In a relief for India Inc, MCA extends virtual AGMs till September 2023

In what may come as a relief to India, the Ministry of Corporate Affairs has now allowed companies – whose Annual General Meetings (AGMs) are scheduled for 2023 – to hold them through video conference (VC) mode until September 30 next year.

In a separate move, MCA allowed companies to hold their Extraordinary General Meetings (EGMs) via video conferencing and item transactions through postal ballot until the end of September next year.

“In continuation of the Ministry’s general circular dated May 5, 2020 and the general circular May 5, 2022, it has been decided that companies that are scheduled to hold their annual general meetings in 2023, will be allowed to hold their annual general meetings on or before September 30….” This was stated in the circular issued by MCA on Thursday.

The video conferencing system leverages the strengths of Digital India by utilizing a combination of VC and electronic voting / simplified voting through recorded emails to enable companies to conduct EGMs.

As the meetings will be held via VC/OAVM, the facility for appointing agents has been dispensed with, while representatives of corporate bodies will continue to be appointed to participate in such meetings.

The MCA circular also clarified that the latter step should not be considered as granting any extension of time for holding Annual General Meetings by companies under the Companies Act 2013. Also, companies that have not adhered to the relevant timetables will be liable for legal action under the appropriate provisions of the Companies Act. for 2013.

Corporate law experts have highlighted that the latest exemption for holding virtual general assembly meetings till September 2023 will be available to companies whose financial year ends on 31st December 2022 and 31st March 2023. This should be seen as a continuation of the exemption from compliance announced for India Inc post The emergence of the Covid-19 epidemic in March 2020.

Since the onset of the Covid-19 pandemic in March 2020, MCA has taken various measures to make things easier for India Inc to meet the requirements to comply with the Company Code.

In May last year, MCA extended the Virtual General Assembly facility until December 2022 in respect of companies that were scheduled to be held in 2022. The facility was extended by six months from the external limit previously set on June 30, 2022. It then clarified that companies can hold Its Extraordinary General Meetings (EGMs) via video conferencing and item transactions through postal ballot through the end of December 2022.

Fear of spreading COVID-19

This latest MCA move has come at a time when the Federal Ministry of Health is forecasting an increase in Covid-19. Indeed, there is some chatter in official circles that the next 40 days will be crucial for India.

From 1 January 2023 the Ministry of Health has made negative RT PCR reports mandatory for travelers arriving from China, Hong Kong, Singapore, Japan, South Korea and Thailand.

Virtual general assembly meetings

Under the exceptional circumstances of the prevailing Covid-19 epidemic in the country, MCA on April 8, 2020 for the first time allowed companies to hold Extraordinary General Assembly meetings through virtual mode until June 30, 2020. This was later extended to September 30, December 31, 2020, June 30 , 2021, Dec 31, 2021, Jun 30, 2022, Dec 31, 2022 and now through Sept 30, 2023.

The immediate relaxation of business to be carried out in the context of EGMs also through virtual means is in line with the broader objective of digital recognition as an effective alternative method of conducting corporate affairs.

Experts have even suggested that the option of video conferencing should be legislated, and that these facilities be made available as an alternative to small businesses.

Action recording

The current framework allows companies to hold extraordinary shareholder meetings through VC/OAVM without compromising the other requirements of the law. As an added check, all companies using this option are required to keep a recorded transcript of the entire procedure in a safe place, and public companies are also required to host this transcript on their website for added transparency.

Furthermore, all decisions passed through this framework will be required to be submitted to the International Law Commission within 60 days, so that these decisions can be viewed by the public.