General meetings by Video Conferencing: Recognising the inevitable

Team Vinod Kothari & Company

corplaw@vinodkothari.com | updated as on 14th April, 2020

“If necessity is the mother of invention, then adversity must be the father of re-invention”, says Johnny Flora. It is a pity that an urgency of such colossal scale should have been needed for the lawmakers for companies to realise that in an age where all businesses are working day and night with meetings and conferences on the internet, and even courts are hearing matters using VC, the ability of a company to conduct general meetings by using VC should have come as a concession, or a limited period dispensation. The MCA Circular of 8th April, 2020[1] (‘MCA Circular’),  if it is a precursor to a larger rethinking, is certainly welcome.

One can almost be sure that the experience with general meetings using VC, even though granted for a limited time window up to September 30, 2020 (extended vide MCA circular dated 15th June, 2020) which was earlier permitted only upto June 30, 2020, should, and eventually would, be made a permanent feature of the law.

One starts with a trite saying that the company law does not provide for general meetings using VC. In our view that is not the right way to approach the issue. The right way is, does not company law hate or abhor such meetings? Has the law ever ruled out meetings in the virtual world? It would be outrageous to have expected laws which were anchored into the 1950s to have thought of meeting by the VC mode; it is even more outrageous to search for answers for VC meetings in such a law.

While the MCA circular certainly puts up a serious attempt to set the stage ready for calling the general meetings through VC, however, as we discuss in this write up, various unattended issues would leave the stakeholders in confusion while actually implementing the same. With the intent of resoving some of the practical issues, MCA issued yet another clarification vide its Circular dated 13th April, 2020[2] (‘Additional Circular’) seems to get some of the issues right.

However, now that the MCA Circular as well as the Additional Circular is in place, we may discuss certain practical issues as discussed below.

Addressing practical issues 

Notice for EGM

  • Pre-conditions of sending notice
    • If the company already has the e-mail ids of all the shareholders- there shall be no requirement of any other compliances as per the Additional Circular. The company can easily call a meeting by short notice; otherwise
    • Telephonic communication/ communication through any other mode to be made to the shareholders whose e-mails are not registered for getting the same done
    • If the telephonic communication could not be made-
      • Public notice to be made by way of advertisement to be made immediately
      • Members to get their e-mail ids registered within 3 days of the date of public notice by writing to the e-mail id provided by the company
    • Point to be noted here is that, if such communication is not made then it may not be considered as an accidental omission but a systematic one
  • Authenticity of the e-mails received by the company for registration
    • The shareholders may attach the scan of the share certificate with the e-mail.
  • Mode of sending notice
    • The same has to be emailed to the shareholders on their registered e-mail ids.
    • For those who have not registered their e-mail ids, the notice should be hosted on the website of the companies (where the company has an official website for the shareholders) and submitted to the Stock Exchange.
  • Length of notice- can that be waived?
    • Subject to the consent of the members, the mandatory notice of 21 clear days can be waived of.
  • Length of the notice as per the Additional Circular
    • For companies not having e-voting facility the timeline would be at least 2 to 3 days for publication + 3 days gap after publication of notice (for getting the requests from shareholders for registering the e-mails) +21 clear days (i.e. 21 +2 days). Thus, the company will have to keep a month in hand before calling the EGM.
  • Contents of the notice
    • The notice will have all contents as it requires to have except for the route map and proxy form for the meeting.
    • The notes will, however, require some modifications, with respect to certain matters like proxy, inspection of registers, etc. 

Timeline of the Circular

  • Meaning of the phrase ‘conducting the meeting on or before 30.06.2020’
    • In our view this phrase should mean the company should have started taking steps for the meeting on or before 30th September, 2020. i.e., the notice for calling the meeting should have been sent on or before the said date.

Voting Prescriptions

  • Do I need to get every shareholders’ resolution through the VC mode?
    • It talks about companies which are required to provide e-voting facility, and companies that are not required to provide e-voting facility.
    • The former types of companies will be barely 5-6% of the total population of companies[3].
    • Hence, 90% of the companies are those that are not required to provide VC facility
    • Are we contending that all such companies, will have to follow the VC meeting circular for any shareholders’ resolution
    • For example, if I have 2 shareholders, and they are in the same house, do I say I will offer the facility of joining by VC?
      • Surely not required since unanimous consent is as good as taking approval in the meeting (refer sec 117 (3) (b) of the CA, 2013). 
  • Can the common law rule that unanimous shareholders resolution is valid as a special resolution still valid, despite the Circular? It this circular an enabling circular or a prescriptive circular?
    • While the circular has been brought with the intent to enable participation through VC or Other Audio Video Means (OAVM), however, the language seems to be prescriptive only, in the sense that it requires the companies calling EGM that too within a time frame of 2-3 months from the issuance of this circular, to allow and arrange for VC conducted meetings.
    • Note that the circular is clearly saying – only where the EGM is unavoidable.

“However, in case holding of extra-ordinary general meeting (EGM) by any company is considered unavoidable, the following procedure needs to be adopted for conducting such a meeting on or before 30.06.2020, in addition to any other requirement provided in the Act or the rules made thereunder”

The Circular gives a hint that if the general meetings could be deferred or are not of an urgent nature, may not hold the EGMs through this procedure. While the Circular gives a time frame to the companies to take recourse to the prescriptions given in it for holding EGM, we are of the firm view that, in the current situation, holding virtual meetings is inevitable and the only option where the social distancing norms can be adhered to.

  • Providing log-in id and password
    • The Companies will be required to provide a log-in id and password to all the members so that they can participate in the meeting and cast their votes through poll.
  • Action point for enabling to vote
    • Three action points from the company as well as the member’s side
      • Sending an invite with the log in credentials by the company (informing the e-mail id for receiving the votes/ questions, etc.)
      • Members logging in to participate in the meeting
      • Voting during the meeting either through poll (which mostly seems to be conducted like a remote e-voting or by sending votes through e-mail, as the case may be)
  • Possibility of voting for members not having e-mail id
    • An e-mail id will be required in the first place to get the login -id and password for participation and voting. This cannot be received through any public notice
    • People not having an e-mail id will not be able to vote at all
    • Probably the flow of events for obtaining the e-mail ids of the members would be as follows:

  • Co-ordination with the depositories (NSDL and CDSL)
    • NSDL or CDSL should coordinate with the company to provide the facility to allow the members to vote during the meeting.
      • This could probably be done wither by re-opening the e-voting window of the company or by giving such other facility.
    • The notice of the meeting should clearly mention that the voting shall only take place during the meeting.
      • In the absence of the same, there could be high chances of cornering of votes.
  • Role of scrutinizer
    • While the Circular does not mention about the role of the scrutinizer, however, for meetings where the voting is being done other than by way of votes cast during the meeting, should engage a scrutinizer.
    • In fact the e-mail id of the scrutinizer should be given as the recipient e-mail id for receiving the votes
      • This reduces the chance of tampering of votes since a third / external agency is involved.

Requirement of Postal Ballot

  • As per the proviso inserted to Section 110 (1) of the Companies Act, 2013 vide the Companies (Amendment) Act, 2017, the law has already provided that for the items of business mandatorily required to be transacted by means of postal ballot, may be transacted at a general meeting by a company which is required to provide the facility of e-voting under section 108. Therefore, the use of postal ballot may be done away with in the current scenario.

Certain Technicalities

  • What will be the place of the meeting – will the meeting have a place? Do such meetings have to have a place?
    • Since the meeting is being joined by several participants from different places, one can say that the place of the meeting is the Cloud. However, for the sake of recording the minutes, the place from where the Chairperson joins may be recorded as the place for the meeting.
  • The Circular talks about filing of resolutions – are we saying all resolutions passed in such meeting will have to be filed?
    • The Circular suggests that all the resolutions passed in such meetings will have to be filed with the MCA within 60 days. However, in our view, only those resolutions which require filings with the MCA, should be filed.
      • All resolutions to be filed with Registrar and mechanism of following the circular is required to be indicated in the Form.
  • Will the company attach CTC of minutes?
    • The copies of the resolution are generally certified, however, in the absence of physical signing, digitally certified resolutions filed should be fine.
  • In case notice already sent Part A Para XIV
    • Company has to first take consent as per 101 (1) of the CA, 2013
    • So if no consent obtained, one cannot avail benefit straight away by sending a further notice.
  • What is effectively the difference between a poll in a VC meeting and e-voting at the meeting? (Part B Para X onwards)
    • In case of poll – members emails to the address
    • In case of e-voting – it casts votes on the portal of the service provider.
  • Other things to be done through electronic mode
    • Inspection of documents.
      • This could probably be done by either sharing the documents on cloud with the members or the VC platform itself allow the facility to add documents during the meeting for inspection.
      • All the documents, unless they are public documents cannot be uploaded on the website of the company. 
  • Adjourn meeting to declare result (Part B Para XIV)
    • This seems to be totally impractical since the voting aggregation being in electronic form should not require much time.
  • Uploading of transcript on website
    • While the Circular uses the term recorded transcript, however, in our view, uploading of the minutes / proceedings of the meeting should be sufficient compliance.
    • The said recording should be kept till such time as other VC documents are kept, i.e. till the completion of the audit for the said financial year in which the meeting took place.
  • Website
    • If the company has an official website with a corner on it to disseminate shareholder’s information, then the transcript and other information will be required to be hosted.
    • In other cases, where the website is for commercial presence with no investor’s corner or tab, then not uploading the said information should not be taken as a non-compliance.
  • Time –Zone
    • Generally all meeting in India are held as per one time zone i.e. Indian Standard Time
    • Unless, there are global investors, then a time which is convenient for all members should be fixed and in other cases a time convenient for the majority of the members.

Presence of Auditors and IDs

  • Presence of auditors
    • There is absolutely no relevance for this requirement for the following reasons:
      • EGM does not require the auditors to be mandatorily present;
      • EGMs are called to discuss urgent and special business which does not include approval of financials. Accordingly, there is no role for the auditors to play in EGM unless there is any agenda that requires their presence.
  • Presence of IDs
    • While the IDs and all other directors, endeavour to participate in all the general meetings, however, in case of unforeseen situations, there could a situation that a director may not attend.
    • This cannot make the proceedings of the meeting invalid.

Extending the applicability of the Circular in other cases

  • Is this something that I can use for an AGM?
    • As on date the intend of conducting AGM is that the directors being the managers of the company and the shareholders being the owners, the directors shall at least once in a year be made answerable to the shareholders. The same may not be possible through VC. So, as far as AGM is concerned, unless the law completely exempts the companies from AGM formalities, the companies will have to resort to physical AGM at least for quite some time.
  • If all the shareholders have consented, say by emails, do I still need to get them hooked on to a VC?
    • The circular requires the companies covered under Para 3B to provide a specific email id on which the shareholders give their assent or dissent unless the number of members present is less than 50. There is no point or reason to say that consent by way of an email is required to be given by all shareholders. In any event, as discussed above, if the approval / denial to a particular agenda is received by way of an email, we find no reason for the shareholders to hook themselves on a VC.
  • Can this Circular be used after September 30, 2020?
    • In our view, considering the current situation, we should surely be able to take reference from this Circular and hold virtual meetings even after 30th September, 2020.
  • What about class meetings? Can the principles of this Circular be used there as well?
    • There is no hard and fast rule for conducting the meetings of different classes of security holders as for the equity shareholders. Accordingly, companies may choose any virtual or other means (vote by email, etc.) through which the votes of the classes as may be required, for example – class of debenture holders, preference shareholders, etc.
  • Court convened meetings can also be done in the similar manner
    • In times where the Hon’ble Supreme Court has also turned to virtual hearings, there is no reason for the companies to not hold the court convened meetings in the same fashion.


[1] http://mca.gov.in/Ministry/pdf/Circular14_08042020.pdf

[2] http://www.mca.gov.in/Ministry/pdf/Circular17_13042020.pdf

[3] http://www.mca.gov.in/Ministry/pdf/MIBFeb_16032020.pdf

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