The Ministry of Corporate Affairs has made a welcome decision to allow companies to hold their Annual General Meetings (AGMs) in the video conference mode for one more year until September 2023. While it has termed this as temporary ‘compliance relief’, virtual AGMs and EGMs should be made a permanent feature of India’s Companies Act.
Virtual shareholder meetings score over physical events on many counts. They enable wider retail participation by obviating the need to travel to the venue to mark one’s presence. Companies are required to hold their AGMs in cities where their registered offices are located. As this could be in any State, it is a tall ask to expect investors owning a portfolio of shares to travel the length and breadth of the country during AGM season. Some companies in fact hold AGMs in far-flung towns to explicitly discourage attendance. Virtual meetings also do away with the dubious practices in physical AGMs that put off serious investors. Some companies hand out gift boxes ahead of AGMs, with shareholders flocking to the venue for the express purpose of collecting them.
Others encourage ‘management-friendly’ attendees, who fritter away time by singing paeans to the management and raising frivolous queries. Virtual meetings where companies invite and screen questions well ahead, allow professional matters to take precedence. Electronic ballots ensure more democratic voting on resolutions, compared to the show of hands in physical meetings.
While making virtual shareholder meetings permanent, the Ministry must also lay down unambiguous ground rules. Companies must be required to invite queries in advance of the AGM from every section of shareholders, screen them with the aid of an independent scrutiniser and address all valid queries either verbally or in writing, during AGMs/EGMs.