The Institute of Company Secretaries of India (ICSI) on 15 April 2020 issued guidelines for Secretarial Standards for Board and General Meetings (SS-1 and SS-2 respectively). Several amendments have been introduced by the government under the Companies Act 2013 on a provisional basis to ease the companies that are combating the worsened economic situation of the country due to the COVID-19 outbreak in India.
Legal Norms:
- Section 118(10) of the Companies Act,2013 provides for mandatory observance of SS-1 and SS-2 by all companies.
- The term “Act” as defined under the SS-1 and SS-2,
- Act means Companies Act 2015 or provision of the previous act or any modification or any revised edition of the act that has Rules and Regulations.
- Any relief in the provisions given by the Central Government that is related to the compliance norms of the Board or General Meeting under the act shall invariably be applied under Secretarial Standards whatever the nature of the case is and the provisions will be applied as far as they are enforceable.
Guidelines related to norms of SS-2 ‘SECRETARIAL STANDARD ON GENERAL MEETINGS’ and ICSI Amendments:
- MCA circulars released on 8 April 2020 and 13 April 2020 clarifies the norms related to passing any ordinary or special resolution issued by the companies in accordance with the Companies Act 2013. Also, the rules made for Extra-Ordinary General Meetings (EGMs) done via Video Conferencing due to COVID-19 crises in India.
- Certain reliefs given under the MCA circulars related to Secretarial Standard on General Meetings ( SS-2) are mentioned beneath.
Guidance related to the provisions of Secretarial Standard on General Meetings ( SS-2) are given below:
1. Para 1.2.1
1. A written notice for every meeting shall be extended to every Member of the company. ‘Notice’ can be sent via hand, post, speed post, registered post, courier email or any electronic mode.
Para 1.2.2
Notice will be extended to the members via post or e-mails or any other electronic mode under the following cases:
- There is a facility of e-voting
- The item of business is being transacted through the postal ballot.
If any of the members of the company wish to accept the notice in any mode other than the ones decided by the company then he/she must pay the fees as decided in AGM and the notice will be sent via that mode.
Notice shall be extended to the members also when the meeting is being called on the demand of the requisitionists and not the Board.
ICSI Guidelines:
Circular released by MCA and dated 8 April 2020 and 13 April 2020 has permitted the EGM to be conducted via Video Conferencing (VC) or Other Audio-Visual Means (OAVM). Notices prior to the meetings shall be given to the members-only via emails registered with the company or depository participant.
In SS-2, where reference is given of the Notices in physical form for delivering the information of general meetings, it should be sufficient if they are sent via emails that are registered with the company or with depository participants.
These guidelines are similarly applicable to Para 8.5.1 and Para 16.4.1 of SS-2, which involves norms related to Notices in the case of e-voting and postal ballots.
#2. Para 1.2.4
Notice sent to the members must clearly state the time, date and day and venue of the meeting (complete data of address including the landmark).
ICSI Guidelines
Since the MCA circular has already permitted the companies for holding EGMs remotely through video conferencing the prerequisite for meeting address mentioned under SS-2 is inapplicable, if the meeting is held as per the amended MCA circular. Notice of the EGM must have the venue of the meeting. The notice shall mention that the meeting that is scheduled for VC or OAVM shall be deemed to be made at this place.
#3. Para 1.2.5 (4th Para)
If reference is given of any document, contract, agreement, Memorandum of Association or Article of Association. Then the explanatory statement shall be accompanied by that particular document for the purpose of inspection in the Registered Company office. Such documents or the copies of the documents shall be made available in the physical or electronic form to the Head Office as well as the Corporate Office of the company (if the registered, head and corporate office are not the same).
ICSI Guidelines
In SS-2, where reference is given of the demand for documents and proofs related to the general meeting it would be sufficient if such documents are furnished via electronic modes and guidelines for such an inspection are given in the notice.
#4. Para 1.2.10
The notice must also have an attendance slip and a Proxy form having clear instructions for filing, stamping, signing and depositing the proxy form.
ICSI Guidelines
As declared by MCA, GMs and EGMs will be held on VC or OAVM so Proxy Form can be eliminated from the scenario. There is no need for attendance slip and proxy form as earlier states MCA Circular dated 8 April 2020.
Attendance Mechanism
Respective companies must ensure that all their members must have a secure and strong mechanism so that they can attend through VC and OAVM.
#5. Para 3.1 – Quorum (3rdPara)
Unless the Articles provide for a larger number, the Quorum for a General Meeting shall be:
(a) for public firms,–
(i) five Members personally present if the number of Members as on the date of Meeting is not more than one thousand;
(ii) fifteen Members personally present if the number of Members as on the date of Meeting is more than one thousand but up to five thousand;
(iii) thirty Members personally present if the number of Members as on the date of the Meeting exceeds five thousand;
(b) for private firms, two Members personally present.
The Quorum in the Articles is higher than the Quorum under the Act, the Quorum shall confirm to such higher requirements.
Members personal presence is needed at a Meeting to constitute the Quorum. Proxies shall be excluded for determining the Quorum.
ICSI Guidelines
Though it is already mentioned in the MCA Circular that the meetings will be held in VC or OAVM that will not be counted as quorum for the purpose of section 103 of the Act. the physical presence of the quorum is not needed.
A secured mechanism of attendance would be enough if the meeting is conducted in accordance with the circular by MCA. provided that the company has followed the secured mechanism of attendance.
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#6. Para 5.1 – Appointment of the Chairman for meeting
The chairman shall be available to conduct the meeting within 15 minutes starting from the time allotted for the meeting. In case the chairman is not present or he is unwilling to act as the chairman for the meeting then in such a situation Directors present shall nominate one among them to be the chairman. If directors are not available for the meeting or no director is willing to replace the chairman, then the members must vote (on the show of hands) for one among them to replace the Chairman for the meeting or whatever condition is mentioned in the Article.
ICSI Guidelines:
If would be convenient if the chairman is appointed as per the above-mentioned provision of MCA circular dated 8 April 2020.
#7. Para 6 – Proxies Guidance by the ICSI:
As declared by MCA Circular, the EGM will be conducted through VC or OAVM and therefore proxy shall not be applicable. Hence the provisions mentioned in sentence 6 shall be applicable.
#8. Para 6.6.3 ( 2ndPara)
For the postal ballot, the letter of appointment/authorization will be submitted to the scrutinizer accompanied by the physical ballot form.
ICSI Guidelines
As per the amended provisions, postal ballot notices or forms shall be extended only via emails and in accordance with the MCA norms. One has to duly abide by the norms of MCA.
#9. Para 7.3 – Show of Hands
Every company shall, at the Meeting, put every Resolution, except a Resolution which has been put to Remote e-voting, to vote on a show of hands at the first instance, unless a poll is validly demanded.
ICSI Guidelines
EGM shall commence through video conferencing or other audio visual modes, voting might goon by show of hands as directed by the MCA circular dated 8 April 2020 and 13 April 2020.
#10. Para7.4 – Poll
The Chairman must order a poll. Upon receiving a valid demand for poll either before or on the declaration of the result of the voting on any resolution on a show of hands.
In such a case, a poll shall be processed through a ballot process.
While Proxy is denied any speech in the meeting, he is empowered to demand or join the demand for the poll.
The poll may be taken by the chairman on his own motion.
ICSI Guidelines
For the conduct of EGM through video conferencing or other audio visual modes, the poll has to be conducted as per the requirements stated in MCA circular dated 8 April 2020.
#11. Para 7.5 – Voting Rights (3rdPara):
A member present in person or proxy shall have votes equivalent to his share in the total equity shares of the company in a poll of the ballot. The shareholder has the right to vote in the major decisions of the company as an additional benefit.
ICSI Guidelines
As per the MCA circular, the EGM that will be conducted virtually (through video conferencing), the words ‘present in person’ or ‘by proxy’ shall be denoted as shareholder or ‘present in person’.
#12. Para 8.6.2
The poll results that are drawn from the number of votes given in favor or against the resolution shall be displayed at the ‘Notice Board’ of the company at the registered office, head office or any corporate office. Also, the results of the voting accompanied by the scrutinizer’s report shall be uploaded at the official website of the company. In case, the company owns an official website or a brand website.
ICSI Guidelines
Due to nationwide lockdown, it is not possible to display the voting results on the office notice board and therefore it would be sufficient if the company displays the results on its official website (if any). The same provision applies to para 9.5.2 and para 16.6.2 of the SS-2, which deals with the results of the poll or postal ballot.
#13. Para 9 – Conduct of Poll Guidance by the ICSI:
For EGM that is being conducted virtually, the poll needs to be processed as per the norms stated in the MCA circular dated 8 April 2020.
#14. Para 16.4.3
Notice shall have the date, day, time and venue where the results of the postal ballot shall be declared as the link of the official website on which the results shall be uploaded. The notice must also contain information about the results of voting by postal ballot.
ICSI Guidelines
If the postal ballot is conducted as per the norms of MCA circular SS-2 and the notice through which the results of the postal ballot shall be announced, the ‘venue’ need not be stated in the notice as it would be enough if the link of such a notice that is uploaded on the website is declared.
#15. Para 16.5.1
Postal ballot form must have the postage prepaid reply envelope addressing the scrutinizer.
ICSI Guidelines:
As stated, postal ballot forms or notices shall be given through email abiding by all the norms in MCA circular dated 13 April 2020, there is no need to send the “postage prepaid reply envelope” as stated by the norms under SS-2.
#16. Para 17.4 – Entry in the Minutes Book
Minutes shall be duly noted in the minute book (within 30 days starting from the date when the meeting concluded).
#17. Para 17.5.1
The minutes shall duly be signed and dated by the chairman of the meeting. In case of death or any other inability of that chairman to do the job then the Director (the attendee in the meeting and duly authorized by the Board) shall perform the task. This shall be done within 30 days of the general meeting.
ICSI Guidelines:
Owing to the COVID-19 Crises in India all the EGMs will be conducted virtually via video conferencing or any other audio-visual source. Final Minutes shall be communicated via emails. So here the companies will be unable to register the final minutes in the Minutes Book as per the protocols and get it signed physically by the Chairman.
Here the company must record the Minutes and get it signed digitally by the chairman in the same way as it was to be done under normal circumstances.
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