Relaxation for conducting EGMs & Postal Ballots

Do you know holding an annual general meeting is an annual procedure that every company must follow? The Ministry of Corporate Affairs (MCA) has allowed companies to hold their Annual General Meetings (AGMs) through video conferencing for the next six months. Against the set outer limit of the end of June 2022, the MCA has now clarified that it has been decided to allow companies whose AGM is due in 2022 to hold their AGM on/before 31/12/2022 through Video Conferencing (VC) or Other Audio Visual Means (OAVM). So let us discuss the relaxation on EGMs & Postal Ballots.

What is an Extraordinary General Meeting (EGM)?

An extraordinary general meeting (EGM) is a gathering of members of an organization, company shareholders, or employees of an official body, which takes place at an irregular time.

An extraordinary general meeting (EGM) is a general meeting convened other than the scheduled annual general meeting (AGM) of the company.

• An extraordinary general meeting is used to deal with urgent matters that arise between annual general meetings.
• EEZs are often thought of as extraordinary measures, such as the immediate resolution of a legal matter or the dismissal of a key manager.

Postal Ballet 

MCA vide a circular has allowed postal polling to be conducted through a special framework. Conduct of postal ballots through this special framework was allowed till 31st December 2022. MCA vide it’s circularly granted this extension and now companies can conduct postal ballots under the special framework till 30th September 2023. 

It is further it must be pointed out that the conduct of AGM or EGM or postal voting through VC or OAVM mode would require the update of the shareholder database using e-mail IDs of shareholders among others. While conducting AGM or EGM or postal voting through electronic mode, the e-mail ID of shareholders holding shares in physical form and Demat form is most important. Companies, especially listed companies, must inform their shareholders about this by sending a separate communication in this regard. As we have mentioned in our earlier post regarding the relaxation given in conducting AGMs through VC or OAVM mode, it is reiterated that the MCA is proposing to make the conduct of AGMs and postal ballots electronic by incorporating the same in the Companies Act, 2013. 

This extension will make companies and their shareholders accustomed to conducting meetings or voting processes by mail and will also help save crores of expenses.

Relaxation in the holding of EGM

In the case of an Extraordinary General Meeting (EGM), MCA has allowed companies to hold EGM through VC/OAVM or transact consignments through the postal ballot following earlier circulars till 31 December 2022. The extension was granted in General Circular No. 3/2022 dated 5 May 2022.

Applicability of Relaxation

MCA dated 05.05.2022 has given more freedom to companies to hold Annual General Meetings in virtual mode.

• The relief will apply to companies whose general meeting is to be held in 2022
• Companies proposing to hold their AGMs in 2022 for a financial year ending/ending any time before/31. March 2022, they can do the same through virtual mode till December 31, 2022.
• Companies can conduct their general meetings via video conference (VC) or other audio-visual means (OAVM).

What does MCA Circular notify?

Following on from its previous general circulars (including General Circular No. 21/2021 dated 14 December 2021), the MCA has issued two new circulars allowing companies to hold general meetings via video conferencing or other audiovisual means until 31 December 2022.

Accordingly, companies can now conduct their EGM through VC or OAVM or conduct consignment transactions through postal voting following the provisions/framework provided in the previous general circulars until 31 December 2022.

Points for companies to adhere

• Companies must bear in mind that the various functions of conducting meetings through VC or OAVM mode viz need to adhere to Webex facilities, enabling two-way communication, etc. 
• So companies need to ensure that these facilities are available 24/7 to conduct meetings seamlessly. 
• Companies planning to hold general meetings or voting by post through the VC or OAVM regime shall ensure that all resolutions passed under this mechanism are filed with the Commercial Register within 60 days of the general meeting, clearly stating that the mechanism referred to in this document along with other provisions of law and rules have been duly complied with.

There may be a scenario where companies have already sent their notices of holding general meetings or voting by post in physical mode, assuming that there will be no extension to hold general meetings through VC or OAVM mode. In this regard, Clause XVI of the MCA circular states that companies must also ensure that if the notice of meeting is served before the date of the circular, the framework proposed in the circular can be adopted for the meeting if the consent of the members has been obtained under section 101 sub-section 1 of the Act and subsequently a new, shorter notice is issued with proper publication under this circular.

Final words

Both companies that are required to provide electronic voting equipment or have adopted such equipment and companies that are not required to provide such electronic voting equipment under the Act and rules made there under shall ensure that any further compliance related to the provisions relating to the general meetings, including but not limited to disclosure, document inspection, corporate voting rights, etc., as provided by law and rules made there under; and according to the company’s articles of association, they are carried out through the electronic mode.