PremiumNew Delhi: The corporate affairs ministry has allowed businesses to hold shareholder meetings in audiovisual mode or by postal ballot till the end of December, given the second wave of the coronavirus pandemic.
The flexibility to hold extraordinary general meetings or EGMs, which refer to shareholder meetings other than the annual general meeting, granted last year was to expire on 30 June.
In a notification on Thursday, the ministry said that this facility is subject to riders provided in the framework for such remote decision-making. This facility first granted in March 2020, was already extended three times.
Under this framework, businesses have to offer facility fo participation of at least 1,000 shareholders on a first-come-first-served basis. In the case of major shareholders having a 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 is not applicable. Businesses also have to maintain a recorded transcript of such meetings and in the case of public companies, it has to be made public too. Also, there should be a facility for simultaneous two-way communication.
The move is set to make decision-making easier for companies given that physical meetings are less desirable during the pandemic. The ministry had recently expanded the relief given to companies for holding meetings of the board of directors. It permanently removed the restriction on holding video conferencing in certain cases such as board meetings for approving annual financial statements, board’s report and prospectus, audit committee meetings for consideration of accounts and clearing matters relating to amalgamation, merger, demerger, acquisition, and takeover.
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 audiovisual meetings specify that quorum has to be maintained throughout the meeting.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!