Virtual Meetings of the Companies: MCA’s Reaction to COVID 19

The Legal Arc Volume 1 Issue 1 Articles

Vinayak Nawal

Vinayak Nawal is a Third Year law student at Hidayatullah National Law University Raipur, Chhattisgarh. He is interested in corporate and revenue laws.

Ayush Dwivedi

Ayush Dwivedi is a Third Year law student at Hidayatullah National Law University Raipur, Chhattisgarh.He is interested in corporate and insolvency laws.


These difficult times where COVID-19 has forced us to be in lockdown has impaired the functioning of various companies. Various important matters about the company which require the physical presence of the shareholders in a meeting are improbable in the current scenario considering the fatal consequences and following social distancing norms to protect oneself from endangering his/her life. To prevent such a setback in the corporate sector, the key objective to accomplish is the smooth functioning of the companies. To facilitate companies, the Ministry of Corporate Affairs has issued Circular no. 14/2020 on April 8, 2020, allowing companies to convene their meetings via Video Conferencing (VC) or Other Audio-Visual Methods (OAVM). The decisions or resolutions can be taken through simple voting or electronic voting. Such relaxation is prescribed until June 30, 2020.

These circulars are considered a remarkable alternative to alleviate the current problem. It should be noted that The Companies Act, 2013, which provides provisions to govern the companies’ structuring and its functioning, has no provisions regarding the virtual meeting of shareholders of the company. The MCA has requested the companies to hold meetings virtually and henceforth the resolutions and decisions of the company should be taken through electronic voting or postal ballot in pursuance of Section 110 of The Companies Act, 2013[1] and the Rule 20 of the Companies (Management and Administration) Rules, 2014,[2] as well as the provisions of the current circular. One of the major highlights of this circular is that such relaxations are provided for meetings of urgent nature, that is Extraordinary General Meeting (EGM), which creates a dilemma as to what constitutes as urgent. MCA has tried to give some insights as to what constitutes urgent; decisions on fundraising or restructuring of the company where approval of the shareholders is necessary are considered urgent. Further, MCA tried to address the issue which involves companies lacking the infrastructure to enable virtual meeting and electronic voting facility.

Summary of Procedure Under the Circular

The guidelines provided under categories A (companies which are required to provide e-voting facility) and B (companies which do not require to provide e-voting facility) have been outlined below:

  1. The notification of the meeting must incorporate a statement saying that the EGM has been organized as per the Act and provisions of the General circular no 14/2020. In times where physical dispatch of financial statements of the company is not possible, emails must be sent to the respective shareholders. Before sending such emails, a public notice such as an advertisement must be published in a vernacular newspaper of that district where the company has been registered. It should contain the following information:
  2. Date and time of the General Meeting conducted through VC or OAVM.
  3. Availability of the statement and notices on the company’s website and other necessary information that is required to be in the notice of the shareholders.
  4. The meeting can be conducted through Video Conferencing or other audio-visual means (OAVM).
  5. While deciding the time for EGM, the company must take into consideration the time zone differences of all directors and shareholders.
  6. For an EGM held through OAVM or VC, a recorded transcript must be kept in safe custody. In case of a public company, it must be published on the company’s website.
  7. If the number of shareholders present in the meeting is not more than fifty, the Chairman shall be appointed in pursuance of section 104 of The Companies Act, 2013, otherwise through an electronic voting facility.
  8. According to section 105 of the Act, a proxy is allowed to be appointed on behalf of the member who cannot attend personally, but since there is no physical meeting, no proxies need to be appointed. However, as per section 112 and 113 of the Act, representatives will be allowed to poll when the members, due to some reasonable reason, are not able to attend the meeting.
  9. The quorum shall be recognized and the attendance shall be counted for the purpose of quorum under section 103 of the Act.
  10. All resolutions passed in consonance with this mechanism must be filed with the Registrar of Companies within sixty days of the meeting.
  • The guidelines which are different for companies under category A and B are:
Category ACategory B
The facility allowing the members to attend the meeting by way of VC or OAVM must have the capacity for 1000 members on a first-come, first-served (FCFS) basis. However, large shareholders and auditors should not be limited on the first-come, first-served basis. Hence, exceptions must be made for large shareholders, promoters, Auditors, Directors, and key managerial personnelThe facility allowing the members to attend the meeting by way of VC or OAVM must have the capacity for 500 members, or members equal to the total number of members on a first-come, first-served (FCFS) basis. Exceptions must be made for large shareholders, promoters, Auditors, Directors, and key managerial personnel.
At least one auditor and an independent director or his authorized representative must attend the meeting.There is no provision of this nature.
The facility of remote e-voting must be provided before the decided date of the meeting.While sending the notice of the meeting, a designated email must be assigned to all members. This email address is required be used for taking a poll. The company has the responsibility to maintain the secrecy of the email and password.
The MCA in its circular no. 14/2020 had permitted the show of hands for voting. However, in its later circular, the MCA has set the responsibility on the Chairman to ensure that the e-voting facility is made available during the meeting.For voting, the members must send the email to the designated email address at the time of sending the notice. The members are required to vote from their registered email address. If the members are less than fifty, then the Chairman can allow the drill of show of hands to seek votes.


The major highlight of the circular is that it only gives relaxation for virtual meetings which are unavoidable, that is Extraordinary General Meetings. The guidelines provided by the Ministry of Corporate Affairs give a very dicey impression since the insights provided for what constitutes urgent are not clearly answered. It has been deduced that meetings held by reasonable justification must be held. Every company deals with different issues that are unavoidable for their functioning and are important financial steps. Various instances can be carved out such as, if a company faces financial distress, a meeting held to increase funds could be seen as unavoidable. There are various issues that are given different precedence in different companies. Some key issues are the appointment/replacement of a chairman, structuring of a company, disclosure of dividends and auditor’s report, etc. Each issue has different significance for different companies considering the company’s goals and objectives. Thus, it is very important to clear the air of dilemma occurring due to this provision of the circular. The relaxations that are provided need to be looked at again in order to ease the situation in these COVID times. 

After going through the various provisions outlaid under the circular, we examine that it is high time that the laws must be evolved to keep pace with the changing time, with provisions for a more permanent situation rather than temporary. Reliance upon technological advancements can be very useful to counter the COVID situation as well as restructuring the provisions of The Companies Act, 2013. Further, this concept of virtual meetings is not new to the Indian corporate sector. The Green Initiative brought in by the Ministry of Corporate Affairs which allowed paperless submissions, is of the similar pattern. It eventually benefits the company as well as its shareholders because of increased participation, minimization of the cost of setting up physical meetings, and enabling global connection. These benefits can only be availed if shareholders’ interest in the company is very well-prioritized which needs activation of safety measures to protect them from cyber theft and making them aware of the technological advancements that have become quintessential for the smooth functioning of the board meetings. Further, Section 118 of The Companies Act, 2013[3] specifies that there must be a record of the minutes of the meetings and this can efficiently be achieved by introducing technological advancement in the corporate sector.


The government or the Ministry of Corporate Affairs should now examine the result of this brief arrangement and ought to consider promulgating permanent provisions of similar nature to the corporate sector. This must be done since this is inevitable. The headway in technology and its advantages of being cost-effective and efficient has driven the entire world on its way toward development.

The administration can form an umbrella setup where the Information Technology Act, 2000 as well as The Companies Act, 2013 can be brought in to achieve the primary objective of protecting the interests of the shareholders in pursuance to Section 43 and 66 of the IT Act, 2000 that penalizes hacking, data theft, damaging computer network, etc.[4] Furthermore, The Green Initiative in the corporate governance was applied after considering Sections 2,4,5 and 81 of the Information Technology Act, 2000 for the legal validity of the ‘paperless compliances’ under The Companies Act, 1956. Thus, it’s a perfect example of both the acts being enforced in consonance. It is important to note that if the General Meeting of the company goes virtual, strict measures are very much required. This gives an opportunity to the lawmakers to formulate provisions under both The Companies Act and the I.T. Act that ensure the safety and effectiveness of the process.

[1] The Companies Act, 2013, S.110

[2] The Companies (Management and Administration) Rules, S.20

[3] The Companies Act, 2013, S.118

[4] The Information Technology Act, 2000, S.43 S.66

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