AGM through VC or OAVM

Today on 5th May MCA issued a Circular no. 20/2020, Now for the first time Companies are allowed to conduct their AGM through VC or OAVM, as a special situation due to Covid-19. 

AGM through VC is for the calendar year 2020 only and also subject to the fulfillment of the following requirements:

before looking at the procedure for AGM through VC, there is another important we need to talk:

MCA General Circular No. 18/2020 provides that if the companies whose financial year (other than first financial year) has ended on 31st December, 2019, can  hold their AGM for such financial year within a period of nine months instead of six months from the closure of the financial year (i.e. by 30th September, 2020), if they are not able to conduct the AGM within time-limit and then it will not be taken as non-compliance, an extension of 3 more months is being given.

Further, Circular no. 20/2020 provides that those companies which are not covered by the General Circular No. 18/2020 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 RoC under section 96 the Act.

Now coming to AGM through VC or OAVM, for this purpose MCA has divided two categories of Companies:

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;

B. For companies which are not required to provide the facility of E-voting under the Act.

Now procedure as clarified by the MCA

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. On convening AGM through VC or OAVM, the recorded transcript of the same shall be maintained in safe custody by the company. In case of a public company, the recorded transcript of the meeting, shall as soon as possible, be also made available on the website (if any) of the company. 

2. Convenience of different persons positioned in different time zones shall be kept in mind before scheduling the AGM.

3.All care must be taken to ensure that AGM through VC or OAVM facility 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 to submit questions in advance on the e-mail address of the company. 

Such facility must have a capacity to allow at least 1000 members to participate on a first-come-first-served basis. The large shareholders (i.e. shareholders holding 2% or more shareholding). promoters, institutional investors, directors, key managerial personnel, the chairpersons of the Audit Committee. Nomination and Remuneration Committee and Stakeholders Relationship Committee, Auditors, etc. may be allowed to attend the meeting without restriction on account of First-come­-first-served principle.

4.The joining window of the AGM or such related facility shall be kept open at least 15 minutes before the time scheduled to start the meeting and shall not be closed till the lapse of 15 minutes after such scheduled time.

5. Before the actual date of the AGM, the facility of remote e-voting shall be provided in accordance with the Act and the rules.

6. Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.

7. Only those members, who are present in the meeting through VC or OAVM facility and have not cast their vote on resolutions through remote e-voting and are otherwise not barred from doing so, shall be allowed to vote through e-voting system or by a show of hands in the meeting.

8. Unless the articles of the company require any specific person to be appointed as a Chairman for the meeting, the Chairman for the AGM shall be appointed in the following manner:

a.  where there are less than 50 members present at the meeting. the Chairman shall be appointed in accordance with section 104.

b.  In all other cases. the Chairman shall be appointed by a poll conducted through the e-voting system during the AGM.

9.  The Chairman present at the AGM shall ensure that the facility of e-voting system is available for the purpose of conducting a poll during the meeting held through VC or OAVM Depending on the number of members present in such meeting, the voting shall be conducted in the following manner:

a. where there are less than 50 members present at the meeting, the voting may be conducted either through the e-voting system or by a show of hands, unless a demand for poll is made in accordance with section 109 of the Act, in which case, the voting shall be conducted through the e-voting system,

b. in all other cases, the voting shall be conducted through e-voting.

10. Since AGM under this special situation will be held through VC or OAVM, where physical attendance of members is not possible, therefore there is no requirement of appointment of Proxies (A proxy is allowed to be appointed under section 105 of the Act to attend and vote at a general meeting on behalf of a member who is not able to attend personally).  Accordingly, the facility of appointment of proxies by members will not be available for such meetings. 

However, in pursuance of section 112 and section 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.

11. At least one independent director (where the company is required to appoint one), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.

12. Where institutional investors are members of a company. they must be encouraged to attend and vote in the AGM through VC or OAVM.

13. The notice for the general meeting shall make disclosures with regard to the manner in which framework provided in this Circular shall be available for use by the members and also contain clear instructions on how to access and participate in the meeting. 

The company shall also provide a helpline number through the registrar & transfer agent, technology provider, or otherwise, for those shareholders who need assistance with using the technology before or during the meeting. A copy of the meeting notice shall also be prominently displayed on the website of the company and due intimation may be made to the exchanges in case of a listed company.

14. All resolutions passed in accordance with this mechanism shall be filed with the RoC within 60 days of the meeting, clearly indicating therein that the mechanism provided herein alongwith other provisions of the Act and rules were duly complied with during such meeting.

15. The company may give the notice of the meeting only through e-mails registered with the company or with the depository participant/ depository (In pursuance of Rule 18 of the Companies (Management and Administration) Rules, 2014).

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

17. In view of 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.

18. 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 the Circular No. 20/2020 dated 5th May, 2020 issued by MCA:

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 company;

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

g. any other detail considered necessary by the company.

19. If 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.

20. 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. 

B. For companies which are not required to provide the facility of E-voting under the Act:

1. AGM can be conducted through VC or OAVM only by a company, if it 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 1000 rupees in face value or more than 1% 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 75% of the total voting power exercisable at the meeting.

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

3. AGM may be held through VC or OAVM and the recorded transcript of the same shall be maintained in safe custody by the company. In case of a public company, the recorded transcript of the meeting, shall as soon as possible, be also made available on the website (if any) of the company.

4. Convenience of different persons positioned in different time zones shall be kept in mind before scheduling the meeting.

5. All care must be taken to ensure that such meeting through VG or OAVM facility 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 to submit questions in advance on the e-mail address of the company. 

Such facility 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, The large shareholders (i.e. shareholders holding 2% or more shareholding), promoters, institutional investors, directors, key managerial personnel. the chairpersons of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee, auditors, etc. may be allowed to attend the meeting without restriction on account of first-come-first-served principle.

6. The facility for joining the meeting shall be kept open at least 15 minutes before the time scheduled to start the meeting and shall not be closed till the expiry of 15 minutes after such scheduled time.

7. Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act.

8. Unless the articles of the company require any specific person to be appointed as a Chairman for the meeting, the Chairman for the meeting shall be appointed in the following manner:-

a.where there are less than 50 members present at the meeting, the Chairman shall be appointed in accordance with section 104;

b. in all other cases, the Chairman shall be appointed by a poll conducted in a manner provided in succeeding sub-paragraphs.

9. Atleast one independent director (whore the company is required to appoint one), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.

10. A proxy is allowed to be appointed under section 105 of the Act to attend and vote at a general meeting on behalf of a member who is not able to attend personally. Since general meetings under this framework will be held through VC or OAVM, where physical attendance of members in any case has been dispensed with, there is no requirement of appointment of proxies Accordingly, the facility of appointment of proxies by members will not be available for such meetings. However, In pursuance of section 112 and section 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.

11. Where institutional investors are members of a company, they must be encouraged to attend and vole in the said meeting through VC or OAVM.

12. The company shall provide a designated email address to all members at the time of sending the notice of meeting so that the members can convey their vote, when a poll is required to be taken during the meeting on any resolution, at such designated email address.

13. The confidentiality of the password and other privacy issues associated with the designated email address shall be strictly maintained by the company at all times. Due safeguards with regard to authenticity of email address(es) and other details of the members shall also be taken by the company.

14. During the meeting held through VC or OAVM facility, where a poll on any item is required, the members shall cast their vote on the resolutions only by sending emails through their email addresses which are registered with the company. The said emails shall only be sent to the designated email address circulated by the company in advance.

15. Where less than 50 members are present in a meeting, the Chairman may decide to conduct a vote by show of hands, unless a demand for poll is made by any member in accordance with section 109 of the Act. Once such demand is made, the procedure provided in the preceding sub-paragraphs shall be followed.

16. In case the counting of votes requires time, the said meeting may be adjourned and called later to declare the result.

17. The notice for the general meeting shalt make disclosures with regard to the manner in which framework provided in the Circular shall be available for use by the members and also contain clear instructions on how to access and participate in the meeting. The company should also provide a helpline number through the registrar & transfer agent, technology provider, or otherwise, for those shareholders who need assistance with using the technology before or during the meeting. A copy of the notice shall also be prominently displayed on the website of the company.

18. All resolutions passed in accordance with this mechanism shall be filed with the Registrar of Companies within 60 days of the meeting clearly indicating therein that the mechanism provided herein alongwith other provisions of the Act and rules were duly complied with.

19. Regarding notice: the company may give the notice of the meeting only through e-mails registered with the company or with the depository participant/ depository (In pursuance of Rule 18 of the Companies (Management and Administration) Rules, 2014).

20. 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.

21. 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.

22. 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.

Both type of companies referred above, shall ensure that all other compliances 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.