Norms for Board & Shareholding Meetings Relaxed
The MCA has granted the following relaxations and guidelines to companies for holding meetings as provided under the Companies Act, 2013 (“Companies Act”):
The MCA has issued the following clarification on passing of ‘ordinary’ and ‘special’ resolution by companies without a holding a general meeting, which requires physical presence of members at a common venue.
- The mandatory requirement of holding meetings of the Board of the companies within a period of one hundred and twenty (120) days in terms of Section 173 of the Companies Act has been extended by a period of sixty (60) days. Therefore, the gap between two (2) consecutive meetings of the Board stands extended to one hundred and eighty (180) days for next two (2) quarters ending on September 30, 2020.
- The companies whose financial year (other than first financial year) ended on December 31, 2019, can hold their Annual General Meeting (“AGM”) for such financial year within a period of nine (9) months instead of six (6) months from the closure of such financial year. Therefore, such companies can now hold their AGM by September 30, 2020.
- Under Companies Act, the independent directors are required to hold at least one (1) meeting in a financial year without the attendance of non-independent directors and members of management. For the Financial Year 2019-2020, the non-compliance with this requirement will not be considered as a violation. The independent directors, however, can share their views amongst themselves through telephone or e-mail or any other mode of communication, if they deem it to be necessary.
- The requirement of holding Board meetings with physical presence of directors in terms of Section 173(2) of the Companies Act read with Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 for approval of the restricted matters has been relaxed. All meetings can now be held through video conferencing or other audio visual means, till June 30, 2020.
- Further, in case of unavoidable circumstances, a company is permitted to hold an extraordinary general meeting (“EGM”) on or before June 30, 2020 through video conferencing or other audio visual means, provided:
- The use of video conferencing or other audio visual means to conduct such meeting should allow two way teleconferencing for ease of participation. The recorded transcript thereof is required to be maintained by the company or in case of public company, made available on the website, if any;
- The notice of such EGM should contain disclosure of manner of conducting the meeting along with the instructions on how to access and participate therein. In case of companies that do not have e-voting, then they have to provide designated e-mails address in the notice to the members to enable them to convey their vote, when a poll is required to be taken during the meeting on any resolution;
- Attendance of members in such meeting will be accounted for determining the quorum under Section 103 of the Companies Act;
- For conducting votes, e-voting will be used by companies providing e-voting facility. For companies that do not have e-voting facility, the members can cast their votes by sending e-mails through their registered e-mail addresses to the designated e-mail address of the company as mentioned in the notice; and
- All resolutions passed in such meetings are to be filed with the Registrar of Companies within sixty (60) days of such meeting, clearly indicating that mechanism provided in the circular along with the provisions of the Companies Act were duly complied with.
- The companies will take all decisions of urgent nature requiring the approval of members, other than items of ordinary business or business where any person has a right to be heard, through the mechanism of e-voting or voting by electronic means, without holding a meeting.
- For companies that do not have e-voting facility, they will send a notice by email to all members informing them of the company’s designated email address. The notice will also contain the process of registration of member’s email address with the company, if not already registered. The members will cast their votes by sending an email from their registered email address with the company to the designated email address mentioned in the notice.