AGMs via video conference get nod

Directors and shareholders of companies can now log onto their board, committee and general meetings at the click of a mouse.

The Ministry of Corporate Affairs has given the nod to video conferencing of board, committee and shareholder meetings under the provisions of the Companies Act, 1956. The Ministry enabled this facility under Section 13 of the Information Technology Act, 2000.

While it is not binding on companies to provide its directors this facility, it would be mandatory for all listed companies to provide the facility to shareholders from next year, said an official.

For e-voting in general meetings, National Security Depository Ltd and Central Depository Services Ltd have been chosen to provide and supervise electronic platforms. However, NSDL and CDSL need to obtain certification from the Ministry of Communication and IT.

Moving with the times

The Ministry said, “A director participating through video conferencing will be counted for the purpose of quorum. But every director must attend at least one meeting in a financial year.”

The statutory registers required to be signed by the other directors are deemed to have been signed by the participating directors through the electronic mode if they have given their consent to this effect in the meeting. The video recording would have to be preserved by the company for one year.

Welcoming the move, Mr Hitesh Gajaria, Executive director of Tax, KPMG India, said: “The move will help companies in convening meetings speedily and transcending geographical barriers.”

This shows that corporate law is moving with the times, he said. Cost should not be a problem for companies, as most of them already have such facilities, he added.

“If it is mandatory, we will comply,” said Mr Prabhakar Jain, Chief Executive Officer, Global Fevicol Division, Pidilite Industries Ltd. “We are installing video conferencing this year at four of our offices as a pilot and will roll it out in the main factories as well.”

Such a move will also result in a drastic reduction of paper, said Mr Gajaria.

Mr Dinesh Agarwal, Founder and CEO, Indiamart.com, questioned the practicality of holding such meetings.

“I am not sure how a general meeting with too many shareholders can be managed in video conferencing. Companies do not have photos of shareholders on record. So how do you ensure that it is the correct person who is in? There are security issues,” he said.

Companies will have to set up video conferencing facilities in at least five places across India depending on the number of shareholders, the Ministry stated.

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