In the wake of the prevailing Covid – 19 pandemic and subsequent government lockdown in India, the Ministry of Corporate Affairs ("MCA") has been playing a vital role in implementing several relaxations and directives while taking cognizance of the public health issue before us. In furtherance of its circulars dated March 19, 2020 and March 24, 2020 whereby certain compliance relaxations were introduced, the MCA has now issued two (2) circulars dated April 8, 2020 ("Circular 1")1 and April 13, 2020 ("Circular 2")2 for relaxation of ordinary and special resolutions in light of the current extra-ordinary circumstances. This article aims to summarize the relaxations and subsequent clarifications issued by the MCA in this regard.

In Circular 1, the MCA has requested companies to take all decisions of urgent nature requiring the approval of the members, other than for items of ordinary business and items where any person has a right to be heard, through the mechanism of postal ballot/e-voting, without holding a general meeting which requires physical presence of members. Vide Circular 2, the MCA while clarifying the issue of dispatch of notices by companies by post and communication by the members of their assent or dissent on relevant resolutions by post under the current circumstances, has stated that while such companies are transacting any item only by postal ballot, up to June 30, 2020, or till further orders, whichever is earlier, the requirements provided in Rule 20 of the Companies (Management and Administration) Rules, 2014 ("Rules") as well as the framework provided in the Circulars would be applicable mutatis mutandis.

In its Circular 1, the MCA has directed all stakeholders that in case holding of an extraordinary general meeting ("EGM") is unavoidable, the following procedures need to be adopted for conducting such meeting on or before June 30, 2020 in addition to other requirements under the Companies Act, 2013 ("Act") and Rules there under:

  1. For companies which are required to provide the facility of e-voting under the Act or any other company which opts for this facility:
    1. EGMs may be held through video conferencing ("VC") or other audiovisual means ("OAVM") and the recorded transcript of the same shall be maintained by the company. In case of a public company, the transcript shall also, as soon as may be possible, be posted on the website of such company.
    2. Convenience of persons in different time zones shall be kept in mind while scheduling a meeting.
    3. Care shall be taken to ensure meetings through VC or OAVM allows for two-way conferencing or webex and participants are allowed to pose questions or given time to submit questions in advance on the e-mail address of the company. Such facility must have a capacity to allow at least thousand (1000) members on a first-come-first-served basis with the exception of large shareholders (holding 2% or more shareholding), promoters, institutional investors, directors, key managerial personnel, chairpersons of audit committee, nomination and remuneration committee and stakeholders relationship committee, auditors etc. who shall be allowed to attend the meeting.
    4. The facility for joining the meeting shall be kept open for at least fifteen (15) minutes before the scheduled time of meeting and shall not be closed for fifteen (15) minutes till after the expiry of scheduled time.
    5. The facility of remote e-voting shall be provided before the date of meeting in accordance with the Act and Rules there under.
    6. Attendance of members through VC or OAVM shall be counted towards quorum under Section 103 of the Act.
    7. Only members who are present through VC or OAVM and have not cast their vote on resolutions through remote e-voting and are otherwise not barred, shall be allowed to vote through e-voting system in the meeting.
    8. Chairman: Unless a specific person has been appointed as chairman as per the articles of the company, where there are less than fifty (50) members present, the chairman shall be appointed with a show of hands (as per Section 104 of the Act). In other cases, the chairman shall be appointed by a poll conducted through e-voting system.
    9. Manner of voting: Where there are less than fifty (50) members, voting shall be conducted through e-voting system (if a demand for poll is made under Section 109 of the Act) or by a show of hands. In all other cases, voting shall be through e-voting system. Vide its Circular 2, the MCA has clarified that the chairman shall ensure that the facility of e-voting system is available for the purpose of voting during the meeting.
    10. The facility of appointment of proxies of members will not be available for such meetings. However, representatives of members may be appointed under Sections 112 and 113 of the Act.
    11. At least one independent director and auditor (or his representative) shall be present for the meeting.
    12. Institutional investors being members of the company, shall be encouraged to be present for and vote at the meeting.
    13. Notice: The notice shall contain clear instructions as pointed out in the Circular and also contain helpline numbers for assistance with technology. A copy of the notice shall be displayed prominently on the website of the company. Due intimation may be made to the exchanges in case of a listed company. In case a notice has been served prior to the date of the Circular, the framework proposed in the Circular may be adopted, in case consent of members has been obtained in accordance with Section 101(1) of the Act and a fresh notice of shorter duration with due disclosures is issued.
  1. Clarifications under Circular 2:
    The MCA has made the following clarifications under Circular 2 with respect to the manner and mode of issue of notices under Circular 1:

    1. Notices to members may be given only through e-mails registered with the company or with the depository participant/depository in accordance with Rule 18 of the Rules.
    2. While publishing the public notice under Rule 20(4) of the Rules, the following shall also be stated:
      1. A statement that the EGM has been convened through VC or OAVM in compliance with applicable provisions of the Act and Rules read with the Circulars.
      2. Date and time of EGM.
      3. Availability of notice of the meeting on the website of the company and stock exchange.
      4. Manner in which members who are holding shares in physical form or those who have not registered their e-mail addresses with the company can cast their vote through e-voting.
      5. Manner in which registration of e-mail address with the company can be done.
      6. Any other details considered necessary by the company.
    3. The chairman shall satisfy himself and cause to record the same before considering the business of the meeting that all feasible efforts under the circumstances have been made by the company to enable members to participate and vote in the meeting.
    4. The company shall send notice by e-mail to all its shareholders having registered e-mail addresses with the company or depository participant/depository. The company would also be duty bound to provide a process of registration of e-mail addresses of members and state so in the public notice. Communication of assent of members would only take place through remote e-voting system.
  1. For companies not required to provide the facility of e-voting under the Act:
    For companies falling under this category, the points mentioned above shall be applicable barring those specific to e-voting. Additionally, Circular 1 lays down the following requirements:

    1. The company shall provide a designated e-mail address to all members at the time of sending a notice for the purpose of casting their vote.
    2. The company shall maintain confidentiality and privacy issues with respect to the e-mail addresses and other details.
    3. Members shall caste their vote on resolutions only by sending e-mails through their e-mails registered with the company. Such e-mails shall only be sent to the designated e-mail address of the company.
    4. In case less than fifty (50) members are present, the chairman may conduct a vote by show of hands, unless a demand for poll is made under Section 109 of the Act.
    5. Meeting may be adjourned if additional time is required for counting votes.
    6. All resolutions passed shall be filed with the Registrar of Companies within 60 days of the meeting clearly indicating that mechanisms provided under the Circulars and the Act and Rules there under were duly complied with.
  1. Clarifications under Circular 2:
    The MCA has made the following additional clarifications under Circular 2:

    1. Notices to members may be given only through e-mails registered with the company or with the depository participant/depository in accordance with Rule 18 of the Rules and displayed prominently on the website, if any, of the company.
    2. For the purpose of making all members aware of the general meeting, the company shall:
      1. Contact all members not having registered e-mail addresses with the company over telephones or any other mode of communication for registration of their e-mail addresses before sending the notice; or
      2. Where contact details are not available, a public notice shall be published immediately at least once in a vernacular newspapers in the principal vernacular language of the district in which the registered office of the company is situated and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, preferably both newspapers having electronic editions, and specifying in the advertisement that the company intends to convene a general meeting in compliance with applicable provisions of the Act read with the Circulars, and for the said purpose it proposed to send notices to all its members by e-mail after, at least, three (3) days from the date of publication of the public notice and details of the e-mail address along with telephone number on which members may contact for getting their e-mail addresses registration for participation and voting in the general meeting.
    3. The chairman shall satisfy himself and cause to record the same before considering the business of the meeting that all feasible efforts under the circumstances have been made by the company to enable members to participate and vote in the meeting.
    4. The poll will take place during the general meeting and members must convey their assent or dissent at such stage by sending e-mails.

The MCA has further clarified that all companies shall ensure that all other compliances associated with the provisions relating to general meetings such as making of disclosures, inspection of related documents by members, or authorizations for voting by bodies corporated etc. as provided in the Act and the articles of association of the company are made through electronic mode.

Footnotes

1. http://www.mca.gov.in/Ministry/pdf/Circular14_08042020.pdf

2. http://www.mca.gov.in/Ministry/pdf/Circular17_13042020.pdf

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.