Virtual Board and Shareholder Meetings

In view of the lockdown situation, travel restrictions and social distancing norms prevailing in the country due to COVID pandemic, the Ministry of Corporate Affairs (“MCA”) has allowed companies to conduct their meetings, both of the directors and members through Video Conference (“VC”) or Other Audio Visual Means (“OAVM”) without physical presence.

The MCA amended The Companies (Meetings of Board and its Powers) Rules, 2014 on 19 March 2020 and further amended on 23 June 2020, to permit the companies to hold board meetings through VC/OAVM and transact those agenda items which are otherwise restricted under the rules.

The permission to consider the following matters in a meeting through VC/OAVM is available to the companies till 30 September 2020 -

  1. The approval of the annual financial statements.
  2. The approval of the Board’s report.
  3. The approval of the prospectus.
  4. Audit committee meetings for consideration of financial statement.
  5. The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Guidelines to be followed by a company while conducting meetings through Video Conference (“VC”) or Other Audio Visual Means (“OAVM”) are given below:

Before the start of the meeting:

  1. State in the notice of the meeting that the meeting would be held through VC/OAVM means.
  2. Provide, in notice of the meeting, all necessary information such as name, contact no. or e-mail address of the relevant authority in the company to whom one may write to express their intention to attend the meeting via VC/OAVM. The notice should also contain clear instructions on how to take part in the meeting.
  3. Due care must be taken to ensure that the VC/OAVM facility allows participation of all the members attending the meeting concurrently and all necessary arrangements must be made to avoid failure of video or audio visual connection.
  4. The facility for joining the meeting should be kept open at least 15 minutes before the time scheduled to start the meeting and should not be closed until 15 minutes after the expiry of the scheduled time.

During the meeting:

  1. The company ensures that participants attending the meeting through VC/ OAVM are able to hear and see the other participants clearly during the course of the meeting.
  2. At the commencement of the meeting, a roll call should be taken where every participant of the meeting must state, for the record, the following:
    1. Name,
    2. The location from where he is participating,
    3. That he has received agenda and all the relevant material for the meeting; and
    4. that no one other than the concerned participant is attending or having access to the proceedings of the meeting at the location mentioned in (b) above.
  3. The Chairperson must ensure that the required quorum is present throughout the meeting.
  4. Every participant must identify himself for the record before speaking on any item of business on the agenda.
  5. If a statement of a participant in the meeting through VC/OAVM is interrupted or garbled, the Chairperson must request for a repeat or reiteration.
  6. At the end of discussion on each agenda item, the Chairperson of the meeting must announce the summary of the decision taken on such item along with names, if any, who dissented from the decision taken by majority.

On conclusion of the meeting:

  1. Company to store for safekeeping and marking the tape recording(s) or other electronic recording mechanism as part of the records of the company at least before the time of completion of audit of that particular year.
  2. Company to record proceedings and prepare the minutes of the meeting.
  3. The minutes must disclose the particulars of the participants who attended the meeting through video conferencing or other audio visual means.

Extra measures to be taken in case of General Meetings:

  1. The notice of the meeting must also be displayed on the website, if any, of the company and in case of listed companies, stock exchanges should be intimated of the meeting.
  2. The facility of appointment of proxies by members will not be available for meetings conducted through VC/OAVM.
  3. VC/OAVM facilities should have the capacity to allow at least 1000 members or the actual number of members, whichever is lower to participate on a first-come-first-served basis.
  4. Shareholders holding 2% or more shareholding, promoters, institutional investors, directors, key managerial personnel, the chairpersons of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee, auditors, etc. may be allowed to attend the meeting without restriction on account of first-come-first-served principle.
  5. Recorded transcript of the meeting must be kept in safe custody and in case of a public company shall be uploaded on its website, if any.
  6. All resolutions passed in such meetings must be filed with RoC within 60 days. Such resolution should clearly indicate the mechanism followed as per the MCA Circulars and provisions of the Act and rules.

References:

  1. http://www.mca.gov.in/Ministry/pdf/Circular20_05052020.pdf

  2. http://www.mca.gov.in/Ministry/pdf/Circular14_08042020.pdf

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