Last Updated On:
May 27, 2020, 8:08 p.m.
ANNUAL GENERAL MEETINGS (AGM) Through VC OR OAVM:
On Account of the need for continuous adherence to social distancing norms and restrictions, MCA and SEBI have taken effective and necessary measures at this period of COVID-19. It has given one of the best options that have been provided to the companies in order to make sure that compliance requirements are met with is by enabling to conduct Board, Committee and General meetings through video conferencing and other audio visual means.
The Ministry of Corporate Affairs (MCA) vide its general circular No. 18/2020 dated 21/4/2020 has allowed the companies whose financial year ended on 31st December 2019, to hold their AGM before 30th September. This Circular broadly divided into two categories:
(i) Which are required to provide e-voting facility under the Act
(ii) Which are not required to provide e-voting facilities under the Act
SEBI circular dated 12th May, 2020 has aligned its Regulations with the relaxations provided by MCA to convene EGM/ AGM for the calendar year 2020.
Companies need to fulfill these criteria’s in order to convene AGM through VC or OAVM:
- Nature of Business to be considered at the AGM: Company providing the facility of e-voting under the Act, shall consider only those items of special business which are considered to be unavoidable by the Board in addition to the ordinary business.
- Mode of sending AGM documents: Notice and Financial Statements (including Board’s report, Auditor’s report) should be sent to all members through the mail.
- Newspaper publication: Before sending the notices and copies of the Financial Statements. Public notice of advertisement of the AGM should be published at least in a Vernacular and an English newspaper preferably having electronic editions and must provide the following information-
i. A statement that the AGM will be convened through VC.
ii. The date and time of the Annual General Meeting.
iii. Availability of notice of the AGM on the website of the company
iv. The manner in which the members who are holding shares in physical form or have not registered their email addresses with the company can cast their vote through remote e-voting or through remote e-voting system during the meeting.
v. The manner in which the members who have not registered their email addresses with the company can get the same registered with the company.
vi. 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
vii. Any other details necessarily considered by the company.
- Mode of Dividend payment: If the company is unable to pay the dividend to its shareholders electronically because of the non-availability of Bank accounts, the company shall upon normalization of the postal services, dispatch the dividend through warrant or cheque to such shareholder by post.
- Permission to convene AGM through physical presence: If the company has been permitted to convene the AGM at its registered office which is in line with Sec 96 of the Act, then the company in addition to the physical presence of members, also provide a facility for VC.
- Extension of Annual General Meeting: Companies that are unable to conduct their AGM as provided in the Circular are advised to make applications for extension of AGM at a suitable point of time before the concerned ROC.
Procedure for conducting AGM through VC which is applicable to entities which are required to provide e-voting facility under the Act –
- Dispatch of Annual Report: The Dispatch of Annual Reports to the shareholders in hard copies has been done away for Companies conducting AGM/ EGM.
- The time period to conduct AGM: According to the Convenience of different shareholders, different time zones shall be kept in mind before scheduling the meeting.
- Two Way Teleconferencing or Webex: Companies must ensure that AGM through VC facility allows two-way teleconferencing or Webex for the ease of participation of the members;
- Participation on first- come- first- served basis: Such facility of Video Conference must accommodate at least 1000 members to participate on first-come-first-served basis. Shareholders holding more than 2 % or more, Promoters, Institutional Investors, Directors, and Auditors may be allowed to attend the meeting without any restriction of first- come- first- served principle.
- Appointment of Proxy: The appointment of Proxy is not available for these meetings as members cannot physically attend these meetings. However, representatives of the
members may be appointed for the purpose of attending the meetings and voting.
- Shareholder’s question: Shareholders are allowed to pose questions concurrently or be given time to submit questions in advance on the E-mail address of the Company.
- A waiting period of 15 minutes: The facility for joining the meeting shall be kept open at least 15 minutes before the time scheduled to start and shall not be closed until the expiry of 15 minutes.
- Remote e-voting Facility: Remote e-voting means where the voter submits their votes electronically to the election authorities This facility for remote E-voting shall be provided in consonance with the Act
- Transcript of Annual General Meeting: The transcript of the AGM should be made available as soon as possible on the website of the company.
- MCA filings: All resolutions passed in accordance with the mechanism shall be filed with ROC within 60 days of the meeting, clearly indicating that the company has complied with the mechanism provided in the above as said in the circular.
Procedure for conducting AGM through VC which is applicable to the entities which are not required to provide e-voting facility under the act-
Eligibility: Only those entities who have in its records at least 50 % of email addresses of its total number of members are eligible to conduct the meeting through VC/ OAVM, who in case of
a. Nidhi entities hold shares more than Rs.1000 in face value or more than 1% of the total paid-up share capital, whichever is less.
b. Other companies having a share capital, who represent not less than 75% of such part of the paid-up capital of the company as gives the right to vote at the meeting.
c. Other companies not having share capital who have the right to exercise not less than 75% of the total voting power exercisable at the meeting.
Participation on first- come- first- served basis: Such a facility of VC must accommodate at least 500 members or members equal to the total members of the company, whichever is lower to participate on the first-come-first-served basis. Shareholders holding more than 2 % or more, Promoters, Institutional Investors, Directors, Key Managerial Personnel, and Auditors may be allowed to attend the meeting without any restriction of first- come- first- served principle.
Voting: 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 a poll is made by any member in accordance with Section 109 of the Act. Votes have to be counted and declared at the meeting and in case if counting is consuming time, then the said meeting may be adjourned and called later to declare results.
CHALLENGES FACED BY COMPANIES:
- Identifying a good service provider to help them conduct these meetings smoothly for a large number of members of the company.
- Questions of the Shareholders must be sent in advance or must be noted simultaneously while conducting the meeting.
- All the queries of the Shareholders must be addressed.
- A lot of companies may not have all their shareholder's email IDs registered with them, so the companies must urge their shareholders to come forward and register their email Id.
- The provisions provide for member capacity of 1000/ 500 to attend the meetings on first- come- first serve this might be difficult for companies to manage a large number of shareholders