MCA allows companies to hold AGM through VC or OAVM
The Ministry of Corporate Affairs (“MCA”), issued a General Circular No. 20/2020 (“Circular”) on 05 May 2020 giving clarifications for providing relaxations in the provisions of Companies Act, 2013 (“Act”) to allow companies for conducting Annual General Meetings (“AGM”) for the calendar year 2020 on account of the threats posed by Covid-19.
A. For companies which are required to provide the facility of e-voting under the Act, or any other company which has opted for such facility:
1. In terms of Section 108 of the Act read with Companies (Management and Administration) Rules, 2014 (“Rules”), a listed company or a company having not less than one thousand shareholders, shall provide to its members facility to exercise their right to vote at general meetings by electronic means.
2. Other than ordinary business, only special and unavoidable items of business may be transacted.
3. A public notice by way of advertisement published in a vernacular newspaper and an English newspaper (preferably both having electronic editions), in which the registered office of the company is situated, should be published with the following information:
- Statement that AGM will convene through VC or OAVM, along with the date and time of AGM;
- Availability of notice of meeting (in case of listed company) on the website of the company and stock exchange;
- Manner of casting their vote through remote e-voting or e-voting system during the meeting;
- Manner of getting email address registered with the company;
- Manner in which members can give their mandate for receiving dividends directly in their bank account through the Electronic Clearing System (ECS)
- Any other detail considered necessary;
4. Financial statements including auditors report shall be sent by email to members, trustees for the debenture-holder and to all other persons so entitled.
5. Incase of incapableness of paying dividend to any shareholder by electronic means, the same shall be done via postal services upon normalization.
6. In case permission taken by the company from relevant authorities to conduct AGM at registered office. However, the company shall provide facility of VC or OAVM to members who are not physically present. All resolutions shall be passed through facility of e-voting system.
B. For companies which are not required to provide the facility of e-voting under the Act-
1. AGM may be conducted by facility of VC or OAVM only by a company which has in its records, the email addresses of at least half of its members, who-
- In case of a Nidhi, hold shares of more than 1000 rupees in face value or more than 1% of the total paid-up share capital, whichever is less;
- In case of other companies having share capital, represents not less than 75% of such part of paid-up share capital of the company as gives a right to vote at the meeting;
- In case of companies not having share capital, have the right to exercise not less than 75% of the total voting power exercisable at the meeting.
2. Only special and unavoidable business to be transacted. All necessary steps to be taken to register email address of all members of the company.
3. Financial statements including board report, auditors report etc. shall be sent by email to members, trustees for the debenture-holder and to all other persons so entitled.
4. Companies shall make adequate provisions for allowing members to give their mandate for receiving dividends directly in their bank account through ECS means. Incase of incapableness of paying dividend to any shareholder by electronic means, the same shall be done via postal services upon normalization.
The companies shall ensure that all other compliances associated with the provisions relating to general meetings, as provided in the Act and the articles of association of the company are made through electronic mode.
Further, the framework provided for the manner and mode of issuing notices for holding Extra-Ordinary General Meeting in our previous Article dated 17 April 2020 shall be applicable mutatis mutandis for conducting the AGM.
The companies which are not covered by the General Circular No. 18/2020 dated 21 April 2020 (AGM for companies who’s financial year ended in 31 December 2020) and are unable to conduct their AGM in accordance with the framework provided above, are advised to prefer applications for extension of AGM at a suitable point of time before the Registrar of Companies.
This post has been contributed by Ms. Vaneesa Agrawal and Mr. Rishi Ahuja.
[DISCLAIMER: This article is for academic purpose and is solely to provide readers with general information regarding developments in Indian law. The information contained herein does not constitute legal or a professional advice.]