The Securities and Exchange Commission of Pakistan (SECP) has given listed companies an option to hold general meetings via electronic mode.
According to circular number 6 of 2021 issued by the SECP on Thursday, in continuation to SECP’s circular number 4 dated Feb 15, 2021, and in light of the practical difficulties reported by the stakeholders, the SECP, in the exercise of the powers conferred under section 510 of the Companies Act 2017, hereby clarify that the listed companies, which are facing practical difficulties in holding general meeting physically, may opt to hold such meeting through electronic mode.
However, the company shall provide necessary reasoning in the notice of the general meeting issued under sub-section (3) of section 132 of the Act for not holding the general meeting physically.
Through the previous circular, the SECP had allowed directors of the listed and non-listed public companies to participate in the Board of Directors meetings through video conferencing without recording the videos to reduce their expenditure.
Keeping in view the latest developments in technology, the SECP has allowed all the directors of the listed and non-listed companies, whether in Pakistan or abroad, to participate in the board of directors meetings through tele/video conferencing.
There are situations where some members of the board were not available in the country. Therefore, the decision would help those members to participate in the meeting who are not present in the country.
It was decided that the directors of the listed and non-listed public companies may be allowed to participate in the Board of Directors meetings through tele/video conferencing by further simplifying the procedure, where it would not be essential to secure the tele/video recording of the proceedings of the meetings. The recording of such videos involves an unnecessary expenditure of the companies.
Moreover, it is also practically difficult for the regulator to monitor such requirements. However, it has been made mandatory for the companies to circulate the draft minutes among all the directors who participated in the proceedings of the meeting through tele/video conference for their confirmation, and the minutes shall be signed by the chairman of the meeting.
Similarly, the company secretary or (in case of his absence) the chief executive shall be responsible to observe the requirements of the requisite quorum and other legal formalities relating to holding such meetings.
The SECP has considered the proposal in light of the recommendations made by the Registration Department, and it has been decided that the directors of the listed and non-listed public companies have been allowed to participate in the Board of Directors meetings through tele/video conferencing by further simplifying the procedure that it would not be essential for the companies to secure the tele/video recording of the proceedings of the meetings as it involves an unnecessary expenditure of the companies. Registrar of Companies has issued the necessary circular in this regard, sources added.
The SECP had also directed the listed companies to modify their usual planning for annual general meetings to avoid large gatherings at one place to limit the spread of coronavirus at the annual general meeting of shareholders.
SECP, while realizing the responsibility of the companies to its shareholders, and to limit their risks, while at the same time retaining the shareholders’ right to vote on the proposed agenda at the AGMs, during the threat posed by evolving COVID-19 situation (coronavirus) pandemic had directed the listed companies, whose financial year ended on December 31, 2019, to modify their usual planning for annual general meetings to avoid large gathering at one place. The companies were asked to consider the provision of video link facilities, webinars, or other electronic means.