In continuation to the previously issued circular by The Ministry of Commerce Affairs (MCA) regarding the omission of restriction from Rule 4, an additional relaxation has been passed for conducting physical meetings. Therefore, as per the update, Companies can conduct Extra-Ordinary General Meeting (EGM) through video conferencing (VC) or otherwise audio visual means (OAVM) until 31 December 2021.
Last year too, the Ministry had permitted Companies to hold EGM through VC or OAVM. Under the same guidelines, through General Circular No. 10/2021 dated 24 June 2021, MCA has made this provision for the current fiscal year.
Below are the details from the previously released circular dated 15 June 2021.
The MCA has notified a new set of rules, Companies (Meetings of Board and its Powers) Amendment Rules, 2021, to amend the Companies (Meetings of Board and its Powers) Rules, 2014, which will come into force as and when it is published in the Official Gazette.
The purpose of this amendment is to remove the restriction of Rule 4, which specifies the matters that cannot be dealt within a meeting held through VC or OAVM.
Listed below are the points covered in Rule 4:
- The approval of the Annual Financial Statements;
- The approval of the Board's report;
- The approval of the Prospectus;
- The Audit Committee Meetings for consideration of Accounts; and
- The approval of the matter relating to Amalgamation, Merger, Demerger, Acquisition and Takeover.
Our Comments
The second wave of COVID-19 has brought multiple challenges for Indian Corporates as they struggle to meet the timelines for various compliances. The proposed change is a respite for Indian Corporates as removing the restriction of Rule 4 will enable all the critical approvals via video conferencing and save time. The relaxation is in continuation to MCA's effort to reduce the burden off from Indian Corporates and ease the process of carrying out compliance in India. Some of these pandemic-induced relaxations may continue even after the pandemic ends, which will be helpful in the long term.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.