Virtual Meetings of Shareholders

Onslaught of novel Corona virus has changed rather forced us to remain home-bound for an uncertain period so as to contain the spread of the virus. But people and institutions across the world appear to be finding inventive ways to amuse themselves and transact business and commerce. Meeting friends over zoom and whatsapp group video calling has become routine feature and conducting birthdays, parties and other ceremonies has become the new normal. Thanks to the available technology, even quarantined folks are also able to carry on their activities from home with the aid of ICT tools.

In India and elsewhere, incorporated companies are mandated to conduct their shareholder meetings at the place/town/village where the registered office of the company situated. Besides complying with the provisions of the Companies Act, listed companies are supposed to abide by the SEBI laid norms and those in the listing agreements with the bourses where they are listed.

Raichur based pharma company Shilpa Medicare Limited was to conduct its Extraordinary General Meeting on March 30, 2020 at Raichur, Karnataka for seeking nod of the shareholders for a particular transaction.

Being a shareholder I was informed on March 7, 2020 by email of the meeting. After imposition of nationwide lockdown on the night of March 24, the company sent an email informing that the meeting would be held at the stated time but on virtual platform Microsoft Teams. In line with the motto of digital India and taking cue from the Hon’ble Prime Minister conducting video conferences with various dignitaries, the company had come up with this innovative idea of holding the generally body meeting via video conferencing.  Ministry of Corporate Affairs had earlier permitted conducting virtual Board meetings. 

The meeting went on live on March 30, 2020 and a large number of shareholders attended the meeting from the comfort of their homes making it a successful first of its kind virtual general body meeting in the history of corporate India.

When  Shilpa conducted the meeting, procedure was yet to be notified and there were no secretarial standards available for guidance. The company complied with all the mandatory guidelines of conducting a physical meeting for this virtual meeting, promptly communicated to shareholders, Board members, auditors, stock exchanges and other stakeholders of its intention to go ahead with the meeting.

Perhaps buoyed by its success and thoroughly impressive secretarial standards followed by the company and representations from various quarters, MCA has on April 8, 2020 come out with a Circular  permitting holding of virtual general body meetings for the time being in limited cases. But based on the experience in the next couple of months, such an easy, cost efficient, time saving procedure needs to be made permanent feature by making an appropriate provision in the statue so as to enable  wider participation especially minority shareholders who cannot otherwise reach designated venues which are more often located in distant places.

Management and secretarial team of Shilpa Medicare Ltd deserves a big applause for setting a novel way for conducting general body meetings in this challenging environment. Similarly, MCA needs to be appreciated for laying down guidelines.

Let’s hope ICSI  comes out with requisite secretarial standards based largely on the methods followed by Shilpa.