Conducting Annual General Meeting (AGM) through video conferencing (VC) or other audio visual means (OAVM)- MCA Clarifies

Conducting Annual General Meeting (AGM) through video conferencing (VC) or other audio visual means (OAVM)- MCA Clarifies

While the world has entered in a situation where restricting physical movements is necessary, there is no stopping the internet and the ever growing technology. As we all are aware of the ongoing circumstances of lock down, the impact of COVID-19 pandemic has brought about a new set of challenges for the economy in the world as well as for the Indian economy.

In view of this situation, MCA earlier extended the time frame for conducting Annual General Meetings by the Companies, which are following Financial Year as January 1 to December 31. The revised due date is September 30, 2020, instead of June 30, 2020.

Important Note: Due to COVID 19 crisis, the MCA has further extended the time line for conducting an Annual General Meeting by the Companies (AGM) by Video Conferencing (VC) or other audio visual means (OAVM). The further revised due date for conducting AGM is 31th December, 2020, instead of September 30, 2020.

To add more on the list of facilitating the companies and businesses in India, The Ministry of Corporate Affairs (MCA) has now allowed companies to hold their annual general meeting (AGM) by Video Conferencing (VC) or other audio visual means (OAVM) during the calendar year 2020 amidst the COVID-19 crisis.

MCA has prescribed certain additional guidelines, which a company needs to follow to hold AGM through VC or OAVM. The guidelines are as mentioned in the official circular issued by MCA :

1. Holding of an AGM through Video Conferencing and Other Audio Visual Means 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:

• The framework provided in para 3 -A of EGM Circular – I and the manner and mode of issuing notices provided in sub-para (i)-A of EGM Circular – II shall be applicable for due alterations to be made in similar statements for conducting the AGM.

• In such meetings, other than ordinary business, only those items of special business, which are considered to be unavoidable by the Board, may be transacted.

• Given the prevailing situation, owing to the difficulties involved in dispatching of physical copies of the 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.

• 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:

a. statement that the AGM will be convened through VC or OAVM in compliance with applicable provisions of the Act read with this Circular;

b. the date and time of the AGM through VC or OAVM;

c. availability of notice of the meeting on the website of the company and the stock exchange, in case of a listed company;

d. 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;

e. the manner in which the persons who have not registered their email addresses with the company can get the same registered with the cornpany;

f. the manner in which the members can give their mandate for receiving dividends directly in their bank accounts through the Electronic Clearing Service (ECS) or any other means;

g. any other detail considered necessary by the company

h. In case, the company is unable to pay the dividend to any shareholder by the electronic mode, due to non-availability of the details of the bank account, the company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.

i. In case, the company has received the permission from the relevant authorities to conduct its AGM at its registered office, or at any other place as provided under section 96 of the Act, after following any advisories issued from such authorities, the company may in addition to holding such meeting with physical presence of some members, also provide the facility of VC or OAVM, so as to allow other members of the company to participate in such meeting. 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. All resolutions shall continue to be passed through the facility of e-voting system.

2. Holding of an AGM through Video Conferencing and Other Audio Visual Means for companies which are not required to provide the facility of e-voting under the Act:

• AGM may be conducted through the facility of VC or OAVM only by a company which has in its records, the email addresses of at least half of its total number of members, who

a. 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;

b. in case of other companies having share capital, who represent not less than 75%. of such part of the paid-up share capital of the company as gives a right to vote at the meeting;

c. 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.

• The company shall take all the necessary steps to register the email addresses of all persons who have not registered their email addresses with the company.

• The framework provided in para 3 -A of EGM Circular – I and the manner and mode of issuing notices provided in sub-para (i)-A of EGM Circular – II shall be applicable for due alterations to be made in similar statements for conducting the AGM.

• In such meetings, other than ordinary business, only those items of special business, which are considered to be unavoidable by the Board.

• Owing to the difficulties involved in dispatching of physical copies of the financial statements (including the 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.

• 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.

3. The companies referred to in paragraphs 3 (A) and (B) above, shall ensure that all other compliance associated with the provisions relating to general meetings viz making of disclosures, inspection of related documents/registers by members, or authorizations for voting by bodies corporate, etc as provided in the Act and the articles of association of the company are made through electronic mode.

4. The companies which are rioted covered by the General Circular No. 18/2020, dated 21.04.2020 and are unable to conduct their AGM in accordance with the framework provided in this Circular 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.

However, many companies which have already approved their AGM notices will have to make suitable changes therein in line with the said circular. Further, post the issue of this AGM Circular, most of the companies will be making their debut in conducting the AGM through VC/ OAVM and it will be interesting to see smooth convening amidst the crisis. However, this is a welcome move by the MCA.

Know more on: Various steps taken by the Government of India amid COVID 19 outbreak.