The coronavirus outbreak has disrupted every sector with almost all businesses going through a downfall. Considering the nationwide lockdown and more importantly, the need to maintain social distancing, the Ministry of Corporate Affairs (MCA) has recently allowed the companies to hold their annual general meetings online. Despite being shifted to electronic mode, the ministry also said that except for some necessary changes, the framework provided earlier for AGMs would still remain the same. However, there will be relaxations in certain norms in light of the current circumstances, such as transferring documents including financial statements and reports via email.
With that said, what benefits do virtual AGMs hold against in-person counterparts? For one, participating online means more shareholders are likely to be able to attend meetings considering the fact that they can now attend from anywhere. Moreover, switching to digital voting means the process will be more transparent and convenient with results instantly revealed to the participants. Nevertheless, there are certain things shareholders have to compromise. For instance, there are certain intangibles like in-person interaction with fellow shareholders which the conventional general meetings proffer. Similarly, should there be any flaw from the management’s end, it is easier to spot it in offline AGMs which one may not be able to see to a same extent in a virtual setting. In-person extraordinary meetings may be the ideal way but given the current circumstances, online is the best option.
While MCA has allowed those companies whose financial year ended on December 31, 2019 to postpone their extraordinary meeting by September 30, 2020, for others, it has given the permission to hold it online be it through video conferencing or other audio-visual means. With that said, it has become crucial for MCA to take the onus of making the entire process seamless and a fair process by overseeing AGMs.