In what could be a relief for India Inc, the Corporate Affairs Ministry has now allowed Companies —whose Annual General Meetings (AGMs) are due in the year 2023 —to hold them through Video Conference (VC) mode till September 30 next year.
The MCA, in a separate move, has allowed companies to hold their extraordinary general meetings (EGMs) via video conference and transact items through postal ballot till end September next year.
“In continuation to this Ministry’s General circular dated May 5 , 2020 and General circular May 5, 2022, it has been decided to allow the companies whose AGMs are due in the year 2023, to conduct their AGMs on or before September 30….”, said the MCA circular issued on Thursday.
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 corporate bodies will continue to get appointed for participation in such meetings.
The MCA circular also clarified that the latest move should not be considered as conferring any extension of time for holding of AGMs by the companies under the Companies Act 2013. Also, the companies not adhered to the relevant timelines would be liable for legal action under the appropriate provisions of the Companies Act 2013.
The company law experts highlighted that the latest dispensation to hold virtual AGMs upto September 2023 would be available for companies whose financial year ends on December 31, 2022 and March 31, 2023. This should be seen as continuation of compliance relief announced for India Inc post the onset of Covid-19 pandemic in March 2020.
Since the onset of Covid-19 pandemic in March 2020, the MCA took several measures to make life easy for India Inc to meet the company law’s compliance requirements.
In May last year, the MCA had extended virtual AGM facility till December 2022 in respect of companies that were to hold AGM in the year 2022. The facility was extended by six months from earlier set outer limit of June 30, 2022. MCA had also then clarified that companies can hold their extraordinary general meetings (EGMs) via video conference and transact items through postal ballot till end December 2022.
Covid-19 surge scare
This latest MCA move has come at a time when the Union Health Ministry anticipates a Covid-19 surge. Already, there is some chatter in official circles that the next 40 days are going to be crucial for India.
The Health Ministry has from January 1 , 2023 made negative RT PCR reports mandatory for passengers arriving from China, Hong Kong, Singapore, Japan, South Korea and Thailand.
In the backdrop of extraordinary circumstances of Covid-19 pandemic prevailing in the country, the MCA had on April 8, 2020 for the first time allowed companies to hold EGMs through virtual mode till June 30, 2020. This was later extended to September 30, December 31, 2020, June 30, 2021, December 31, 2021, June 30, 2022, December 31, 2022 and now to September 30, 2023.
The instant relaxation pertaining to business required to be carried out under EGMs also through virtual means it is in alignment with the broader objective of acknowledging the digital mode as an alternative efficacious mode for conducting affairs of companies.
The experts even suggested that the video-conferencing option should be legislated, and such facility be provided as an alternate for small companies.
Recording of proceedings
The current 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 by the public.