To ease the impact of disruption caused by the Coronavirus/COVID-19 pandemic and in the spirit of social distancing, the Ministry of Corporate Affairs (“MCA”), through its circular dated April 8, 2020 (“Circular”) and a subsequent clarificatory circular dated April 13, 2020 (“Clarification”), has provided specific guidelines for the companies to take all decisions which are urgent in nature and which require the approval of members of such companies, other than items of ordinary business or business where any person has a right to be heard, through the mechanism of postal ballot or e-voting, in accordance with the provisions of the Companies Act, 2013 (“CA 2013”). Given that the CA 2013 does not provide for any specific provision in relation to allowing the conduct of shareholders meetings through video conferencing (“VC”) or other audio-visual means (“OAVM”), the general provisions in relation to postal ballot or e-voting under the CA 2013 and the rules framed thereunder shall be applicable for such extraordinary general meetings (“EGMs”).
The MCA through the Circular and the subsequent Clarification also provides for the procedure which is required to be followed by companies, allowed under CA 2013 to provide its members with an e- voting facility and otherwise, to hold EGMs for urgent matters until June 30,2020. While the detailed procedure can be referred to in the attached Circular and Clarification, please see below certain essential features set out below:
1. Mode of conducting the EGMs and requirement for recording the transcript of the meeting:
EGMs can be held through VC and OAVM, however the convenience of persons situated in different time zones is required to be taken into consideration before scheduling such EGMs. Recorded transcripts of EGMs held by a private company shall be kept in safe custody with the company while the same shall be uploaded on the company website in case of a public company.
2. Prerequisites for conducting EGMs:
· VC or OVAM facility with two-way teleconferencing or webex facility shall be provided and participants of the EGMs shall be allowed to ask questions.
· The VC or OVAM facility shall have the capacity of atleast 1000 (thousand) members (500 (five hundred) members or the total number of members of a company, for companies not required to provide e-voting facility under CA 2013), on first come first basis.
· Eligibility to attend without restrictions: (i) shareholders holding 2% (two percent) or more; (ii) key managerial person; (iii) chairperson of the audit committee, if any; (iv) chairperson of the nomination and remuneration committee, if any; (v) chairperson of the stakeholders relationship committee (vi) institutional investors, (vii) auditors, and (viii) independent director (in the event that a company is required to appoint one in terms of CA 2013).
· The Clarification has further provided that in case of companies which are required to provide an e-voting facility under the CA 2013, the chairman of the proposed EGM shall ensure that e-voting facility shall be available for the purpose of voting during an EGM held through OVAM or VC.
3. Notice for the EGMs:
In addition to the general disclosures and related documents under CA 2013, the notice for the EGMs shall clearly set out the manner in which the EGM is proposed to be conducted and information in relation to the method of accessing the VC or OVAM and participation in e-voting.
The Clarification provides that, given the current scenario, all notices will be required to be sent to all the members of any company intending to hold an EGM, through emails to the registered email ids of such members. Further, the Clarification also provides that:
- In case of companies required under CA 2013 to provide for an e-voting facility: such company shall be required to issue a public notice by way of an advertisement to be published, immediately upon completion of dispatch of notices in relation to convening an EGM through email its members.
- In case of companies not required under CA 2013 to provide for an e-voting facility: a copy of the notice for convening an EGM shall be prominently displayed on the website of the such company. In order to ensure that all members of a company intending to hold an EGM are informed of such a meeting, the company shall: (i) individually contact each member of the company whose email address is not registered with the company and (ii) in the event that the aforementioned members cannot be reached, such notice shall be advertised in one newspaper in the principal vernacular language of the district in which the registered office of the company is situated and one in English language in an English paper in wide distribution.
4. Attendance at the EGMs:
The attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum as per Section 103 of the Act.
5. E-Voting at the EGMs:
Only those members who are present in the EGMs through VC or OAVM and who have not voted through remote e-voting or are not expressly barred from voting at such EGMs, shall be allowed to vote through e-voting system or by way of show of hands during the EGM.
6. Voting through poll, without holding an EGM:
The Circular also provides that in case of companies which are required to provide an e-voting facility under the CA 2013, certain items can be taken up for voting during these times, only by way of postal ballot, without actually holding an EGM. Additionally, the Clarification provides that in this regard, the provisions of rule 20 of the Companies (Management and Administration) Rules 2014, shall apply and the notice for such items shall be sent to the concerned members through email and the same shall be set out in the public notice as well.
7. Appointment of the Chairman:
Unless the articles of association of a company requires otherwise:
- If members present at an EGM are less than 50 (fifty)– the chairman shall be elected pursuant to the provisions of Section 104 of the CA 2013;
- In all other cases– the chairman shall be elected by poll conducted through e-voting system during such EGM.
8. Proxy and Representatives at the EGMs:
The members of a company intending to hold an EGM do not have the right to appoint proxies for such meetings. However, pursuant to section 112 and 113 of CA 2013, representatives of the member entity may be allowed to participate and cast a vote through e-voting.
9. Filing with the Registrar of Companies:
All resolutions passed in an EGM shall be filed with the concerned registrar of companies within a period of 60 (sixty) days of the date of such EGM. Such filing must clearly indicate the mechanism provided in the Circular and the relevant compliances undertaken as per CA 2013.
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