Green Initiative by Ministry of Corporate Affairs
In its continuous drive towards Green Initiative & improved Corporate Governance Assurance, the Ministry has yet again taken another stride in this direction by introducing the following three initiatives:-
- Participation by Shareholders in general meetings through electronic mode
- Participation by Directors in meetings of Board / Committee of Directors through electronic mode
- Issuance of Digital Certificates by the ROC officials
A gist of the said circulars is provided hereunder:-
Participation by Shareholders in General Meetings under the Companies Act, 1956 through electronic mode vide General Circular No. 27/2011 dated 20.05.2011
The Ministry of Corporate Affairs has clarified that that a Shareholder of a Company may participate in a general meeting under the provisions of Companies Act, 1956 through electronic mode. This has been made possible by utilizing the relevant portions of the Information Technology Act, 2000.
For this purpose certain general points have been specified to ensure proper conduct of the meetings such as proper audio visual facilities to be provided for participation, proper communication through notice to the Shareholders for availability to participate through such an option, ensuring proper recording and to take care of technical challenges that can be faced during such a process.
To enable larger participation of shareholders in a Listed Company, more stress has been given for Listed Companies wherein it has been recommended to make such option available in at least five major States/UTs as per the address of the Shareholder.
However this does not do away with the requirement of Quorum as required under section 174 of the Companies Act, 1956. This means though Shareholders can participate through videoconferencing but the requirement of quorum has to be fulfilled by members personally present.
For exact text, circular of the ministry is attached herewith: Circular_27-2011_20may2011.pdf
Participation by Directors in meetings of Board / Committee of Directors under the Companies Act, 1956 through electronic mode vide General Circular No. 28/2011 dated 20.05.2011
As another measure towards green initiative undertaken by the Ministry of Corporate Affairs, participation of Directors/ Committee members through video conferencing has been allowed if proper notices have been issued and the same is allowed by Articles of Association of the Company. These Directors will be counted for the purpose of quorum, unlike the member meetings where quorum has to be physically present.
For this purpose certain general guidelines have been specified over important concerns to be taken care of such as providing specific notice to the directors about availability of the option of participation through video conferencing, arrangement of proper audio visual facilities, circulation of gist of the minutes within seven days of the meeting for removal of doubt, granting specific responsibility upon the Chairman and Secretary about maintaining the integrity and effective participation in the Meeting. A new concept of roll call has been introduced to ensure presence of the Directors at the meeting.
It is however mandatory for a Director to physically attend at least one meeting in one financial year and with respect to each meeting the Director has to specify well in advance regarding the mode through which he is going to participate in the meeting.
For exact text, circular of the ministry is attached herewith: Circular_28-2011_20may2011.pdf
Issuance of Digital Certificates by the ROC officials vide General Circular No. 29/2011 dated 20.05.2011
In a move to curtail the time in issuing certificates and standard letters by Registrar of Companies, the Ministry has taken a step that these certificates and letters will now be issued under the Digital Signature of the Registrar of Companies.
The Digital Certificates are being developed and will be available for issue by 30th June, 2011 in phased manner.
For exact text, circular of the ministry is attached herewith: Circular_29-2011_20may2011.pdf