Relaxations by MCA for Conducting Annual General Meeting 2020
In terms of the Companies Act, 2013 (Act) and rules made thereunder, every company other than a one person company is required to hold an Annual General Meeting (AGM) within 6 months (9 months in case of first AGM) from the closure of the previous financial year and not later than a period of 15 months from the date of last AGM. The AGM should be called during the business hours (i.e. between 9 A.M to 6 P.M) on any day other than a national holiday and should be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. The Act also provides that the AGM of an unlisted company can be held at any place in India, if the consent is given, in writing or by electronic mode, by all the members in advance. The Act further permits e-voting (including remote e-voting) in case of a general meeting and passing of resolutions (except items of ordinary business and items where any person has a right to be heard) through postal ballot (which includes electronic ballot and electronic voting), in addition to physical meeting. However, there is no specific provision under the Act which allows convening of the members’ meetings through videoconferencing (VC) or other audio-visual means (OAVM).
In view of the travel restrictions and threat posed by COVID-19, the Ministry of Corporate Affairs (MCA) vide its General Circular No. 20/2020 dated May 05, 2020 (MCA Circular 20) granted the relaxation with respect to holding of the AGM through VC or OAVM, during the calendar year 2020.
In view of the extraordinary circumstances prevailing in the country due to the pandemic, the relaxation under MCA Circular 20 would be beneficial, especially, for the individual members and/or the authorised representatives of the corporate members, who were otherwise required, under the Act, to travel inter-state or cross border for attending the AGM. Earlier, in case of a private limited company having only two members, the physical presence of both such members (through authorised representative in case of corporate member) was required at the venue of the AGM to form the quorum. However, post relaxation granted under MCA Circular 20, the individual member/authorised representative need not travel to the venue of the AGM during the calendar year 2020, provided the said company has made necessary arrangements to hold its AGM through VC or OAVM, in accordance with MCA Circular 20.
The company desirous of holding its AGM through VC or OAVM should follow the procedure specified in MCA Circular 20, in addition to any other requirements provided in the Act and rules made thereunder. There are different procedures specified under MCA Circular 20, for convening AGM by VC or OAVM, by –
(i) the companies which are required to provide e-voting facility under the Act or which have opted for such e-voting facility; and
(ii) the companies which are not required to provide e-voting facility under the Act.
MCA Circular 20 provides for further clarifications with respect to the below:
(i) other than the ordinary business items, only those special business items may be transacted, at the AGM held through VC or OAVM, which are considered unavoidable by the Board;
(ii) the financial statements (including Board’s report, Auditor’s report or any other relevant document required to be attached therewith) can be sent through e-mail on the registered e-mail addresses of the members;
(iii) the company should take all necessary steps to register the e-mail addresses of all persons who have not registered their e-mail addresses with the company.
Further, MCA through its General Circular no. 18/2020 dated April 21, 2020 (MCA Circular 18) extended the due date of holding the AGM to September 30, 2020, for the companies whose financial year ended on December 31, 2019. It is noteworthy to mention that MCA has not yet extended the due date of the AGM for the companies whose financial year ended on March 31, 2020, instead, it clarified in MCA Circular 20 that all the companies, which are not covered under MCA Circular 18 and are unable to conduct their AGM, in physical or in accordance with the framework provided in MCA Circular 20, can file applications for extension of the AGM at a suitable point of time before the jurisdictional Registrar of Companies in accordance with the Act.