Kerala High Court Upholds Virtual AGMs for Companies Amidst Legal Challenge

Court dismisses petition against online AGM, affirms government’s exemption power under Companies Act

In a significant ruling, the Kerala High Court has upheld the conduct of Annual General Meetings (AGMs) through virtual modes such as Video Conferencing (VC) or Other Audio-Visual Means (OAVM) for companies, dismissing a petition that challenged the legality of such practices. The judgment, delivered by Justice N. Nagaresh, emphasized the validity of government-issued circulars that allow AGMs to be held online, despite the traditional requirement for physical meetings as per the Companies Act, 2013.

The petitioner, TGN Kumar, a shareholder of Cochin International Airport Limited (CIAL), contested the planned virtual AGM set for September 27, 2025, arguing that it contravened Section 96 of the Companies Act, which mandates AGMs to be held at the company's registered office or another location within the city where the office is situated. Kumar's legal team contended that the government’s circulars permitting virtual AGMs deviated from statutory provisions and caused hardships for shareholders unfamiliar with digital platforms.

However, the court, after hearing arguments from both sides, concluded that the government's circulars were indeed valid. The court highlighted that the proviso to Section 96(2) of the Companies Act empowers the Central Government to exempt companies from the requirement of physical meetings, provided certain conditions are met. This exemption was deemed applicable through circulars issued by the Ministry of Corporate Affairs, which allowed companies to hold AGMs through virtual means. 

The respondents, represented by senior counsel and supported by the Central Government Counsel, argued that the circulars were initially introduced during the COVID-19 pandemic to facilitate corporate governance and have since continued to ensure flexibility in conducting AGMs. The court agreed, noting that these circulars effectively constituted exemptions under the law, thereby legitimizing the virtual conduct of AGMs.

Justice Nagaresh's judgment underscored the adaptability of corporate practices in response to technological advancements and public health considerations, marking a pivotal interpretation of statutory provisions in the context of modern corporate governance. The petition against CIAL's virtual AGM was consequently dismissed, reinforcing the legal foundation for virtual corporate meetings in India.

Bottom Line:

Companies Act, 2013 - Conducting Annual General Meetings (AGMs) through virtual mode permissible under the exemption granted by the Central Government as per the proviso to Section 96(2) of the Companies Act, 2013. 

Statutory provision(s): Companies Act, 2013, Section 96(2)

TGN Kumar v. Secretary The Ministry of Corporate Affairs, (Kerala) : Law Finder Doc Id # 2788720