With the pandemic risk not yet mitigated and travel restrictions continuing, the Corporate Affairs Ministry (MCA) has now allowed companies to hold their Extraordinary General Meetings (EGMs) via video conferencing mode or other audio visual means till December 31 this year.
It maybe recalled that the MCA had in end-December 2020 extended the validity of such a facility till June this year. This facility, which was allowed on April 8 last year in the backdrop of extraordinary circumstances of Covid-19 pandemic, was to expire on June 30, 2020 but was later extended to September 30, December 31, June 30, 2021 and has now been extended to December 31, 2021.
The video conferencing system leverages on the strengths of digital India by using a combination of VC and e-voting/simplified voting through registered emails to enable companies to conduct their EGMs. As the meetings will be conducted over VC/OAVM, the facility for the appointment of proxies had been dispensed with, while representatives of bodies corporate will continue to get appointed for participation in such meetings.
This framework allows companies to hold shareholders’ EGMs through VC/OAVM without compromising on the other requirements of the law. As an additional check, all companies using this option are required to maintain a recorded transcript of the entire proceedings in safe custody, and public companies are also required to host this transcript on their website for greater transparency.
Further, all resolutions passed through this framework will be required to be filed with the RoC within 60 days, so that such resolutions may be viewed publicly. Other safeguards have also been included in the MCA circular to ensure transparency, accountability and protection of investors interests.
Khazat Kotwal, Partner, Deloitte India, said that the MCA’s latest move is one more step towards ease of doing business in India and will help in removing administrative bottlenecks and result in swift decision making by companies and their Boards.
Harish Kumar, Partner, L&L Partners said: “Amidst the prevailing Covid restrictions, this extension for passing necessary shareholders resolution at EGM through video conferencing up to December 31, 2021 was much needed given the expiry of earlier provided extension up to June 30, 2021”.
Aseem Chawla, Managing Partner, ASC Legal, said: “ in line with MCA earlier allowing companies to conduct board meetings through virtual means, the instant relaxation pertaining to business required to be carried out under extraordinary general meetings (EGMs) also through virtual means is in alignment with the broader objective of acknowledging the digital mode as an alternative efficacious mode for conducting affairs of companies”.
Company law experts suggested that the video-conferencing option should be legislated, and such facility be provided as an alternate for small companies.
In the wake of Covid19 pandemic, MCA has already allowed companies to conduct board meetings via video conferences for certain compliances till June 30.