In what is seen as a relief for India Inc that is faced with pandemic-induced compliance hardships, the Corporate Affairs Ministry (MCA) has allowed companies to hold their Annual General Meetings (AGMs) through video conferencing mode for six more months. 

As against earlier set outer limit of end June 2022, the MCA has now clarified that companies whose AGMs are due in the year 2022 can now conduct such meetings through video conferencing or other Audio Visual Means (OAVMs) till December 31. A circular to this effect has now been issued by MCA.

In a separate move, the MCA has also clarified that companies can hold their extraordinary general meetings (EGMs) via video conference and transact items through postal ballot till the end of December. This facility was hitherto available till end June this year, but now extended.

Since the onset of Covid-19 pandemic in March 2020, the MCA has been taking several measures to make life easy for India Inc to meet the company law’s compliance requirements.

Experts’ take

Manendra Singh, Associate Partner, Economic Laws Practice, said: “Allowing companies to conduct shareholders’ meetings virtually was initially seen as a forced measure to address challenges due to the pandemic. The regulator, however, seems confident to allow this on a regular basis. The relaxations to hold EGM and AGM by virtual/hybrid means have kept getting extended – and this time till December 31, 2022. Recently, the Company Law Committee report of March 2022, has also recommended that these should be made permanent considering the practices in other jurisdictions. A carefully drafted procedure is all that is needed to ensure that such meetings are in line with the best corporate governance practices.”

It may be recalled that the Company Law Committee (CLC) had in its third report submitted to government recently recommended amendments to the Companies Act 2013 to enable the Central Government to prescribe the manner in which companies can hold AGMs and EGMs physically, virtually and in hybrid mode.

 It was also stated that where the meeting is for an EGM to be conducted entirely in electronic mode, the notice period for such meetings could be reduced to such period as may be prescribed by Central Government. The Committee proposed to empower the Central Government to prescribe detailed procedures and safeguards by way of Rules.

Several stakeholders had suggested to the CLC on allowing such flexibility of holding AGMs and EGMs, either fully or partially through VC or OAVM, by way of an enabling provision within CA-13. The stakeholders submitted that such flexibility was a welcome change as it is cost-effective, ensures members’ wider participation, and is more convenient. Hence, stakeholders believed that these relaxations must remain operational irrespective of the restrictions ensuing from the pandemic.

The CLC was also briefed on similar relaxations introduced in other jurisdictions that have seamlessly allowed meetings to be conducted virtually and in hybrid mode. For instance, Singapore and Australia allowed companies to hold meetings virtually as long as the participants were given adequate notice. Additionally, the Committee also took note of existing regulatory practices in countries such as South Africa and Japan.

Bambi Bhalla, Emissary Counsel - Cornellia Chambers, a law firm, said, “Considering virtual meetings have become the norm with businesses relying on the benefits of work from home and in light of the regular relaxations provided by the MCA, this is another step towards making virtual meetings the normal process thereby increasing ease of doing business.”

Anubha Sital, Partner, IndusLaw, said that in light of the Covid situation, to facilitate decision making the MCA had requested companies to take up urgent business and decisions of urgent nature, which are not ordinary business and doesn’t involve a person’s right to be heard, by way of postal ballet/e-voting in the manner prescribed under Companies Act, 2013. In case it was unavoidable to hold an EGM, then the circular permitted such unavoidable EGMs to be held through video conferencing (VC) or other audio visual means (OAVM) facility and laid down the procedure to be adopted by companies for conducting such meetings. This facility has now been extended to December 31, 2022 by the MCA circular issued on May 5.

Similarly, in May 2020, the MCA had issued a similar relaxation for conducting annual general meetings through video conferencing (VC) or other audio-visual means (OAVM) facility. Now, the companies whose AGMs are due in the year 2022, are being allowed to conduct their AGMs on or before December 31, 2022, through VC/ OAVM facility. No extension of time for holding the AGM has been granted, but circular issued permits such AGMs to be held through VC/ OAVM till December 31, 2022.

Related Topics
comment COMMENT NOW