Conducting AGM through video conferencing – MCA Clarifies

CS Shubham Katyal | Sep 2, 2020 |

Conducting AGM through video conferencing – MCA Clarifies

Conducting AGM through video conferencing – MCA Clarifies

Conducting Annual General Meeting (AGM) through video conferencing (VC) or other audio visual means (OAVM) – MCA Clarifies

The Ministry of Corporate Affairs (MCA) vide it’s General Circular No 14/2020 issued earlier, on April 08, 2020, allowed the Companies to hold their Extra-Ordinary General Meetings (EGM) through Video Conferencing (VC) or Other Audio-Visual Means (OAVM). Later on May 05, 2020, MCA has come up with another Circular i.e. General Circular No 20/2020 allowing the Companies for holding Annual General Meeting (AGM) through Video Conferencing (VC) or Other Audio-Visual Means (OAVM) in the calendar year 2020 subject to the fulfillment of few requirements.

While the world has entered a situation where restricting physical movements is necessary, there is no stopping the internet and ever-growing technology. As we all are aware of the ongoing circumstances of lockdown, the impact of the COVID-19 pandemic has brought about a new set of challenges for the economy in the world as well as for the Indian economy.

In view of this situation, MCA earlier extended the time frame for conducting Annual General Meetings by the Companies, which are following Financial Year as January 1 to December 31. The revised due date is September 30, 2020, instead of June 30, 2020.

Before knowing the process of holding AGM through VC or OAVM, we should be aware of the intentions of authorities and should be very clear with the requirements of issuing the aforesaid Circular. As you are aware that the Coronavirus Pandemic COVID – 19 has surpassed all the historic pandemics & Crises and also has put the earth & the whole economic & business system to a halt. This pandemic has also led to the temporary shutting down of millions of Corporate and industrial unit. This Circular had issued by MCA in the view of the current situation of COVID – 19 and Social Distancing which led the Companies to complete shutdown or to do activities with a minimum number of staff.

To add more on the list of facilitating the companies and businesses in India, The Ministry of Corporate Affairs (MCA) has now allowed companies to hold their annual general meeting (AGM) by Video Conferencing (VC) or other audiovisual means (OAVM) during the calendar year 2020 amidst the COVID-19 crisis.

The procedure of Holding Annual General Meeting (AGM) through Video Conferencing (VC) or Other Audio-Visual Means (OAVM)

A. For Companies mandatory require to/opted for providing e-voting facility-

1. The Notice of Holding AGM shall be dispatched to members only through e-mails registered with the Company or Depository Participant;

2. The copies of financial statements including Board’s report, Auditor’s report or other documents required to be attached therewith, shall be sent only by email to the members, trustees for the debenture-holders, and to all other persons so entitled;

3. Before sending notices of AGM and copies of Financial Statements to members, an advertisement has to be published at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the Company is situated and at least in the English Language in English Newspaper having a wide circulation in that district, preferable both newspapers having electronic editions, and shall specify the following information:

(a) a statement that the AGM will be convened through VC or OAVM. This is done in compliance with applicable provisions of the Act read with applicable Circular;

(b) the date and time of the AGM through VC or OAVM;

(c) availability of notice of the meeting on the website of the company and the stock exchange, in case of a listed company;

Conducting Annual General Meeting (AGM) through video conferencing (VC) or other audiovisual means (OAVM) – MCA Clarifies

[Author’s Suggestion: It is suggested to provide the link of the website of the company and the stock exchange, if possible.]

(d) the manner in which the members who are holding shares in physical form or who have not registered their email addresses with the company can cast their vote through remote e-voting or through the e-voting system during the meeting;

(e) the manner in which the members can give their mandate receiving dividends directly in their bank accounts through Electronic Clearing Service (ECS) or any other means;

[This clause is applicable only for those companies who are declaring final dividend at their AGM.]

(f) any other detail considered necessary by the company.

4. The facility for joining the meeting shall be opened at least 15 minutes before the time scheduled for the meeting. It will close after 15 minutes of the expiry of the scheduled time of the meeting.

5. The Company shall ensure that meeting through VC or OAVM allows two-way teleconferencing or Webex for the ease of participation of the members and the participants are allowed to ask questions or given time to ask questions in advance on the email address of the Company.

6. The Facility must have a capacity to allow at least 1,000 members to participate on the First-cum-First-serve basis.

7. The shareholders holding 2% or more shareholding, promoters, KMPs, Chairpersons of the Audit Committee and Nomination & Remuneration Committee, etc. may be allowed to attend the meeting without restrictions.

8. Chairperson: As specified in the Articles of Association (AOA) of the Company. If AOA does not specify the name of Chairperson then-

  • Where there are <50 members present: Chairperson appointed as per Section 104 of the Act;
  • In all other cases: Appointed by Poll conducted through e-voting.

9. Attendance of members through VC or OAVM shall be counted for quorum u/s 103 of the Act.

10. Proxies u/s 105 of the Act are not allowed to be appointed for the meeting held under this Framework. However, representatives of the members u/s 112 & 113 of the Act are allowed to be appointed for the purpose of voting through remote e-voting or for participation in the meeting through VC or OAVM.

11. Participation of at least One Independent Director (Where the Company has Independent Directors) and the Auditors or his representative is mandatory for holding meetings through VC or OAVM.

12. In case the Company has received permission from relevant authorities to conduct AGM at its Registered Office, or at any other place as provided under section 96 of the Act, then the Company in addition to holding such meeting with the physical presence of some members shall also provide the facility of VC or OAVM so as to allow other members of the company to participate in such meeting.

13. 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 counted in Quorum.

14. All resolutions shall continue to be passed through the e-voting facility

B. Companies not required to provide e-voting facility-

1. The Company can conduct AGM through VC or OAVM Facility only when it has the email addresses of at least half of its total number of members:-

Conducting AGM through video conferencing - MCA Clarifies

Conducting AGM through video conferencing – MCA Clarifies

2. The company shall take all necessary steps to register the email addresses of all persons who have not registered their email addresses with the company.

3. The Notice of Holding AGM shall be dispatched to members only through e-mails registered with the Company or Depository Participant;

4. The copies of financial statements including:

  • Board’s report,
  • Auditor’s report or
  • Other documents required to be attached therewith,

shall be sent only by email to the members, trustees for the debenture-holders, and to all other persons so entitled;

5. The facility for joining the meeting shall be opened at least 15 minutes before the time scheduled for the meeting. It should close after 15 minutes of the expiry of the scheduled time of the meeting.

6. The Company shall ensure that meeting through VC or OAVM allows two-way teleconferencing or Webex for the ease of participation of the members and the participants are allowed to ask questions or given time to ask questions in advance on the email address of the Company.

7. The Facility must have a capacity to allow at least 500 members or equal to the total number of members of the Company, whichever is lower, to participate on the First-cum-First-serve basis.

8. The shareholders holding 2% or more shareholding, promoters, KMPs, Chairpersons of the Audit Committee and Nomination & Remuneration Committee, etc. may be allowed to attend the meeting without restrictions.

9. Chairperson: As specified in the Articles of Association (AOA) of the Company. If AOA does not specify the name of Chairperson then-

  • Where there are <50 members present: Chairperson appointed as per Section 104 of the Act;
  • In all other cases: Appointed by Poll conducted through e-voting.

10. Attendance of members through VC or OAVM shall be counted for quorum u/s 103 of the Act.

11. Participation of at least One Independent Director (Where the Company has Independent Directors) and the Auditors or his representative is mandatory for holding meetings through VC or OAVM.

12. Proxies u/s 105 of the Act are not allowed to be appointed for the meeting held under this Framework. However, representatives of the members u/s 112 & 113 of the Act are allowed to be appointed for the purpose of voting through remote e-voting or for participation in the meeting through VC or OAVM.

13. Where the Company has Institutional Investors as its Member, they must be encouraged to attend and vote in the said meeting through VC or OAVM.

14. In case the Poll is required to be taken, the Company shall provide a designated email address to all members at the time of sending the notice of meeting so that the members can convey their vote.

15. During the meeting held through VC or OAVM facility, where a poll on any item is demanded, the members shall cast their vote on such resolution only by sending emails through their email address registered with the Company.

Any member-voted through any other email id not registered with Company, such vote shall be considered as Invalid.

16. Voting on Resolution(s)

Where <50 members present: Voting by show of hands unless poll demanded
Where >50 members present: Voting by poll through e-mail as stated in clause 15 above

17. In case the Company is unable to pay the dividend to any shareholder by the electronic mode, due to the non-availability of the details of the bank account, then the company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.

C. The companies which are covered by the General Circular No. 18/2020, dated 21.04.2020 and are unable to conduct their AGM in accordance with the framework provided in this Circular. They are advised to prefer applications for extension of AGM at a suitable point of time. The application should be made to concerned Registrar of Companies under section 96 of the Act.

Note: However, many companies that have already approved their AGM notices. They will have to make suitable changes therein in line with the said circular. Further, post the issue of AGM Circular, many companies will make their debut in conducting the AGM through VC/ OAVM. It will be interesting to see smooth convening amidst the crisis. However, this is a welcome move by the MCA.

DISCLAIMER:

This write-up is based on the understanding and interpretation of the author. The same is not intended to be professional advice.

Tags: Company Laws

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