ANNUAL GENERAL MEETING THROUGH VIDEO CONFERENCING

Corporate world has been greatly affected by ongoing pandemic situation. The stakeholders were facing several difficulties for passing ordinary or special resolutions in accordance with the provisions of the Companies Act, 2013. As a result, Ministry of Corporate Affairs through its vide circular[1], dated on 08.04.2020 allowed the companies to hold their Extra-ordinary General Meeting (EGM) through video conferencing (VC) or other audio visual means (OAVM). Further clarifications were made relating to conduct of EGM through circular[2] dated on 13.04.2020.  This circular states the manner of issuing notice, voting by show of hands and postal ballot, etc.

Considering the representations made by various stakeholders MCA issued another circular[3] dated on 05.05.2020. where in all the companies whose financial year ended on 31.12.2019 were allowed to conduct their AGM within nine months from the closure of the financial year i.e. 30.09.2020 and it shall not be considered as violation of law.

In continuance of aforesaid circular, MCA issued another circular[4] dated on 05.05.2020 for conducting AGM through video conferencing or other audio- visual means. This circular shall draw its reference from the EGM circulars. It can be said that the provisions relating to EGM circular will be mutatis mutandis apply to the AGM circular.

Note: Considering the present norms of social distancing this circular has been brought for the current time being in force. This circular is only applicable for conducting AGM for the calender year 2020.

PROVISIONS REGARDING HOLDING AGM:

As per Section 96 of the Companies Act, 2013:

Every Company, other than One Person Company (OPC), must hold a general meeting in each year apart from other meetings as Annual General Meeting (AGM). The AGM must be held within six months from the closing date of financial year. A notice of 21 days has to be sent to all members.

Every Company, apart from OPC, must have to hold in addition to other meetings, by giving a notice about the meeting, not more than 15 months in between the date of AGM to the next. A Company may hold its first AGM within the period of 9 months from closing of its first financial year otherwise in other cases within the period of 6 months. [Section 96(1) of the Companies Act,2013]. As per the above, if a company holds its meeting, then it has no need to call an AGM in the year of its incorporation.

APPROVAL OF FINANCIAL STATEMENTS AT AGM

According to Section 129(2), at every AGM, Board of Directors of the company shall lay before the meeting financial statement for the financial year.

Moreover, Section 129(3) says, where the company has one or more subsidiaries, then they have to prepare in addition to the statement under section 129(2) a consolidated financial statement and of all subsidiaries in same format and also present before the AGM of the Company with the prescribed statement under section 129(2).

BUSINESS TO BE TRANSACTED AT AGM[5]

As per section 102(2) of the Companies Act, 2013, the following businesses may be transacted during AGM:-

1) Ordinary Business [Section 102(2)], i.e.

a. Consideration of financial Statements and reports of board of directors and Auditors.

b. Declaration of any Dividend

c. Appointment of directors in place of retiring one

d. Appointment of and Fixation of the remuneration of the auditors.

2) Special Business [Section 102(b)]: Apart from the above businesses, the rest are deemed to be a Special business, transacted during the AGM.

APPLICABILITY OF THE CIRCULAR:

All the companies have to conduct AGM in calender year 2020 for the financial year 2019-20. The company can hold its’s AGM only if it has email-ids of at least half of it’s total number of members who-

1. in case of a Nidhi, hold shares of more than one thousand rupees in face value or more than one per cent. of the total paid-up share capital, whichever is less;
2. in case of other companies having share capital, who represrant not less than seventy-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting;
3. in case of companies not having share capital, who have the right to exercise not less than seventy-five per cent. of the total voting power exercisable at the meeting.

In such meetings, other than ordinary business, only those items of special business which are unavoidable by board can be transacted.

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

The circular has been divided into two segments:

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

The circular describes the provisions relating to manner of issue of notice, type of business, maintenance of recorded receipt, minimum standard of VC/OAVM facility, attendance through VC/OAVM, E-voting facility during meeting, etc.

BENEFITS OF HOLDING MEETING THROUGH VIDEO CONFERENCING:

1. Less time consuming and less travel
2. Cost saving
3. Eco-friendly
4. Optimized operations, etc.

The only challenge the company faces is audit of the final accounts.

Recently, Tata Consultancy Services Limited held its 24^th AGM[6] via video conferencing on 11^th June, 2020 and it became India’s first company to hold its AGM via video conferencing. The whole AGM has been made available on the platform of youtube[7].

SOME PROVISIONS OF COMPANIES ACT, 2013 RELATING TO VIDEO CONFERENCING:

Section 108 and rules made thereunder provides the company to allow voting through electronic modes.

Section 173(2)[8] The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time:

Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means.

CONCLUSION:

Considering the present pandemic, the importance of virtual meetings has been increased as far as corporate sector is concerned. The importance of technology has increased. Various countries like Austria, Belguim, Germany, Italy, etc have started giving this facility as a result of covid-19 outbreak[9]. Corporate sector have started adapting the virtual means to hold meeting. Even after pandemic there will be restriction in movements and thus this should be permanently added by the legislature. Thus, this temporary circular may be the permanent solution to overcome the hurdle of holding meeting.

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[1]http://mca.gov.in/Ministry/pdf/Circular14_08042020.pdf , Last accessed on june 16, 2020.

[2]http://www.mca.gov.in/Ministry/pdf/Circular17_13042020.pdf , Last accessed on June 16, 2020.

[3]http://www.mca.gov.in/Ministry/pdf/Circular18_21042020.pdf , Last accessed on June 16, 2020.

[4]http://www.mca.gov.in/Ministry/pdf/Circular20_05052020.pdf, Last accessed on June 16, 2020.

[5] https://www.linkedin.com/pulse/annual-general-meeting-agm-under-companies-act-2013-aakanksha-kashyap/, Article on Annual General Meeting (AGM) under Companies Act, 2013 by Aakansha Kashyap, Last accessed on June 17, 2020.

[6]https://www.tcs.com/content/dam/tcs/pdf/discover-tcs/investor-relations/faq/stock-exchange-letter-newspaper-advertisement-annual-report-19-20.pdf, Last accessed on June 16, 2020.

[7]https://www.youtube.com/watch?v=9bWKYydLAWE&t=1739s, Last accessed on June 16, 2020.

[8]http://ebook.mca.gov.in/Default.aspx?page=applicablity&rg_applicabilityChangePage=4, Last accessed on June 16, 2020.

[9]http://vinodkothari.com/2020/05/convening-of-agm-during-covid-19-crisis/, Last accessed on June 17, 2020.

By: Dhruvanshi Mistry
BA LLB
GLS Law College.