NEW DELHI :
The government on Friday further extended the facility for companies to conduct shareholder meetings electronically till end of December 2022, showed an order from the ministry of corporate affairs.
The ministry said that after due examination, companies have been allowed to hold their extraordinary general meetings (EGMs) through videoconferencing or other audio-visual means or through postal ballot upto 31, December. This facility was to expire by end of June 2022.
The ministry introduced the facility for shareholder meetings via audio-visual means in March 2020 in view of the pandemic. The ministry said that the video-conference or audio-visual facility has to be utilised as per a framework provided for the same.
EGMs of shareholders are called in between scheduled annual meetings to deal with urgent matters such as a legal situation.
As per the framework, companies holding EGMs by audio-visual means have to offer at least 1000 shareholders the facility to participate on first come first served basis. In the case of major shareholders having 2% stake or more, institutional investors, key managerial persons, auditors and chairpersons of key committees of the board of directors, the first come first serve principle does not apply.
Businesses also have to maintain recorded transcript of such meetings and in the case of public companies, it has to be made public too. There should also be facility for simultaneous two-way communication in such meetings.
The ministry also issued a separate order allowing companies to hold their annual general meetings (AGMs) electronically. Companies the AGMs of which are due in 2022 are required to do so as per their respective due dates through electronic means until 31 December, 2022, explained Bambi Bhalla, Counsel at law firm Cornellia Chambers.
“Considering virtual meetings have become the norm with business’ relying on the benefits of work from home and in light of the regular relaxations provided by the MCA, this is another step towards making virtual meetings the normal process thereby increasing ease of doing business,” said Bhalla.
The government had earlier permanently removed the restriction on holding videoconferencing in certain cases such as board meeting for approving annual financial statements. Physical meetings were earlier required for board resolutions given the need for a quorum and the impact these binding decisions have on stakeholders. The rules for audio-visual meetings specify that quorum has to be maintained throughout the meeting. During the pandemic, the government had given several compliance relief measures including extension of various due dates.