COMPANY GENERAL MEETING- COMBINED CLARIFICATION

COMPANY GENERAL MEETING- COMBINED CLARIFICATION

This Article covers the clarification issued by the MCA, with regard to holding of General (both AGM and EGM) Meetings of Company

OVERVIEW- GENERAL MEETING


Ministry of Corporate Affairs (MCA), Government of India issued clarification with regard to holding of General Meetings (Annual General Meeting and Extra-Ordinary General Meeting) under the Companies Act, 2013 (the Act) during the pandemic COVID-19 through their circular numbers 14/2020 dated 08-04-2020, 17/2020 dated 13-04-2020, 18/2020 dated 21-04-2020 and 20/2020 dated 05-05-2020. 

Under the above-mentioned circulars, MCA has provided the facility to Companies for conducting their Annual General Meeting (AGM) and Extra-Ordinary General Meetings (EGMs) through Video Conferencing (VC) or through Other Audio-Visual Means (OAVM).

FOR COMPANIES- REQUIRED TO PROVIDE E-VOTING FACILITY


Companies which are required to provide the facility of e-voting under the Act or any other Company which has opted for such facility:

a.  In case, it is unavoidable then EGM, may be held through VC or OAVM and recorded Transcript of the Meeting shall be maintained in safe custody, and in case of Public Limited Company, recorded Transcript, in addition, shall be made available on its website, if any;

b.  In case of AGM, only ordinary business and unavoidable, as considered by the Board, special business, may be transacted;

c.  The Company shall send Financial Statements including Boards’ Report, Auditors’ Report or other documents required to be attached therewith, and other Statements, only by email to the Members, Debenture trustees and to all other entitled persons;        

d.  The Company may send the Notice of the Meeting to the Members only through emails registered with Company or with depository participant/ depository, in accordance with provision of Rule 18 of Companies (Management and Administration) Rule, 2014 (the Rules);

e.  Before sending the Notices or copies of Financial Statements, etc.  the Company shall publish the public notice by way of advertisement as required under Rule 20(4)(v) of the Rules, at least once in a vernacular newspaper and at least once in an English newspaper, having wide circulation in the district where the Registered Office of the Company is situated in addition, a copy of the Notice shall also be published on the website of the Company, if any, which shall specify the following information:

  1. That the EGM or AGM has been conveyed through VC or OAVM in compliance with applicable provisions of the Act and these circulars;
     
  2. The date and time of EGM or AGM through VC or OAVM;
     
  3. Availability of Notice of the meeting on the website of the Company and the stock exchange, if listed Company;
     
  4. 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;
     
  5. The manner in which the Members who have not registered their email addresses with the Company can get the same registered with the Company; 
     
  6. The manner in which the Members can give their mandate for receiving dividend directly in their Bank Accounts through the Electronic Clearance Service (ECS) or any other means; and
     
  7. Any other detail considered necessary by the Company.  
      

f.  Where Company does not have the details of Bank Account of any shareholder the Company shall upon normalization of the postal service, dispatch the dividend warrant/cheque to such shareholder by post;

g.  With the permission of the relevant authorities and after following any advisories issued from such authorities, the Company can hold its AGM at its Registered Office or such other place as provided under Section 96 of the Act, with physical presence of some Members and some through VC or OAVM, however all resolutions shall continue to be passed through the facility of e-voting system

h.  Before considering the business of Meeting the Chairman shall satisfy himself and cause to record the same that all efforts feasible under the circumstances have indeed been made by the Company to enable Members to participate and vote on the items being considered in the Meeting;

i.  The members of the Company may be positioned in different time zones therefore the Company shall keep in mind the position of its Members before scheduling the Meeting;

j.  The facility must provide two way teleconferencing or WebEx;

k.  It is required to allow members to pose their questions concurrently or to submit their questions in advance through e-mail;

l.  The facility must have capacity to allow at least 1,000 Members to participate on a first-come-first-serve basis. Provided that large shareholders (i.e. shareholders holding 2% or more shareholding), promoters, institutional investors, Directors, Key Managerial Personnel, Chairperson of the Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee, Auditors, etc. may be allowed to attend the Meeting without restriction on account of first-come-first-serve principle;

m.  The facility to join the Meeting shall be open at least 15 minutes before the schedule time of Meeting and shall not be closed till expiration of 15 minutes after the schedule time of Meting;

n.  Before the date of the Meeting facility of remote e-voting shall be provided in accordance with the Act;

o.  The members physically present as well as Members present through VC or OAVM shall be counted for the quorum;

p.  The Members present through VC or OAVM, in case they have not voted through remote e-voting, can vote through e-voting or by show of hands during the Meeting if they are not barred to do so;

q.  Except as otherwise provided in the Articles of Association (AOA) of the Company the Chairman of Meeting shall be elected in the following manner:

  1. In case of less than 50 Members present at the Meeting, the Chairman shall be appointed in accordance with Section 104 of the Act;
     
  2. In any other case, Chairman shall be elected by a poll conducted through the e-voting during the Meeting.
     

r.  The Chairman present shall ensure that e-voting facility is available for the purpose of voting and also to conduct the poll;

s.  Since the Meeting is conducted through VC or OAVM, the Members are not allowed to appoint their proxy, however, representative of the Members may be appointed for the purpose of voting through remote e-voting or for participation and voting in the Meeting held through VC or OAVM, in accordance with Section 112 and 113 of the Act;

t.  Where the Company is required to appoint Independent Directors then one Independent Director and the Auditor or his authorised representative, who is qualified to be Auditor, shall attend the Meeting through VC or OAVM;

u.  Where the Institutional Investors are the Members of the Company, they must be encouraged to attend the Meeting and vote;

v.  The Notice of Meeting shall be prominently displayed on the website of the Company and due intimation may be made to the Stock Exchange in case of Listed Company;

w.  The Notice of the Meeting Shall provide:

  1. Clear instruction on how to access and participate in the Meeting through VC or OAVM;
     
  2. Provide a helpline number through Registrar and Transfer Agent, Technology Provider or otherwise, for those shareholders who need assistance with using the technology before or during the Meeting.
     

x.  In case of Notice of the Meeting has been served prior to the circular number 14/2020 dated 08-04-2020, the framework provided in that circular may be adopted for the Meeting if the consent of the Members has been obtained for shorter notice in accordance with the Section 101(1) of the Act, and a fresh notice of shorter duration with due disclosure in compliance with the circular is issued consequently; and

y.  All Resolutions passed in accordance with this mechanism shall be filed with Registrar of Companies within 60 days from the date of Meeting, clearly indicating therein that the mechanism provided herein alongwith other provisions of the Act and Rules made thereunder were duly complied with during such Meeting.
 

It should be noted that where the Company is transacting any item of business only by way of ‘postal ballot’, up to 30th June, 2020 or till further order, whichever is earlier, the requirements provided in Rule 20 of the Rules and framework provided in these circulars would be applicable mutatis mutandis. The Company will send notice to all its shareholders through email addresses registered with the Company or with depository participant/depository. The Company shall also provide a process for registration of email addresses to the members and state so in public notice. The Members will communication their assent or dissent only through remote e-voting system, as no Meeting required to be called. 
 

FOR COMPANIES- NOT REQUIRED TO PROVIDE E-VOTING FACILITY


Companies which are not required to provide the facility of e-voting under the Act:

a.  In case it is unavoidable then EGM may be held through VC or OAVM and the Company shall keep the recoded transcript of the same in safe custody. In case of a Public Limited Company, recoded transcript of said Meeting shall also be made available on the website, if any, of the Company, as soon as possible after the meeting ends;

b.  The Company can hold its AGM through VC or OAVM only when email addresses of its half of total number of Members are in its record, who:

  1. In case of Nidhi Company, holds shares of more than one thousand rupees in face value or more than one percent of total paid-up share capital, whichever is less;
     
  2. In case of other Companies having share capital, who represent not less than seventy-five percent of such part of paid-up share capital of the Company, carrying voting rights;
     
  3. In case of Companies not having share capital, who have the right to exercise not less than seventy-five percent of total voting power exercisable at the Meeting.
     

c.  The Company may send the Notice of the Meeting to the Members only through emails registered with Company or with depository participant/ depository, in accordance with provision of Rule 18 of Companies (Management and Administration) Rule, 2014 (the Rules);

d.  The Company shall send Financial Statement including Boards’ Report, Auditors’ Report or other documents required to be attached therewith, and other statements, only by email to the Members, Debenture trustees and to all other entitled persons;

e.  The Company shall make adequate provision for payment of dividend through the Electronic Clearing Service (ECS) or any other means, to the Members directly to their Bank Accounts. Where Company does not have the detail of Bank Account of any shareholder the Company shall upon normalization of the postal service, dispatch the dividend warrant/cheque to such shareholder by post;

f.  The Company shall also display the copy of the Notice of the Meeting on its website, if any;

g.  The Company shall ensure that all the Members are aware that a General Meeting is proposed to be conducted in compliance with applicable provisions of the Act and these circulars and for that purpose the Company shall:

  1. Contact all those Members whose email addresses are not registered with the Company over telephone or any other mode of communication for registration of their email addresses before sending the Notice;
     
  2. Where contact detail of any Member of the Company are not available with the Company or could not be obtained as per point (1) above, the Company shall immediately publish public notice by way of advertisement at least in a vernacular newspaper and at least once in an English newspaper, having vide circulation in the district where the Registered Office of the Company is situated, preferably both newspaper having electronic editions, and following information shall be specified;
  • That the Company intends to convey a General Meeting in compliance with applicable provisions of the Act and these circulars, and said purpose it proposes to send notices to all its Members by e-mail after, at least, 3 days from the date of publication of the public notice; and
     
  • The detail of email address alongwith a telephone number on which the members may contact for providing their email addresses for participation and voting in the General Meeting.                    
     

h.  Before considering the business of Meeting the Chairman shall satisfy himself and cause to record the same that all efforts feasible under the circumstances have indeed been made by the Company to enable Members to participate and vote on the items being considered in the Meeting;

i.  The members of the Company may be positioned in deferent time zones therefore the Company shall keep in mind the position of its Members before scheduling the Meeting;

j.  The facility must provide two way teleconferencing or WebEx;

k.  The facility must have capacity to allow at least 500 Members or total number of Members of the Company, whichever is lower, to participate on a first-come-first-serve basis. Provided that large shareholders (i.e. shareholders holding 2% or more shareholding), promoters, institutional investors, directors, key managerial personal, chairperson of the Audit Committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee, Auditors, etc. may be allowed to attend the Meeting without restriction on account of first-come-first-serve principle;

l.  The facility to join the Meeting shall be open at least 15 minutes before the schedule time of Meeting and shall not be closed till expiration of 15 minutes after the schedule time of Meting;

m.  The members present through VC or OAVM shall be counted for the quorum;

n.  Except provided in the Articles of Association of the Company the Chairman of Meeting shall be elected in the following manner:

  1. In case of less than 50 Members present at the Meeting, the Chairman shall be appointed in accordance with Section 104 of the Act;
     
  2. In any other case Chairman shall be elected by a poll conducted in the manner provided in point (t) below;
     

o.  Where the Company is required to appoint Independent Directors then one independent Director and the Auditor or his authorised representative, who is qualified to be Auditor, shall attend the Meeting through VC or OAVM;

p.  Since the Meeting is conducted through VC or OAVM, the Members are not allowed to appoint their proxy, however, representative of the Members may be appointed for the purpose of voting through remote e-voting or for participation and voting in the Meeting held through VC or OAVM, in accordance with Section 112 and 113 of the Act;

q.  Where the Institutional Investors are the Members of the Company, they must be encouraged to attend the Meeting and vote;

r.  For conveying the voting, and to facilitating the demand of poll and voting, the Company shall provide a designated email address to all Members of the Company with the Notice of the Meeting;

s.  The Company shall keep the confidentiality of the password and take care of security issue related to the designated email address. The Company shall safeguard the authenticity of the email address(es) and other details of the Members;

t.  Where a poll is demanded for any matter, during the Meeting, all Members shall cast their votes on the resolution only by sending emails through their email addresses which are registered with the Company to the designated email address provided by the Company;
 

It is hereby clarified that Members will send their assent or dissent through email at the time when the poll is conducted, not before commencement of the Meeting.  
 

u.  Where less than 50 Members are present in the Meeting, the Chairman may conduct the vote by show of hands unless poll is demanded in accordance with Section 109 of the Act. For the purpose of the poll, procedure mentioned in point (t) above shall be followed;

v.  Where time is required to count votes, the meeting may be adjourned and called later to declare the result;

w.  The Notice of the Meeting Shall provide:

  1. Clear instruction on how to access and participate in the Meeting through VC or OAVM;
     
  2. Provide a helpline number through Registrar and Transfer Agent, Technology Provider or otherwise, for those shareholders who need assistance with using the technology before or during the Meeting.
     

x.  In case of Notice of the Meeting has been served prior to the circular number 14/2020 dated 08-04-2020, the framework provided in that circular may be adopted for the Meeting if the consent of the Members has been obtained for shorter notice in accordance with the Section 101(1) of the Act, and a fresh notice of shorter duration with due disclosure in compliance with the circular is issued consequently; and

y.  All Resolutions passed in accordance with this mechanism shall be filed with Registrar of Companies within 60 days from the date of Meeting, clearly indicating therein that the mechanism provided herein alongwith other provisions of the Act and Rules made thereunder were duly complied with during such Meeting.

IMPORTANT NOTES


Note: The Companies shall ensure that all other compliances associated with the provisions relating to General Meeting viz making of disclosures, inspection of related documents by Members, or authorization for voting by bodies corporate etc. as provided in the Act and the Articles of Association of the Company are made through electronic mode.
 

Holding of Annual General Meeting (AGM) by Companies whose Financial year has ended on 31st December, 2019

 

The Ministry of Corporate Affairs through its circular number 18/2020 dated 21-04-2020 has clarified that the Companies whose Financial Years has ended on 31st December, 2019 can hold its AGM (other than first AGM) till 30th September, 2020 and the same shall not be regarded as the violation of the provisions of the Companies Act, 2013. 

Further the reference to the due date of AGM or the date by which the AGM should have been held under the Act or the Rules made thereunder shall be constructed accordingly.
 

All those Companies which are unable to hold their AGM in accordance with these circulars are advised to prefer applications for extension of AGM at a suitable point of time before the concerned Registrar of Companies under Section 96 of the Act. 


EDITED BY MR. NARENDRA SINGH
SENIOR ASSOCIATE
DUCTUS LEGAL