Clarification on - Extra Ordinary General Meeting - Series 589
Clarification on
Extra Ordinary General Meeting
Due to LockDown
(Step Towards ‘Ease
of Doing Business”)
Short Summary:
As demanded by most corporate professional and
compliance professionals, Ministry of Corporate Affairs ("MCA") has clarified the
mode of conducting general meetings for corporates in the era of the outbreak
of Coronavirus. This circular is for passing of resolution in general meeting
which are of “Urgent Nature”.
Legally companies Act 2013 doesn’t specify any provisions
for allowing the conduct of members’ meetings through video conferencing (VC) or other
audio-visual means.
Now, MCA has issued a General Circular
Circular No 14/2020 dated April 08, 2020 vide which Clarification on Passing Ordinary and Special Resolutions by
Companies - on account of threat posed by Covid-19 has been issued.
A. Applicability:
This
circular is appliable on all type of Companies. (like Small, Private, Public,
Listed, Nidhi etc).
B. Type of Meeting:
This is in
relation to all type of Extra Ordinary General Meeting. This scheme is not
applicable on Annual General Meeting.
1.
Whether Companies can hold AGM through VC as per requirement
of above mentioned circular?
This
circular of MCA doesn’t facilitate holding of AGM through VC. However, Companies
can’t hold AGM under this Scheme.
2.
Whether company can pass resolution for ordinary business through
this Circular?
As per this
circular, Company can’t pass resolution for ordinary business. Ordinary
business can’t be discussed through this circular.
C. Conditions for above facilities:
ü EGM must be held on or before 30th June,
2020 under this Scheme. If EGM held after 30th June then this
circular is not applicable.
ü Allowed only in case when passing of resolution
in EGM is unavoidable/ urgent.
ü When passing of resolution through postal ballot
not feasible.
D. Filing of MGT-14:
If any resolution
is passed for which company is required to file MGT-14. Then MGT-14 can be file
with in 60 (Sixty) days of passing of resolution along with a declaration that
provisions of Circular and rules has been complied with.
Conditions/ provisions for holding of EGM through VC
A. Notice of Meeting:
The notice for
the general meeting shall make disclosures with regard to the manner in which
framework provided in this Circular shall be available for use by the members
and also contain clear instructions on how to access and participate in the
meeting. The company shall also provide a helpline number through the registrar
& transfer agent, technology provider, or otherwise, for those shareholders
who need assistance with using the technology before or during the meeting. A
copy of the meeting notice shall also be prominently displayed on the website
of the company and due intimation may be made to the exchanges in case of a listed
company
B. Quorum:
Attendance of
members through VC or OAVM shall be counted for the purpose of reckoning the
quorum under section 103 of the Act
3.
Whether shareholders attending through VC or OAVM will count
for quorum?
Shareholder
attending EGM through VC or OAVM shall be count for quorum.
C. Proxy:
The facility of
appointment of proxies by members will not be available for such meetings.
However, in pursuance of Section 112 and Section 113 of the Act,
representatives 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.
4.
Whether Proxy can appoint if egm held through Video
conferencing?
The
facility of appointment of proxies by members will not be available for such
meetings. Therefore, Proxy can’t appoint.
D. Recording of Meeting:
EGMs, wherever
unavoidable, may be held through VC or OAVM and the recorded transcript of the
same shall be maintained in safe custody by the company.
Publication
on Website: In case
of a public company, the recorded transcript of the meeting, shall as soon as
possible, be also made available on the website (if any) of the company
Duration: The duration for maintaining the safe custody has
not been specified by MCA
E. Participation of Members:
ü All care must be taken to ensure that such
meeting through VC or OAVM facility allows two-way teleconferencing
or webex for the ease of participation of the members and
ü the participants are allowed to pose questions
concurrently or
ü given time to submit questions in advance on the
E-mail address of the company.
ü Presence of atleast 1000 Members: Such a facility must have a capacity to allow
at least 1000 members to participate on a first-come-first-served
basis.
(However
FIFO (first come first served) may not apply in certain case stated below)
The large
shareholders (i.e. shareholders holding 2% or more shareholding), promoters,
institutional investors, directors key managerial personnel the chairpersons of
the Audit Committe Nomination and Remuneration Committee and Stakeholders
Relationship Committee, auditors etc. may be allowed to attend the
meeting without restriction on account of first-come- first-served
principle.
F. Other Points:
Time for
joining of Meeting:
The facility for joining the meeting shall be kept open at least 15 minutes
before the time scheduled to start the meeting and shall not be closed till the
expiry of 15 minutes after such scheduled time. (i.e Pre and Post Meeting
15 Minutes Requirements)
Attendance
of Members: Attendance
of members through VC or OAVM shall be counted for the purpose of reckoning the
quorum under section 103 of the Act.
Presence of
Independent Director:
At least one independent director (where the company is required to appoint
one), and the auditor or his authorized representative, who is qualified to be
the auditor shall attend such meeting through VC or OAVM.
Time Zone: Convenience of different persons positioned in
different time zones shall be Kept in mind before scheduling the meeting.
G. Voting Facility:
Remote e-voting: In case of Companies listed on stock exchange or
having at-least 1000 members, remote e-voting facility shall be provided which
shall remain open for not less than three days and shall close at 5.00 p.m. on
the date of preceeding the date of the General Meeting.
E- voting through email: In case of Companies not listed on stock exchange
or having less than 1000 members, the e-voting shall be taken through
registered email from members on designated mail id of the company, which shall
be secured.
Note: The Chairman present at the meeting
shall ensure that the facility of e-voting system is available for the purpose
of conducting a poll during the meeting
Other Mode of Voting:
a) where there are less than 50 members present at
the meeting, the voting may be conducted either
-
through
the e-voting system or
-
by
a show of hands,
-
unless
a demand for poll is made in accordance with section 109 of the Act, in which
case, the voting shall be conducted through the e-voting system;
b) in all other cases, the voting shall be
conducted through e-voting system
5.
What is meaning of e-voting for companies other than Listed
Companies?
e-voting means,
voting through e-mail by the members on registered e-mail id of the Company.
H. Chairman:
ü The Meeting shall be chaired by person as
specified in AOA
ü If AOA doesn’t provide for the same and
-
members present at meeting are 50 or more, the Chairman shall be
elected by taking poll or
-
if members present are less than 50, the chairman shall be elected by
sow of hands;
6.
Whether Private Company can held EGM through VC or OAVM
under this Circular?
All type of
Companies including Small, Private, Public, Listed etc can hold EGM through VC
or OAVM.
7.
Private Limited Company having 2-50 members required to
provide e-voting facility?
If there is
less than 50 members present in the meeting, EGM can provide either facility of
show of hand or e-voting. It is not mandatory to provide e-voting facility in
this case.
6.
In case of private limited company having website, is it
mandatory to publish recording of Meeting?
In case of Public
Company having website, it is mandatory to publish recording of meeting.
Therefore, it is not mandatory for private company to publish recording.
Author – CS Divesh Goyal, GOYAL DIVESH &
ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). ‘
Disclaimer: The entire contents of this document have
been prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. Although care has been taken to ensure
the accuracy, completeness and reliability of the information provided, I
assume no responsibility therefore. Users of this information are expected to
refer to the relevant existing provisions of applicable Laws. The user of the
information agrees that the information is not a professional advice and is
subject to change without notice. I assume no responsibility for the
consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE
FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING
OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION
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