The Ministry of Corporate Affairs (MCA) is fully cognizant of the difficulties faced by companies on account of the ongoing nation-wide lockdown and social distancing due to COVID 19. The Ministry has also taken note of various representations received from industry associations and corporates on the need to facilitate companies in taking certain emergent/ urgent measures in the face of extreme disruptions and dislocation caused by the pandemic.
Taking stock of the situation, the MCA had earlier allowed all meetings of the Board of directors upto 30th June 2020, to be conducted through Video Conferencing (VC) or other audio visual means (OAVM) vide its notification date 19.03.2020, including meetings on items where the physical presence of directors is otherwise required.
In furtherance of the Government’s objective of facilitating corporate compliances during the current lockdown period and other restrictions on account of COVID 19, the Ministry, on 08 April 2020, has issued a circular allowing companies to hold Extraordinary General Meetings (EGMs) through VC or OAVM complemented with e-Voting facility/simplified voting through registered emails, without requiring the shareholders to physically assemble at a common venue. The Companies Act, 2013 allows ordinary and special resolutions to be passed through postal ballot/e-voting route without holding a physical general meeting. However, in present lockdown/social distancing conditions due to COVID 19, postal ballot facility cannot be utilized by the companies.
Accordingly, the General Circular No. 14/2020 dated 08.04.2020 issued by the MCA allows listed companies or companies with 1,000 shareholders or more which are required to provide e-voting facility under the Companies Act, 2013 to conduct EGM through VC/ OAVM and e-Voting. For other companies, a highly simplified mechanism for voting through registered emails has been put in place for easy compliance.
The framework leverages the strengths of digital India by using a combination of VC and e-Voting/simplified voting through registered emails to enable companies conduct their EGMs. As the meetings will be conducted over VC/ OAVM, the facility for appointment of proxies has been dispensed with, while representatives of bodies corporate will continue to get appointed for participation in such meetings.
This framework allows the companies to hold shareholders’ EGMs through VC/ OAVM without compromising on the other requirements of law. As an additional check, all companies using this option are required to maintain a recorded transcript of the entire proceedings in safe custody, and public companies are also required to host this transcript on their website for greater transparency. Further, all resolutions passed through this framework will be required to filed with the RoC within 60 days, so that such resolutions may be viewed publicly. Other safeguards have also been included in the Circular to ensure transparency, accountability and protection of interests of investors.
The Ministry’s circular dated 08 April 2020 is available at: http://www.mca.gov.in/Ministry/pdf/Circular14_08042020.pdf
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