Corporate India can now breathe easy as the Corporate Affairs Ministry (MCA) has given three more months to them to hold Extraordinary General Meetings (EGMs) through Video Conferencing or other audiovisual means and e-voting.

This facility, which was allowed on April 8 in the backdrop of extraordinary circumstances of COVID-19 pandemic prevailing in the country, was to expire on June 30, but now has been extended to September 30, official sources said.

This latest MCA move is expected to facilitate corporate compliance during the current lockdown period, especially in the main metro cities of the country, said experts.

Sandeep Grover, Partner, Ortis Law Offices, said that this MCA move is a much-needed step considering the health emergency prevailing in major cities in India which is getting worse with each day. This would ensure that the companies can conduct urgent and unavoidable meetings in a smooth and secured way while ensuring social distancing norms, he said.

Srinath Sridharan, a senior industry advisor, said: “Extending the deadline for conducting EGM is a wonderful move as the nation goes digital due to Covid-19. This extension would help shareholders get continuous access to the strategic updates from the companies they invested in. And it also allows the companies to conduct a business agenda that needs shareholders approvals. However, the companies need to ensure that they are patient in ensuring all voices of shareholders are heard in the virtual mode, as many could be having issues of internet bandwidth as well as technical knowledge”.

Aseem Chawla, Managing Partner, ASC Legal, a law firm, said that going forward the recognition of virtual meetings may just become the ‘new normal’ in the given circumstances. He highlighted that the latest MCA move follows the earlier relief provided on April 8 dealing with relaxation provided for convening EGM.

The latest framework on conduct of EGM via video conferencing leverages 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 has been dispensed with, while representatives of bodies corporate will continue to get appointed for participation in such meetings.

This framework allows the companies to hold shareholders’ EGMs through VC/OAVM without compromising on the other requirements of 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 interests of investors.

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