In this present scenario of countries being connected globally, corporates are also getting globalized increasingly. When corporates start working on a global scale, they get connected with people across countries. Nowadays, it is quite normal for companies to have their directors and stakeholders residing in far-flung areas. It is not easy and convenient for them to travel all the way to attend the meetings as it takes time and is also a costly affair.
With the need of making every possible thing electronically available, a requirement of providing an option to companies to conduct their meetings through virtual mode was also felt. Virtual meetings allow people to meet and exchange information in real-time without being physically present together.
Considering all these things in mind, the Companies Act, 2013 allow companies to hold board and general meetings through e-mode with some restrictions.
Directors have busy schedules, and it is not easy for them to attend all the meetings of all the companies in which they hold directorship as it is not just about attending the meetings, but they also have to prepare for that. They have to go through all the documents and agendas required to be discussed in the meetings.
Virtual meetings are less burdensome for the directors to attend.
Section 173 of the Companies Act, 2013 read with Rule 3 and 4 of Companies (Meetings of Board and its Powers) allow the companies to hold virtual board meetings and provides for the manner and procedure for conducting the same.
Earlier, according to Rule 4, some agendas were restricted to be discussed in a virtual board meeting, but the same is now allowed. Those items were
- The approval of the annual financial statements
- The approval of the Board's report
- The approval of the prospectus
- The audit committee meeting for consideration of the financial statement
- The approval of matters related to merger, demerger, amalgamation, acquisition and turnover.
Hence, the directors shall be counted for a quorum for the above matters also even if they participate in the meeting virtually.
NOTICE FOR THE VIRTUAL MEETING
Even the notices sent to the directors through any electronic means shall constitute valid notice. The notice shall include information about the facility available to participate in the meeting through e-mode.
If any director wishes to participate in the meeting virtually, he must give an intimation beforehand to the Chairman or the Company Secretary of the company to enable them to make arrangements in advance. The director may also intimate his intention of participating electronically at the start of the calendar year for the entire year.
The attendance registers shall be deemed to be signed by the respective director if his/her attendance is recorded and authenticated by the Company Secretary, Chairman or any director (as the case may be) of the company.
At the commencement of the meeting, a roll call shall be done during which the director has to state his name, current location, confirmation of receiving the agenda and that no person other than the director has access to the meeting. All of this information is required to be mentioned in the minutes of the meeting.
The venue mentioned in the notice of the meeting shall be deemed to be the venue.
ROLE OF CHAIRPERSON AND COMPANY SECRETARY
The Chairperson and the Company Secretary have to play a crucial role in the successful conduct of the virtual meeting. They need to ensure that all the arrangements have been made, records are being kept safe, the integrity of the meeting is safeguarded correctly and to make sure that every person attending the meeting is audible and their connection is interrupted and not garbled.
Shareholders are the owners of the company but seldom gets the chance to exercise their true ownership. AGMs/EGMs are required to be conducted at the place where the company has its registered office but shareholders live in different parts of the world, and this stands as a hurdle for them to participate in the meeting physically. Through virtual general meetings, companies may achieve wider shareholders participation and it will benefit both the shareholders and the company.
According to the laws and rules prevailing in our country, companies are not allowed to conduct general meetings entirely virtual but can conduct hybrid general meetings, which give both the options to participate (physically/virtually)
MCA has allowed the companies to conduct its EGM (if unavoidable) till further order through video conferencing or other audio-visual means through its circular dated 08.04.2020 and 14.04.2020 after considering stakeholders' requests because of the surrounding covid threat. They have also provided for the procedure to be followed by the companies separately for-
A. The companies which are required to provide the facility for e-voting or have opted for it.
B. The companies which are not required to provide this facility
MCA also provided relaxation for conducting AGM, which was required to be conducted in the year 2020 and 2021 through e-mode.
VOTING THROUGH E-MODE IN GENERAL MEETING
E-voting is a facility given to the members of a company to cast votes on the resolutions electronically.
Section 108 of the Companies Act, 2013 provides the option to vote through e-mode in a general meeting.
And according to Rule 20 of the Companies (Management and Administration) Rules, 2014, every listed company (with its equity shares listed on any recognised stock exchange) and having not less than 1000 shareholders is mandatorily required to provide an option for e-voting.
VIRTUAL MEETING SPACE REQUIREMENTS
Directors' preoccupied schedule makes it difficult for them to reschedule their meetings. So it becomes more important for the meeting to be held successfully in one go without any delay and adjournment. To make sure that the meeting goes smoothly, arrangements should be made well in advance by keeping the following requirements in mind-
- Meeting rooms
- Good quality mike system
- Video or Web cameras
- High-Speed Internet
- Hardware equipment in good working condition
- Required software
- A trial run to ensure proper working and connectivity
The above provisions and reliefs have been made and provided to encourage more participation from all the company stakeholders and protect their interests. There are also many difficulties which the companies and the stakeholders face in attending e-mode meetings like data security, interruption in streaming, maintenance of digital records, meeting room space arrangements, but the benefits far outweigh the difficulties and drawbacks. The companies should encourage their directors and shareholders to participate in such meetings and contribute to the company's growth by sharing their valuable knowledge.
Authored by CA Manish Gupta and assisted by Ms. Khushi Khandelwal
The authors can also be reached at firstname.lastname@example.org
Tags :corporate law