MCA Allows EGMs to be Conducted Virtually

[Aditi Nagpal is a 4th year BALLB student at Jindal Global Law School]

The Ministry of Corporate Affairs (MCA) released a clarification through its General Circular 14/2020 dated 8 April 2020 which allows for extraordinary general meetings (EGMs) of companies to be conducted virtually. The Circular provides a welcome relief in light of the Covid-19 pandemic, and follows naturally in line with the MCA’s earlier decision on 19 March 2020 that allowed all meetings of board of directors until 30 June 2020 to be conducted through video conferencing (VC) or other audio visual means (OAVM).

The basic aim of the Circular is to allow companies to hold EGMs through VC or OAVM, which will be complemented by the e-voting facility or simplified voting through registered emails. The rationale behind the issuance of such a circular is to allow companies to conduct EGMs for urgent and unavoidable business without requiring shareholders to physically assemble at a common venue.

The Circular is broadly divided into two parts: The first part addresses those companies which are required to provide the facility of e-voting under the Companies Act, 2013 (the “Act”) or any other company which has opted for such a facility, and the second part addresses companies which are not required to provide the facility of e-voting under the Companies Act, 2013. The first category of companies, which are required to provide the facility of e-voting, can be found in section 108 of the Act and refers to all listed companies, or companies which have more than one thousand shareholders. The second category of companies would accordingly be unlisted companies and those with less than one thousand shareholders.

The basis for distinction, as evident from the categorization above, is the process of e-voting. E-voting is a process that exists under the Act in section 108, and the procedure for which is laid out in rule 20 of the Companies (Management and Administration) Rules, 2014. The distinction allows the MCA to prescribe different processes of voting, based on convenience and pragmatism, as companies that already offer the option of e-voting would necessarily to do so for EGMs conducted through VC or OAVM. On the other hand, companies that are smaller would collate votes through the process of registered emails, as it would be feasible for them to collate individual emails, as opposed to larger companies as envisaged in the first category.


The Circular at the outset states that this procedure is only applicable to EGMs conducted on or before 30 June 2020. This frame of time is in consonance with the MCA’s other corporate compliance relaxations on board meetings. The Circular also stipulates that this procedure must be followed when the EGM is considered unavoidable. This implies that any matter which can wait should wait, and that the present dispensation is to be used as a sort of last resort by companies.

Moving on to the first category of companies as outlined above, referring to companies that offer the facility of e-voting. The Circular posits certain safeguards to be followed, such as that the meeting must be recorded. Such a recorded transcript must be kept either in the safe custody of the company in case of private company, and the recorded transcript should be made available on the company website in case of a public company. Although not particularly specified by the Circular, this requirement is in addition to the requirement to record minutes of the meeting. The recording serves as an additional safeguard on a new method of conducting EGMs as the proceedings at the meeting in their entirety will be accessible to the shareholders.

Another safeguard introduced by the Circular is that all resolutions passed in accordance with this procedure must be filed with the Registrar of Companies (RoC) within 60 days of the meeting. These filings would also have to include representations that the requirements of both the Circular as well as provisions of the Act were duly complied with. This applies to private companies as well, which are normally exempt from filing resolutions with the RoC. This is applied to all resolutions passed in such an EGM, whether or not they meet the requirement for filing under section 117 of the Act. A final safeguard is the requirement for at least one independent director and the auditor to be present at such a meeting, a requirement which does not currently exist in the Act.

The procedure also stipulates for certain online etiquette to be followed, such as time zone considerations to be kept in mind while scheduling a meeting and certain relaxations such as the facility for joining the meeting to be kept open at least fifteen minutes before the scheduled start of the meeting. The Circular has also been inclusive in that it calls for the company to provide a helpline number through the registrar or technology provider, in the notice of such meeting, for those shareholders who need assistance with using technology before or during the meeting. This is also reflective of the pragmatic approach of the MCA as they are cognizant of the barriers that exist in India with respect to use of technology, and have thus placed the onus on companies to provide such assistance to shareholders so as to not disadvantage any particular group.

A point of contention in the Circular may arise with respect to the approach taken by the MCA towards proxy voting. The circular does not allow proxy voting: the rationale provided by the MCA is that since the physical attendance of members has been dispensed with, there is no requirement for appointment of proxies. This is short-sighted as the Ministry assumes that the transition of a physical meeting to VC or OAVM would automatically make a shareholder available to attend such a meeting, whereas in reality proxies are appointed by shareholders for a variety of reasons such as existing prior commitments or health issues, which would be equally prohibitive towards attendance whether the meeting is conducted by physical presence or through VC. This oversight may serve to exclude certain shareholders and may prove detrimental to them in effect. 

Other than the above requirements, the quorum requirements for the meeting under section 103 of the Act have not been waived and the notice requirements have not been waived either. The notice for any such meeting must also additionally include clear instructions on how to access and participate in the meeting.

The requirements for the second category of companies as outlined above, that is companies that do not provide the facility of e-voting, are largely similar to the requirements of companies with the e-voting procedure. The only notable difference is the procedure for voting. As e-voting is not provided by such companies, the circular calls for the provision of a designated email address to all members at the time of sending of the notice of the meeting, upon which all members can convey their vote when a poll is required to be taken during the meeting. These procedural requirements as issued are lacking and vague as they call for “due safeguards” to be taken with regard to authenticity of email addresses and other details of the members, but the Circular does not specify how these due safeguards are to be taken or their exact nature. Further the Circular states that in the event the counting of votes requires time, the meeting may be adjourned and called later to declare the result. This may prove to be inefficient and time-consuming and overlaps with the problem discussed earlier with respect to proxy voting, as a member may not be available to either cast their vote or for the declaration of the result of such voting, which may prove detrimental to their interests. 


Although the Circular issued by the MCA does present some issues, it serves as an important clarification as the Act does not contain a specific provision that allows for the conduct of members to be governed through VC or OAVM. Further, on the whole, the Circular provides a much needed step towards digitizing company communication in India and allows companies to hold EGMs without compromising on other requirements of the law. It is also in line with the MCA’s objective of facilitating corporate compliances during the lockdown period and maintaining social distancing measures. These measures, if successful, may become a norm rather than an exception in the future.

Aditi Nagpal

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