Clarification on conducting of EGM

CLARIFICATION ON PASSING OF ORDINARY AND SPECIAL RESOLUTIONS BY COMPANIES UNDER THE COMPANIES ACT, 2013.

The Ministry of Corporate Affairs (MCA) vide its circular no. 14/2020 dated April 08, 2020 has provided the relaxation to companies in respect of passing ordinary and special resolution in the meeting of members due to the outbreak of COVID-19 pandemic. The MCA has suggested that companies which need to take urgent decisions requiring members approval can take approvals through postal ballot/ e-voting and hence do not require to conduct any physical meeting.

In case, the holding of Extra Ordinary General Meeting (EGM) is unavoidable for the company, then company should comply with the measures as mentioned in this circular and the said relaxation shall remain in force up to June 30, 2020.

The key measures of the said relaxation are as follows:

A. For companies which are required to provide the facility of e-voting under the Act, or any other company which has opted for such facility:

1. EGM can be conducted through video conferencing (VC) or any other audio-visual means (OAVM), provided the transcript of the same shall be in maintained in the safe custody of the Company. Incase of public companies, the transcript shall be made available on the website of the company, if any.

2. Company shall consider different time zones as per the convenience of members before scheduling the meeting.

3. Company should ensure the facility of two-way conferencing or WebEx for the ease of participation of members. The said facility must allow at least 1000 members to participate on first cum first served basis. The large shareholders (i.e., shareholders holding 2% or more shareholding), promoters, institutional investors, directors, key managerial personnel (KMP), the chairpersons of audit committee, nomination and remuneration committee, stakeholders relationship committee, auditors, etc. may be allowed to attend the meeting without the restriction on account of first come first served basis.

4. Company shall open the facility of joining the meeting before 15 minutes from the scheduled time and will not close it till the expiry of 15 minutes after such scheduled time.

5. Attendance of members through video conferencing or other audio-visual means shall be counted for the purpose of quorum.

6. The facility of voting through e- voting system or by show of hands in a meeting shall be allowed only to the members who are present in the meeting through VC or OAVM and did not cast their vote through remote e-voting.

7. If AOA of a company specifies any specific person to be a chairperson of meeting, then that person will be appointed as chairperson of a meeting, otherwise the chairperson shall be appointed in below manner:

• If less than 50 members are present at meeting, then the members shall appoint one among themselves as chairperson.
• If 50 or more members are present, then chairperson shall be appointed by a poll conducted through e-voting system during the meeting.

8. The Chairperson shall ensure the availability of e-voting facility for the purpose of poll. The voting shall be conducted in the below manner:

• If less than 50 members are present at the meeting, then voting may be conducted either through e-voting system or by show of hands, unless the poll is demanded.

• If 50 or more members are present, then voting through e-voting system only.

9. The members will not be allowed to appoint proxy on their behalf for the purpose of this meeting. However, pursuance to the section 112 and 113 of Companies Act 2013, authorized representative of members is allowed to attend meeting on their behalf.

10. In case institutional investor is member of the company, then they must be encouraged to attend and vote at meeting.

11. The independent director and auditor or its authorized representative shall attend the meeting.

12. Every company should ensure that notice of EGM shall make disclosure regarding the framework provided through this circular and shall give instructions how to access and participate in the meeting. Also, Company shall also provide the helpline number for members who need assistance with using technology.

13. In case companies have already issued any notice prior to the date of this circular and members approval is also received, in that case also, fresh notice is required to be sent.

14. All resolutions passed under this mechanism shall be filed with the ROC within 60 days of passing the resolution mentioning that the company has complied with all the measures mentioned in the circular.

B. For companies which are not required to provide the facility of e-voting under the Act-

1. The applicability of all the points, except point (6) and (8) mentioned above are same as in case of companies which are required to provide the facility of e-voting under the Act.

2. Company shall provide a designated email id along with notice to the members for sharing their votes.

3. The confidentiality of passwords and other privacy issues relating to designated email address shall be strictly maintained by the company.

4. In case poll is required, the members shall cast their votes on the resolution by sending through their registered email id on the designated email id provided by company.

5. In case less than 50 members are present in the meeting, the chairperson may decide to conduct a vote by show of hands, unless poll is demanded. In case poll is demanded and counting of votes requires time, then the said meeting can be adjourned and called later to declare results.

C. The Companies should ensure all the compliances of general meeting mentioned under Companies Act, 2013

Like making of disclosures, inspection of related documents by members, authorizations for voting by bodies corporate are made through electronic mode.

D. The provisions of this circular shall not apply for passing the following resolutions:

• the consideration of financial statements and the reports of the Board of Directors and auditors.
• the declaration of any dividend.
• he appointment of directors in place of those retiring.
• he appointment of, and the fixing of the remuneration of, the auditors.
• Any other matter where any person has a right to be heard.
The link of the amendment is as follows
http://www.mca.gov.in/Ministry/pdf/Circular14_08042020.pdf 



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