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:
- 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;
- Before
scheduling the meeting, persons positioned in different time zones must be
taken into consideration;
- 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;
- 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;
- 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;
- The
quorum shall be reckoned by recording the attendance of the members
through VC or OAVM facility;
- 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;
- 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.
- 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.
- 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.;
- 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.
- Institutional
investors (if any), must be encouraged to attend and vote in such meetings
through VC or OAVM;
- 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;
- 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.
- 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.
- 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:
- 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;
- 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.
- 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.
- 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;
- 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;
- 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;
- 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.