Clarification on passing of ordinary and special resolutions by companies during lockdown

MCA has issued a General Circular  Circular No 14/2020 dated April 08, 2020 .

This circular is applicable on all type of Companies.

This circular is for passing of resolution in general meeting which are of ‘Urgent Nature‘since companies Act 2013 doesn’t specify any provisions for allowing the conduct of members’ meetings through video conferencing (VC) or other audio-visual means (OAVM)

Companies can take urgent decisions without convening a physical General Meeting on or before 30.06.2020 and ratify them through the e-voting process

Unavoidable' extraordinary general meetings (EGMs) need to be held VCs or OAVM and a transcript of the proceedings would need to be maintained by the company and made available on the website of the Company in case of public company.

As per this circular, Company can’t pass resolution for ordinary business or business where the person has right to be heard 

FILING OF MGT-14:

• MGT-14 can be filed within 60 (Sixty) days of passing of resolution along with a declaration that provisions of Circular and rules has been complied with.

CONDITIONS/ PROVISIONS FOR HOLDING OF EGM THROUGH VC/OAVM:

A. General Conditions:

• EGM must be held on or before 30th June, 2020 for this circular to be applicable.
• Allowed only in case when passing of resolution in EGM is unavoidable/ urgent.
• When passing of resolution through postal ballot not feasible.

B. Notice of Meeting:

• Should contain clear instructions on how to access and participate in the meeting.
• helpline number to be provided through the registrar & transfer agent for those shareholders who need assistance with using the technology before or during the meeting.
• notice shall also be prominently displayed on the website of the company and due intimation may be made to the exchanges in case of a listed company
• In case a notice of meeting has been served prior to date of the circular the framework proposed in the circular may be adopted for the Meeting in case the consent from the members is obtained and a fresh notice of shorter duration in consonance with this circular is issued consequently

C. Quorum:

• Attendance of members through VC or OAVM shall be counted for the purpose of reckoning the quorum under section 103 of the Act
• Representatives of the members may be appointed for the purpose of voting.
• facility of appointment of proxies by members will not be available for such meetings.

D. Participation of Members:

• All care must be taken to ensure that such meeting through VC or OAVM facility allows two-way teleconferencing or webex for the ease of participation of the members and the participants are allowed to pose questions concurrently or given time to submit questions in advance on the E-mail address of the company.

E. Presence of required Members:

• Such a facility must have a capacity to allow at least 1000 members to participate on a first-come-first-serve basis for companies which are required to provide the facility of evoting under the Companies act and at least 500 members for other companies.
• The large shareholders (i.e. shareholders holding 2% or more shareholding), promoters, institutional investors, directors, KMPs, the chairpersons of the Audit Committe Nomination and Remuneration Committee and Stakeholders Relationship Committee, auditors etc. may be allowed to attend the meeting without restriction on account of first-come- first-served principle.

F. Time limit for joining of Meeting:  

• The facility for joining the meeting shall be kept open at least 15 minutes before the time scheduled to start the meeting and closed after 15 mins of such scheduled time. 

G. Presence of Independent Director:  

• At least one independent director (where the company is required to appoint one), and the auditor or his authorized representative, who is qualified to be the auditor shall attend such meeting through VC or OAVM.

H. Time Zones

• Convenience of different persons positioned in different time zones shall be kept in mind before scheduling the meeting.

I. Mode of Voting:

where there are less than 50 members present at the meeting, the voting may be conducted either

– through the e-voting system, wherever applicable or
– by a show of hands,
– unless a demand for poll is made in accordance with section 109 of the Act, in which case, the voting shall be conducted through the e-voting system;

In all other cases, e voting shall be conducted. Shareholders can choose either e-voting or voting by show of hands or voting on demand for poll.

J. Chairman:

• The Meeting shall be chaired by person as specified in AOA
• If AOA doesn’t provide for the same and
• – members present at meeting are 50 or more, the Chairman shall be elected by taking poll through e voting or
  – if members present are less than 50, the chairman shall be elected by sow of hands;

• The Chairman present at the meeting shall ensure that the facility of e-voting system is available for the purpose of conducting a poll during the meeting.

The above requirements are in addition to any other requirement under the Act for convening of General meetings.