What's in an address? The case for Virtual Shareholder Meetings
General meetings are a practical expression of corporate democracy and allow members to have a constructive dialogue with the company's management. They enable the company's actual owners (i.e. members) to raise issues before the management and receive information essential for them to make informed decisions, which are manifested through their votes. In short, it is the manifestation of corporate democracy.
In India, the Companies Act, 2013 ("Act") always allowed directors to participate in board meetings via audio visual means, the details of which have been discussed in our post here. However, there was no corresponding provision for members to participate in general meetings, though it did allow for remote participation through a proxy or electronic voting or postal ballot.
However, the recent COVID-19 pandemic and the consequent nation-wide lockdown has led to a situation where companies cannot conduct general meetings at physical locations, as mandated by the Act. In light of the same, the Ministry of Corporate Affairs ("MCA"), on April 08, 2020 issued a notification ("April Notification") expanding the scope of e-voting and postal ballot and prescribing a framework for conduct of an extraordinary general meeting ("EGM"), where there are urgent matters that need shareholder approval prior to June 30, 2020.
In this note ("Note"), we will talk about virtual and hybrid general meetings, the provisions of the Act governing the conduct of general meetings in India, including the April Notification, and take a brief look at the applicable laws in United Kingdom and the United States pertaining to virtual-only and hybrid shareholders' (or stockholders') meetings.
A. What are virtual-only and hybrid shareholders' meetings?
"Virtual-only" shareholders' meetings are held exclusively through the use of technology with all the participants being remotely placed. The United Kingdom
is an example where virtual meetings are permitted. On the other hand, "hybrid meetings" are those meetings which are held at a physical location but also permit participation of members through remote communication. 42 states in the United States either provide for or permit the conduct of hybrid shareholders' meetings.
Originally published 21 April 2020
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