According to the Companies Act, 2013, every company must hold its Annual General Meeting once in a year wherein the main objective is to acquire the audited accounts and to know the position and progress of the company and also there is no provision regarding holding of Annual General Meetings through Video Conferencing (VC) or Other Audio-Visual Means (OAVM).
Keeping in view the problems being faced by the companies in passing an ordinary and special resolution on account of the threat proffered by COVID-19, the Ministry of Corporate Affairs (“MCA”) has issued a General Circular which states that MCA has given an alternative to the companies to conduct their Extra-Ordinary General Meetings which is unavoidable through VC and OAVM by complying a detailed procedure given in said circular and any other requirement provided in the Act or the rules made thereunder. While the notification resolved the big issue of holding an AGM rather than avoiding it, there are still many unanswered questions. The MCA notification does not include any information on recording attendance of members, proxies and their rights to vote, raising queries and their responses, and recording minutes.
Procedures under MCA circular
- Companies that are required to provide the facility of e-voting or any other company which has opted for such a facility
- In such meetings, other than the ordinary business, only those items of a particular company, which are considered unavoidable by the board, may be transacted.
- Because of the prevailing situation due to the COVID-19 pandemic effect, there are specific problems involved in conveying physical copies of the financial statements (including board’s report, auditor’s report or other documents necessary to be attached therewith), that checks shall be sent only by email to the members.
- Before sending the notices and copies of the financial statements, etc., a public message by way of advertisement to be published in a newspaper in prescribed manner with prescribed information:
- Companies need to provide a statement that the AGM shall be summoned through VC or OAVM in compliance with applicable provisions of the Act.
- Time and Date of the AGM.
- Proximity of notice of the meeting on the company’s website and the stock exchange, in case of a listed company.
- The manner in which the members who do not register their email addresses can get the same registered with the company.
- The manner in which the members can give their authorisation for receiving dividends promptly in their bank accounts through the Electronic Clearing Service (ECS) or any other means;
- The manner in which the members are holding shares in physical form or who have not entered their email addresses with the company can emit their vote through remote e-voting or the e-voting system during the meeting; any other detail considered necessary the company.
- The dividend is to be paid through ECS mode; however, in the absence of bank details of the members registered with the company, the prize shall be paid through warrant/Cheque upon normalisation of the postal services.
- When the company obtained special permission from relevant authorities to conduct AGM with the physical existence of some members, also issue the facility of VC or OAVM to allow other members of the company to participate in such meeting. However, even in such AGM, all resolutions shall continue to pass through the e-Voting facility only.
- Companies that are not required to provide the facility of e-voting
- AGM may be conducted through VC/OAVM only by those companies which have the Email address of its members in their records, the email addresses of at least half of its total number of members, who:
- In the case of Nidhi companies, shareholders hold more than Rs.1000 in face value or 1% of the total paid-up share capital, whichever is less.
- Companies with share capital shareholders representing not less than 75% of paid-up capital.
- Companies without share capital shareholders representing not less than 75% of total voting power exercisable at the meeting.
- The company shall take all required steps to register all members who have not recorded their email addresses.
- There are certain complications involved in transmitting physical copies of the financial statements (consisting of board’s report, auditor’s report or other documents needed to be attached in addition to that). Notice shall be sent only by email to the members.
- The circular has clearly explained that the companies can take all decisions of urgent nature requiring members’ approval, other than ordinary business or business items where any person has a right to be heard through Postal Ballot/e-voting as per the provisions of the Act.
- The dividend is to be paid through ECS mode; however, in the absence of Bank details of the members registered with the company, the dividend shall be paid through warrant/Cheque upon normalisation of the postal services.
Therefore, it is crystal clear that the companies may approve of its members for urgent matters (which are permissible through Postal Ballot/e-voting); if EGM could be avoided, companies need to adopt the procedure as set out in the said circular.
We assist our clients in dealing with the preparation of director’s report, conducting of annual general meeting, drafting of notice and agenda for AGM, preparation of minutes for annual general meeting and other compliances related to company incorporation, business setup, ROC filings, winding up of the company etc. If you have any questions or would like to know more about AGM through VC or OAVM, kindly contact us.