As part of the Ministry of Corporate Affairs Green Initiative Campaign for Corporate Governance, MCA on May 20, 2011 gave its approval to companies to hold annual general meetings through video conferencing. This has been allowed with a view to provide larger participation and for curbing costs, borne by the shareholders to attend AGMs and for speedier decision-making.
As part of the Ministry of Corporate Affairs (MCA) Green Initiative Campaign for Corporate Governance, MCA on May 20, 2011 gave its approval to companies to hold annual general meetings (AGMs) through video conferencing. This has been allowed with a view to provide larger participation and for curbing costs, borne by the shareholders to attend AGMs and for speedier decision-making.
The MCA has also given its approval for directors to attend board and committee meetings via video conferencing to ensure flexibility and greater participation in board meetings. “The directors will be required to be physically present for only one meeting in a year,” a senior official at the MCA told HT.
These announcements come after the series of representations received by the MCA from various industry bodies to recognise participation by shareholders in meetings under the Companies Act, 1956 through electronic mode.
The MCA in the notification said a company would have to send a notice informing shareholders and directors about “the availability of participation through video conference, and provide necessary information to enable shareholders and directors to access the available facility of video conferencing”.
The permission for video conferencing comes with certain conditions. The MCA provides that the chairman and secretary would have to safeguard the integrity of the meeting via video conferencing, ensure proper video conference facilities, prepare the minutes of the meeting, ensure that no one other than the concerned shareholder or proxy to the shareholder is attending the meeting through electronic mode.
Listed companies will also have to ensure that video conferencing connectivity is provided at least five places in India. “It is recommended that these places would be situated all over India in such a way that it covers top five states or Union Territories based on maximum number of members or at least 1,000 members, whichever is more, residing as per the address registered with the depositories”, the MCA told media.
Although the Companies Act of 1956 does not provide for video conferencing, the new Companies Bill pending in Parliament allows the same. MCA has used the Information Technology Act, which has overriding powers over Companies Act, to implement this.
Mint reports, MCA has authorised National Security Depository Ltd. and Central Depository Services (India) Ltd. as agencies for providing and supervising electronic platforms. This is subject to the condition that they obtain the required certification from ministry of communications.
Last month, the MCA had also allowed companies to send annual reports by email.
These recent announcements made by the MCA are a welcome move for the shareholders. The use of technology will provide flexibility and greater participation of shareholders. However, the companies will now have to be careful about security threats.
The use of email to send annual reports will reduce paper consumption to a great extent and contribute towards a greener environment.