The Ministry of Corporate Affairs vide General Circular No. 20/2020 dated 5th May 2020 has clarified that the companies are allowed to conduct Annual General Meeting (AGM) through Video Conferencing or other audio visual means due to lockdown or COVID-19 outbreak
MCA has prescribed certain additional guidelines, which a company needs to follow to hold AGM through VC or OAVM in addition to those issued by it vide General Circulars No 14/2020 dated 08th April, 2020 and No. 17/2020 dated April 13, 2020 respectively for holding extra-ordinary general meeting through VC or OAVM.
Let’s analysis these circular through FAQs:
Q1. Which type of companies can hold its AGM through Video Conferencing or Other Audio Visual Means?
- All companies which are required to provide the facility of e-voting or any other company which has opted for such facility.
- Company which has in its records, the email addresses of at least half of its total number of members, who –
- in case of a Nidhi, hold shares of more than one thousand rupees in face value or more than one per cent. of the total paid-up share capital, whichever is less;
- in case of other companies having share capital, who represent not less than seventy-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting;
- in case of companies not having share capital, who have the right to exercise not less than seventy-five per cent. of the total voting power exercisable at the meeting
Q2. How the quorum shall be ascertained for such meetings?
In case Companies take the permission from the authorities to hold the meeting at their registered office than in that case 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 reckoned for the purpose of quorum under section 103 of the Act.
Q3. Which type of business can be transacted in AGM through VC/OAVM?
- Ordinary Business
- Items of Special Business, which are considered to be unavoidable by the Board
Q4. How the Financial Statements shall be sent to the persons entitled?
Financial Statements (including Board’s report, Auditor’s report or other documents required to be attached therewith), such statements shall be sent only by email to the members, trustees for the debenture-holder of any debentures issued by the company, and to all other persons so entitled.
Q5. Whether Companies need to publish advertisement for e-voting in Newspaper?
Companies which are required to provide the facility of e-voting or any other company before sending the notices and copies of the financial statements, etc., a public notice by way of advertisement 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 having a wide circulation in that district, and
- at least once in English language in an English newspaper having a wide circulation in that district
preferably both newspapers having electronic editions, and specifying in the advertisement the following information:
- statement that the AGM will be convened through VC or OIVM in compliance with applicable provisions of the Act read with this Circular:
- the date and time of the AGM through VC or OAVM;
- availability of notice of the meeting on the website of the company and the stock exchange, in case of a listed company
- 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;
- the manner in which the persons who have not registered their email addresses with the company can get the same registered with the company;
- 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;
- any other detail considered necessary by the company
Q6. How can a company pay dividend to its shareholders?
The companies shall make adequate provisions for allowing the members to give their mandate for receiving dividends directly in their bank accounts through the Electronic Clearing Service (ECS) or any other means. For shareholders, whose bank accounts are not available, company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.
Q7. What should be the capacity to avail such facilities?
- Companies which are required to provide the facility of e-voting must have a capacity to allow at least 1000 membersto participate on a first-come-first-served basis.
- Any other company which has in its records, the email addresses must have a capacity to allow at least 500 members or members equal to the total number of members of the company (whichever is lower) to participate on a first-come-first-served basis.
Q8. What shall be the duration for opening and closing of the 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 be closed till the expiry of 15 minutes after such scheduled time.
Q9. What facilities should be provided through VC or OAVM?
- To ensure that such meeting allows two way teleconferencing or webex for the ease of participation of the members; and
- The participants are allowed to pose questions concurrently or given time submit questions in advance on the e-mail address of the company.
Q10. What will be the place of meeting convened through VC or OAVM?
- At its registered office, or at any other place as provided under section 96 of the Act In case, the company has received the permission from the relevant authorities to conduct its AGM
- Where no permission is granted than there will be no place of meeting, since all the participants will be joining the meeting through VC or OAVM.
Q11. How the chairman of the meeting shall be elected?
The Chairman for the meeting shall be appointed in the following manner, unless the Articles of the company require any specific person to be appointed as chairman of the meeting:
- where there are less than 50 members present at the meeting – the Chairman shall be appointed in accordance with Section 104 of the Act;
- in all other cases (where there are more than 50 members present) – the Chairman shall be appointed by a poll conducted through the e-voting system during the meeting.
(This is applicable for companies which are required to provide the facility of e-voting or any other company which has opted for such facility)
- in all other cases (where there are more than 50 members present) – the Chairman shall be appointed by a poll conducted through email.
(This is applicable for companies which are not required to provide the facility of e-voting)
Q12. Whether a person can appoint his proxy for such meetings?
The facility of appointment of proxies by members will not be available for such meeting.
Q13. Whether a person can be appointed as a representative of body corporate?
In pursuance of sections 112 and 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.
Such authorization if not already provided, can be shared with the Company through electronic mode.
Q14. Who must attend such meetings?
At least one independent director (where the company is required to appoint one), and the auditor or his authorised representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.
Q15. Are institutional investors are required to attend and vote in the said meeting?
Where institutional investors are members of a company, they must be encouraged to attend and vote in the said meeting through VC or OAVM.
Q16. How voting will be done in the AGM?
For companies which are required to provide the facility of e-voting or any other company which has opted for such facility
- Before the actual date of the meeting, the facility of remote e-voting shall be provided in accordance with the Act and the rules.
- During the meeting by e-voting.
For companies which are not required to provide the facility of e-voting
- During the meeting
- If number of present is less than 50, then by way of show of hands unless poll is demanded
- In all other cases, by poll.
Click here to download the AGM Circular
Click here to download EGM Circular No. 1
Click here to download EGM Circular No. 2
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Practicing Company Secretary, M.Com and Commerce Graduate and founder at Shaffy Mehta & Co. She is having an overall 4 years experience of Company Law and other Corporate Laws.