Relaxation pertaining to passing of ordinary and special resolutions by companies on account of the threat posed by COVID-19

In view of the difficulties faced by the stakeholders on account of the threat posed by COVID-19, the Ministry of Corporate Affairs (“MCA”) issued a clarification on 08 April 2020 relating to passing of ordinary and special resolutions at the companies general meetings (“Circular”). The following clarifications have been issued in this regard, to ease the process of convening general meetings and the manner in which the members may cast their votes in such general meeting(s) held on or before 30 June 2020.

Procedure for convening a General Meeting

All decisions of urgent nature requiring members approval (except the items of ordinary business or a business where any person has a right to be heard) shall be taken through postal ballot/e-voting in accordance with the provisions of the Companies Act, 2013 (“Act”) and rules made thereunder, without holding a general meeting, which requires physical presence of the members at a common venue.

However, where holding an extraordinary general meeting (“EGM”) during this time is unavoidable, the following procedure is to be adopted for conducting an EGM on or before 30 June 2020 in addition to the other requirements provided under the Act and rules made thereunder:

For companies that are required to provide the facility of e-voting, or companies which have adopted such a facility:

  1. EGM wherever unavoidable, maybe held through video conferencing (“VC”) or other audio-visual means (“OAVM”) and a recorded transcript shall be maintained in the company’s safe custody. In case of a public company the said transcript shall also be made available on the company’s website, if any;
  2. Before scheduling the meeting, persons positioned in different time zones must be taken into consideration;
  3. Meeting through VC / OAVM facility should allow two-way teleconferencing or WebEx and must have the capacity to allow at least 1000 members to participate on a first-cum-first-served basis. The shareholders holding 2% of more of the share capital of the company, promoters, institutional investors, directors, KMPs, chairpersons of various statutory committees, auditors, etc., may not be subject to the restriction of attending the meeting on first-cum-first served basis. Further, the participants must be allowed to pose questions concurrently or should be given time to submit questions in advance via e-mail;
  4. The facility for joining the meeting shall be open at least 15 minutes prior to the scheduled time of the meeting and shall not be closed till the expiry of 15 minutes after such scheduled time;
  5. The facility of remote e-voting shall be provided prior to the actual date of the meeting and must be in accordance with the provisions of the Act and rules made thereunder;
  6. The quorum shall be reckoned by recording the attendance of the members through VC or OAVM facility;
  7. Voting through e-voting system or by a show of hands shall be allowed only to members who are present in the meeting through VC / OAVM and have not cast their vote on resolution through remote e-voting and are otherwise not barred from doing so;
  8. The chairman for the meeting shall be appointed in the following manner, unless the articles of the company provides for a specific person to be appointed as the chairman for the meeting: (i) Where there are less than 50 members, the chairman shall be appointed in accordance with Section 104 (Chairman of the meeting) of the Act; (ii) In all other cases, he/she shall be appointed by a poll conducted through the e-voting system during the meeting.
  9. The chairman shall ensure that the e-voting facility is available for the purpose of conducting a poll during the VC / OAVM meeting. (i) If there are less than 50 members present at the meeting, voting shall be conducted through e-voting or by show of hands, unless a demand for poll has been made in accordance with Section 109 (Demand for poll), in which case, the voting shall be conducted through the e-voting system; (ii) In all other cases, voting shall be conducted through e-voting system.
  10. The facility for appointment of proxies by members will not be available for such meetings. However, the representative of the members may be appointed for the purpose of voting through remote e-voting facility or for participation and voting in the meeting through VC / OAVM.;
  11. At least 1 auditor or his authorised representative and 1 independent director (where the company is required to appoint one) shall attend such meeting through VC / OAVM.
  12. Institutional investors (if any), must be encouraged to attend and vote in such meetings through VC or OAVM;
  13. Disclosures in the notice for the general meeting shall include: (i) the manner in which the framework provided under this Circular is available for use by members; (ii) clear instructions on how to access and participate in the meeting; (iii) helpline number through the registrar & transfer agent, technology provider, or otherwise for those who need assistance with using the technology before and during the meeting;
  14. A copy of the meeting notice shall be prominently displayed on the website of the company and due intimation shall be made to the exchange in case of a listed entity.
  15. In case if the notice for convening an EGM has been served prior to the date of this Circular the framework proposed in this circular may be adopted for the meeting, in case the consent form the members has been obtained in accordance with Section 101(1) (Notice of a general meeting) of the Act, and a fresh notice of shorter duration with due disclosures in consonance with this Circular is issued consequently.
  16. Th resolution passed in accordance with this mechanism shall be filed with the Registrar of Companies within 60 days of the meeting, clearly indicating that the mechanism provided herein, alongwith the other provisions under the Act and rules were duly complied with during such meeting.

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

In addition to the procedure detailed above in S. No. 1, 2, 4 to 6 and 10 to 16, the following shall be applicable in case of companies that are not required to provide the e-voting facility:

  1. Meetings through VC / OAVM facility should allow two-way teleconferencing or WebEx and must have the 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-cum-first-served basis. The shareholders holding 2% of more of the share capital of the company, promoters, institutional investors, directors, KMPs, chairpersons of various statutory committees, auditors, etc., may not be subject to the restriction of attending the meeting on first-cum-first served basis. Further, the participants must be allowed to pose questions concurrently or should be given time to submit questions in advance via e-mail;
  2. The chairman for the meeting shall be appointed in the following manner, unless the articles of the company provides for a specific person to be appointed as the chairman for the meeting: (i) Where there are less than 50 members, the chairman shall be appointed in accordance with Section 104 (Chairman of the meeting) of the Act; (ii) In all other cases, he/she shall be appointed by a poll conducted in the manner provided hereunder.
  3. A designated e-mail address of the company shall be provided to all members at the time of sending the notice for the meeting so that the members can convey their vote to such e-mail address, when a poll is required to be taken during the meeting on any resolution.
  4. The company shall ensure confidentiality of passwords. Further, all privacy related issues shall be maintained strictly, by the company at all times and due safeguards with regard to authenticity of e-mail address and other details of the members shall be taken by the company;
  5. During such a meeting where a poll on any item is required, the members shall cast their vote on resolutions only by sending e-mails to the designated e-mail address through their registered e-mail address;
  6. 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 in accordance with the provisions of Section 109 (Demand for poll) of the Act;
  7. In case the counting of votes requires time, the said meeting may be adjourned and called later to declare the results.

Both, the companies which are required to provide e-voting facilities or have adopted such facility and those which are not required to provide such e-voting facilities under the Act and rules made thereunder, shall ensure that all other compliances associated with the provisions relating to general meetings, including but not limited to, making disclosures, inspection of documents, authorizations for voting by body corporates, etc., as provided under the Act and rules made thereunder; and under the articles of association of the company are made through electronic mode.

POST TAGS