clarification issued by MCA on holding of AGM via VC or other AVM

as per Section 96 of Companies Act,2013 Every Company whether Listed or Unlisted, Public or Private except One Person Company need to Held Annual General Meeting Every Year. The First Annual General Meeting of the Company should be held within the period of 9 moths from the end of 1st Financial Year & the subsequent Annual General Meeting within the period of 6 months from the end of each Financial Year.

as we all know Due to COVID-19 Pandemic, there are many restrictions on the movement of Individuals / Persons at almost every corner of the world & many compliances of Companies / Firms / LLP are also have been put on Hold.

Because of this Many Representations have been made by professionals, companies to Government & then the Ministry of Corporate of Affairs has been Come up with General Circular No. 20/2020 Dated 05.05.2020 in which they have provided some relaxation to companies by Holding Annual General Meeting via Video Conferencing (VC) or Other Audio-Visual Means (OVAM).

Below are some important pointers from General Circular No. 20/2020:

by the General Circular No. 18/2020 dated: 21.04.2020, the companies whose Financial Year ended on 31st December 2019, has been allowed to hold their Annual General Meeting by 30th September 2020.

The Ministry of Corporate Affairs has been decided to allow the companies to conduct their Annual general Meeting through Video Conferencing (VC) or Other Audio-Visual Means (OVAM) during the calendar year 2020, Subject to the fulfillment of some below-mentioned requirements:

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. 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 mutatis mutandis for conducting the AGM.
  2. 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.
  3. 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.
  4. Before sending the notices and copies of the financial statements, etc., public notice by way of the 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 the 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 OI\VM 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 company;
    • f) 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;
    • g) any other detail considered necessary by the company
  5. In case, the company is unable to pay the dividend to any shareholder by the electronic mode, due to the non-availability of the details of the bank account, the company shall upon normalization of the postal services, dispatch the dividend warranUcheque to such shareholder by post.
  6. In case, the company has received 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 the 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 the 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 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 percent. of the total paid-up share capital, whichever is less;
    • b) in case of other companies having a share capital, who represent not less than seventy-five percent. 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 a share capital, who have the right to exercise not less than seventy-five percent. 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. The framework provided in para 3-B of EGM Circular – I and the manner and mode of issuing notices provided in sub-para (i)-B of EGM Circular – II shall be applicable mutatis mutandis for conducting the AGM.
  4. 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.
  5. 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.
  6. 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, the company shall upon normalization of the postal services, dispatch the dividend warrant/cheque to such shareholder by post.

The companies referred to in paragraphs 3 (A) and (B) above, shall ensure that all other compliances associated with the provisions relating to general meetings viz tnaking 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.

The companies which are not 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 the Act.

Read Full Circular from here: General Circular No. 20/2020

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