical shares, can register their email id with the company immediately to cast vote, through remote e-voting or through e-voting system during the meeting.
- any other details as may be considered necessary by the company.
Further, 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 the circumstances have indeed been made by the company to enable to participate and vote on the items being considered in the meeting
The Company shall also provide helpline numbers to those members who need assistance in using the technology before or during the meeting, through registrar and transfer agent, technology provider or otherwise.
Joining of the meeting
The facility for joining the meeting shall be open at least 15 minutes before the time scheduled for the meeting and shall not be closed till the expiry of 15 minutes after the scheduled time for the meeting.
Chairman of the meeting
Unless Articles of Association of the Company require any specific person to be appointed as Chairman of the Meeting, the Chairman shall be elected in the following manner:
- Where there are less than 50 members present : Then members present through VC or AOVM may elect one person among themselves to be Chairman of the meeting. (in accordance with Section 104)
- In all other cases, the Chairman shall be appointed by a poll conducted through e-voting.
Noting of Attendance of the Members
Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.
Casting of vote by Members
The Chairman of the meeting shall ensure that the members can cast their vote, unless otherwise barred from voting;
- During the meeting, through an e-voting system.
- Before the meeting, through a remote e-voting system.
Demand for Poll at the meeting
If the demand for a poll is made, then the Chairman shall conduct the same only through an e-voting system.
Appointment of proxy
As the meetings are held through VC or AOVM where physical attendance of the member is not needed, there is no requirement to appoint a proxy. Hence the facility for appointment of proxy for such meetings is not available. However, representatives of the members may be appointed for the purpose of voting through remote e-voting or participation and e-voting during the meeting.
Mandatory attendance
Such meeting shall be attended through VC or AOVM by:
- At Least one Independent Director (where company is required to appoint)
- Auditor or his representative who is qualified to be auditor
The institutional investors may be encouraged to attend and vote at the meeting held through VC or AOVM.
Filing of resolutions passed under this mechanism
All resolutions passed with this mechanism shall be filed with the Registrar of Companies within 60 days from the meeting. The resolution shall clearly indicate regarding the mechanism adopted as per MCA circular for passing such resolutions alongwith compliance of other provisions of the Act, Rules and Regulations.
If notice of EGM already issued before MCA Circular
In such case, the Company shall obtain Members consent as per Section 101 (1) of the Companies Act, 2013 and issue a fresh notice of shorter duration in accordance with the Circular issued.
For Companies which are not required to provide the e-voting facility under the Act
The holding of EGM and manner of maintaining the record
The companies are allowed to hold an EGM (Extraordinary General Meeting) via Video Conferencing (VC) or any other Audio Visual means (AOVM). The company shall maintain a recorded transcript of the meeting in safe custody.
Requirements of VC or AOVM
The facility should provide for:
- two-way teleconferencing or WebEx for ease of participation by members
- The participants must be allowed to post their questions on the email address of the company in advance in a given time or on a concurrent basis
- The facility should have the capacity to allow at least 500 participants or a number equal to the total number of members (whichever is lower) on first come first serve basis
Note: The large shareholders (holding 2% or more), Directors, Key Managerial Personnel, Promoters, Institutional Investors, chairperson of the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Auditors etc., may be allowed to participate without first come first serve basis.
Publishing of recorded transcript
In the case of public companies, the recorded transcript of the meeting shall be made available on the website of the company as soon as the meeting is over.
Time of the Meeting
While scheduling the meeting, the company shall keep in mind the different time zones and convenience of persons located at such different time zones.
Manner and mode of issuing notice to the members
The notice for the general meeting shall make disclosures regarding the manner of framework available to the members and shall provide clear instructions on how to access and participate in the meeting.
- The company shall send notice to all the members only through emails registered with the company.
- The copy of the notice shall be displayed on the website of the company, if any.
- The company shall take following steps to ensure that all the members are aware that the general meeting is proposed to be conducted :
- the company shall get in touch with such members via telephone or any other mode of communication, whose email is not registered with the company, before sending the notice
OR
- Where the contact details of the member could not be obtained as per (a) above, then 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
AND
At least once in a English language in an English newspaper having wide circulation in the district where Registered office of the company is situated, (both the newspapers having electronics editions)
- The advertisement as stated above should provide the following information:
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That the company intends to convene a general meeting in compliance with applicable provisions of the Act read with the General Circular No. 14/2020, dated 8th April, 2020 and Circular No. 17/2020 dated April 13, 2020 , and for the said purpose it proposes to send notice to all its members by e-mail after, at least, 3 days from the date of publication of the public notice;
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the details of the e-mail address along with a telephone number on which the members may contact for getting their email addresses registered for participation and voting in the general meeting.
Further 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 the circumstances have indeed been made by the company to enable to participate and vote on the items being considered in the meeting
The Company shall also provide helpline numbers to those members who need assistance in using the technology before or during the meeting, through register and transfer agent, technology provider or otherwise.
Joining of the meeting
The facility for joining the meeting shall be open at least 15 minutes before the time scheduled for the meeting and shall not be closed till the expiry of 15 minutes after the scheduled time for the meeting.
Noting of Attendance of the Members
Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.
Chairman of the meeting
Unless Articles of Association of the Company require any specific person to be appointed as Chairman of the Meeting, the Chairman shall be elected in the following manner:
- Where there are less than 50 members present : Then members present through VC or AOVM may elect one person among themselves to be Chairman of the meeting. (in accordance with Section 104)
- In all other cases, the Chairman shall be appointed by a poll conducted through e-voting.
Mandatory Attendance
Such meeting shall be attended through VC or AOVM by:
- At Least one Independent Director (where company is required to appoint)
- Auditor or his representative who is qualified to be auditor
The institutional investors may be encouraged to attend and vote at the meeting held through VC or AOVM.
Appointment of Proxy
As the meetings are held through VC or AOVM where physical attendance of the member is dispensed with, there is no requirement of appointment of proxy. Hence the facility for appointment of proxy for such meetings is not available. However, representatives of the members may be appointed for the purpose of voting through remote e-voting or participation and e-voting during the meeting.
Designated email id to convey votes
The company shall provide a designated email address to all the members at the time of sending notice, so that if a poll is demanded for any resolution during the meeting, they can convey their vote to such designated email id.
Such designated email id shall be strictly maintained by the company at all the times. The company should take all due measures to protect the password and other privacy issues associated with the email id and details of the members.
Voting by Members
If less than 50 members are present in a meeting the Chairman may decide to conduct a vote by show of hands unless demand for a poll is made.
If a poll is demanded, then a poll will take place during the meeting and members can convey their assent or dissent only at such stage on items considered in the meeting by sending email to the registered email id designated by the company for the purpose. The members shall ensure that they send their vote through email id which is registered with the company.
If counting of votes requires time, then the meeting may be adjourned and called later to declare the results.
Filing of resolutions passed under this mechanism
All resolutions passed with this mechanism shall be filed with the Registrar of Companies within 60 days from the meeting. The resolution shall clearly indicate regarding the mechanism adopted as per MCA circular for passing such resolutions alongwith compliance of other provisions of the Act, Rules and Regulations.
If notice of EGM already issued before MCA Circular
In such case, the Company shall obtain Members consent as per Section 101 (1) of the Companies Act, 2013 and issue a fresh notice of shorter duration in accordance with the Circular issued.
The General Circular 17 dated 14th April, 2020, clarified regarding passing of certain items only through postal ballot without convening the Meeting.
The companies covered under Part 3-A of the General Circular 14 dated 8th April, 2020 requiring to transact any item only via postal ballot, should follow below mentioned procedure and such item shall be deemed to be transacted without having requirement to call the general meeting.
- While transacting any items only by postal ballot up to 30.06.2020 or till further orders, whichever is earlier, for such transactions, Rule 20 of Companies (Management and Administration) Rules, 2014 and General Circular 14, 2020 and General Circular 17, 2020 would apply mutatis mutandis.
- The company shall send notice by email to all its shareholders who have registered their email id with the company or depository/ depository participant.
- It is the duty of the company to provide information regarding the process of registration of email id through a public notice.
- The members are required to communicate their assent or dissent only through remote e-voting system.
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