COVID-19 Update – MCA Permits Holding of AGMs Through Video Conferencing or Other Audio Visual Means
The Ministry of Corporate Affairs (‘MCA’), through its Circular dated April 8, 2020 (‘EGM Circular I’) read with its Circular dated April 13, 2020 (‘EGM Circular II’), has permitted companies to hold extraordinary general meetings through video conferencing or other audio visual means (collectively, ‘VC’) (the details of which are provided in our Client Alert dated April 17, 2020, available here). In light of the continued restrictions on the movement of persons being faced, similar relaxations have been introduced by way of MCA’s Circular dated May 5, 2020 (‘AGM Circular’) for holding an annual general meeting (‘AGM’) through VC, during the calendar year of 2020, subject to compliance with the: (a) provisions associated with AGMs under the (Indian) Companies Act, 2013 (‘Act’) and the articles of association of the company through electronic mode; and (b) requirements prescribed under the AGM Circular, key details of which are set out below:
a. Companies are required to comply with the relevant framework provided in paragraph 3 of EGM Circular I and the manner and mode of issuance of notices prescribed under EGM Circular II, while holding AGMs, as applicable to each type of company.
b. For companies which are required to provide the e-voting facility under the Act or any other company which has opted for such facility, a public notice by way of an advertisement should be published in newspapers in the manner prescribed under the AGM Circular before notices and copies of financial statements and other relevant documents are sent, as per the conditions specified under the AGM Circular. If a company has obtained permission from the relevant authorities to conduct a physical AGM, the company may also provide the facility of VC to other members of the company to participate in such meeting, who will together constitute quorum as provided under Section 103 of the Act, and all resolutions should be passed through the facility of e-voting system.
c. In case of other companies, AGMs may be conducted by such companies through VC only if it has the records of email addresses of at least half of its total number of members, who:
(i) In case of a Nidhi company, hold more than INR 1,000 (approx. USD 13) in face value or more than one per cent of the total paid up share capital, whichever is less;
(ii) In case of other companies having share capital, who represent not less than 75 per cent of such part of the paid up share capital of the company as gives a right to vote at the meeting; and
(iii) In case of companies not having share capital, who have the right to exercise not less than 75 per cent of the total voting power exercisable at the meeting.
Further, the company is required to take reasonable steps to register the email addresses of all persons who have not registered their email addresses with the company.
ii. Agenda: Other than ordinary business, only such items of special business which are considered unavoidable by the board of directors of the company may be transacted.
iii. Documents to be Discussed at the AGM: Copies of financial statements, board’s report, auditor’s report and other documents required to be attached may be sent only by email to members, trustees for debenture-holders (if applicable) and all other persons entitled.
iv. Payment of Dividends: In case a company is unable to pay dividends to any shareholder by electronic mode due to un-availability of bank account details, the same should be paid by dividend warrant / cheque on normalization of postal services. Companies, which are not required to provide the facility of e-voting, will make adequate provisions for allowing members to give mandate for receiving dividends in their bank accounts. If such details are not made available, the same may be paid after normalization of postal services as well.
v. General Compliances: Companies are required to ensure that all other compliances in relation to general meetings such as, inter alia: (a) inspection of related documents/registered by members; or (b) authorisation for voting by body corporates etc., as provided in the Act and the articles of association of the company, are made through the electronic mode.
vi. Companies Not Covered: MCA had also, by way of its Circular dated April 21, 2020, extended the deadline for holding AGMs of companies whose financial year (other than the first financial year) ended on December 31, 2019, to September 30, 2020. Companies which are not covered under the aforementioned Circular, and which are unable to conduct their AGMs in accordance with the framework under the AGM Circular, are advised to prefer applications for the extension of time for holding an AGM before the concerned Registrar of Companies under the Section 96 of the Act.