Meetings & Voting of the Committee of Creditors under Section 24 of the IBC
I. Meetings of the Committee of creditors[Sec. 24]
A resolution professional may convene a meeting of the committee as and when he considers necessary, and shall convene a meeting if a request to that effect is made by members of the committee representing thirty three per cent of the voting rights. The members of the committee of creditors may meet in person or by such electronic means.[Sec. 24(1) & CIRP Reg.-18)].
First Meeting of the CoC: The interim resolution professional shall hold the first meeting of the committee within 7 days of filing the report certifying constitution of the committee to the Adjudicating Authority under Regulation 17.[CIRP Reg.-17(2)].
1. Notice of meeting [ Sec. 24(3) & CIRP Reg.-19]
A meeting of the committee shall be called by giving not less than 5 days notice in writing to every participant, at the address it has provided to the resolution professional and such notice may be sent by hand delivery, or by post but in any event, be served on every participant by electronic means.
The committee may reduce the notice period from five days to such other period of not less than twenty-four hours, as it deems fit. The committee may reduce the period to such other period of not less than forty-eight hours if there is any authorised representative.
The resolution professional shall give notice of each meeting of the committee of creditors to following persons:
- Members of committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5).
- Members of the suspended Board of Directors or the partners of the corporate persons, as the case may be.
- Operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of the debt.
2. Contents of the notice for meeting[CIRP Reg.-21]
a). The notice shall inform the participants of the venue, the time and date of the meeting and of the option available to them to participate through video conferencing or other audio and visual means, and shall also provide all the necessary information to enable participation through video conferencing or other audio and visual means.
b). The notice of the meeting shall provide that a participant may attend and vote in the meeting either in person or through an authorised representative. Such participant shall inform the resolution professional, in advance of the meeting, of the identity of the authorised representative who will attend and vote at the meeting on its behalf.
c). The notice of the meeting shall contain the following:
(i) a list of the matters to be discussed at the meeting;
(ii) a list of the issues to be voted upon at the meeting; and
(iii) copies of all documents relevant to the matters to be discussed and the issues to be voted upon at the meeting.
d). The notice of the meeting shall state the process and manner for voting by electronic means and the time schedule, including the time period during which the votes may be cast, provide the login ID and the details of a facility for generating password and for keeping security and casting of vote in a secure manner and provide contact details of the person who will address the queries connected with the electronic voting.
Note: The notice convening the meetings of the committee shall provide the participants an option to attend the meeting through video conferencing or other audio and visual means in accordance with Regulation-23.
3. Service of notice by electronic means [CIRP Reg.-20]
- A notice by electronic means may be sent to the participants through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or Uniform Resource Locator for accessing such notice.
- The subject line in e-mail shall state the name of the corporate debtor, the place, if any, the time and the date on which the meeting is scheduled.
- If notice is sent in the form of a non-editable attachment to an e-mail, such attachment shall be in the Portable Document Format or in a non-editable format together with a ‘link or instructions’ for recipient for downloading relevant version of the software.
- When notice or notifications of availability of notice are sent by an e-mail, the resolution professional shall ensure that it uses a system which produces confirmation of the total number of recipients e-mailed and a record of each recipient to whom the notice has been sent and copy of such record and any notices of any failed transmissions and subsequent re-sending shall be retained as ‘‘proof of sending’’.
- The obligation of the resolution professional shall be satisfied when he transmits the e-mail and he shall not be held responsible for a failure in transmission beyond its control.
- The notice made available on the electronic link or Uniform Resource Locator shall be readable, and the recipient should be able to obtain and retain copies and the resolution professional shall give the complete Uniform Resource Locator or address of the website and full details of how to access the document or information.
- If a participant, other than a member of the committee, fails to provide or update the relevant e-mail address to the resolution professional, the non-receipt of such notice by such participant of any meeting shall not invalidate the decisions taken at such meeting.
4. Quorum at the meeting [CIRP Reg.-22]
- A meeting of the committee shall be quorate if members of the committee representing at least 33% of the voting rights are present either in person or by video conferencing or other audio and visual means. However, the committee may modify the percentage of voting rights required for quorum in respect of any future meetings of the committee.
- Where a meeting of the committee could not be held for want of quorum, unless the committee has previously decided otherwise, the meeting shall automatically stand adjourned at the same time and place on the next day.
- In the event a meeting of the committee is adjourned, the adjourned meeting shall be quorate with the members of the committee attending the meeting.
- The resolution professional shall ensure that the required quorum is present throughout the meeting. [CIRP Reg.- 24(4)].
5. Present in Meeting [Sec. 24(4) & (5)]
- Who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors. The fees payable to such insolvency professional representing any individual creditor will be borne by such creditor.
- The directors, partners and one representative of operational creditors may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings. The absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting.
6. Participation through video conferencing [CIRP Reg-23]
Video conferencing or other audio and visual means such audio and visual facility which enables the participants in a meeting to communicate concurrently with one another and to participate effectively in the meeting. [CIRP Reg.-2(1)(p)].
i. The notice convening the meetings of the committee shall provide the participants an option to attend the meeting through video conferencing or other audio and visual means in accordance with this Regulation and the resolution professional shall make necessary arrangements to ensure uninterrupted and clear video or audio and visual connection. The resolution professional shall take due and reasonable care:
(a) to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;
(b) to ensure availability of proper video conferencing or other audio and visual equipment or facilities for providing transmission of the communications for effective participation of the participants at the meeting;
(c) to record proceedings and prepare the minutes of the meeting;
(d) to store for safekeeping and marking the physical recording(s) or other electronic recording mechanism as part of the records of the corporate debtor;
(e) to ensure that no person other than the intended participants attends or has access to the proceedings of the meeting through video conferencing or other audio and visual means; and
(f) to ensure that participants attending the meeting through audio and visual means are able to hear and see, if applicable, the other participants clearly during the course of the meeting.
Note: The persons, who are differently abled, may make request to the resolution professional to allow a person to accompany him at the meeting.
ii. Where a meeting is conducted through video conferencing or other audio and visual means, the scheduled venue of the meeting as set forth in the notice convening the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place.
7. Conduct of CoC Meeting & Minutes [Sec. 24(2) & CIRP Reg.-24]
1. All meetings of the committee of creditors shall be conducted by the resolution professional and he shall act as the chairperson of the meeting of the committee. At the commencement of a meeting, he shall take a roll call when every participant attending through video conferencing or other audio and visual means shall state, for the record, the following, –
(a) his name;
(b) whether he is attending in the capacity of a member of the committee or any other participant;
(c) whether he is representing a member or group of members;
(d) the location from where he is participating;
(e) that he has received the agenda and all the relevant material for the meeting; and
(f) that no one other than him is attending or has access to the proceedings of the meeting at the location of that person.
2. After the roll call, the resolution professional shall inform the participants of the names of all persons who are present for the meeting and confirm if the required quorum is complete.
3. The resolution professional shall ensure that the required quorum is present throughout the meeting.
4. From the commencement of the meeting till its conclusion, no person other than the participants and any other person whose presence is required by the resolution professional shall be allowed access to the place where meeting is held or to the video conferencing or other audio and visual facility, without the permission of the resolution professional.
5. The resolution professional shall ensure that minutes are made in relation to each meeting of the committee and such minutes shall disclose the particulars of the participants who attended the meeting in person, through video conferencing, or other audio and visual means.
6. The resolution professional shall circulate the minutes of the meeting to all participants by electronic means within forty eight hours of the said meeting.
II. Voting share and votings
Otherwise provided separate provision in the Insolvency and Bankruptcy Code, 2016, all decisions of the CoC shall be taken by a vote of not less than 51% of voting share of the financial creditors. The resolution professional shall take a vote of the members of the committee present in the meeting, on any item listed for voting after discussion on the same. At the conclusion of a vote at the meeting, the resolution professional shall announce the decision taken on items along with the names of the members of the committee who voted for or against the decision, or abstained from voting.
- Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor.
- The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
- The meetings of the committee of creditors shall be conducted in such manner as may be specified.
- The actions listed in section 28 shall be considered in meetings of the committee.
- Any action other than those listed in section 28 requiring approval of the committee may be considered in meetings of the committee.
The resolution professional shall circulate the minutes of the meeting by electronic means to all members of the committee and the authorised representative, if any, within forty-eight hours of the conclusion of the meeting; and seek a vote of the members who did not vote at the meeting on the matters listed for voting, by electronic voting system in accordance with regulation 26 where the voting shall be kept open for at least twenty-four hours from the circulation of the minutes. The authorised representative shall circulate the minutes of the meeting to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelve hours.
1. Voting by Authorised Representative
The authorised representative shall cast his vote in respect of each financial creditor or on behalf of all financial creditors he represents in accordance with the provisions of sub-section (3) or sub-section (3A) of section 25A, as the case may be.
2. Voting through electronic means[Reg.-26]
The resolution professional shall provide each member of the committee the means to exercise its vote by either electronic means or through electronic voting system in accordance with the provisions of this Regulation.
(a) the expressions ‘‘voting by electronic means’’ or ‘‘electronic voting system’’ means a “secured system” based process of display of electronic ballots, recording of votes of the members of the committee and the number of votes polled in favour or against, such that the voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate cyber security;
(b) the expression ‘‘secured system’’ means computer hardware, software, and procedure that –
(i) are reasonably secure from unauthorized access and misuse;
(ii) provide a reasonable level of reliability and correct operation;
(iii) are reasonably suited to perform the intended functions; and
(iv) adhere to generally accepted security procedures.
At the end of the voting period, the voting portal shall forthwith be blocked. At the conclusion of a vote held through electronic means, the resolution professional shall announce and make a written record of the summary of the decision taken on a relevant agenda item along with the names of the members of the committee who voted for or against the decision, or abstained from voting. The resolution professional shall circulate a copy of the record to all participants by electronic means within twenty four hours of the conclusion of the voting.
III. Approval of committee of creditors for certain actions[Sec. 28]
The resolution professional, during the CIRP, shall not take any of the following actions without the prior approval of the committee of creditors namely:
(a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting;
(b) create any security interest over the assets of the corporate debtor;
(c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company;
(d) record any change in the ownership interest of the corporate debtor;
(e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit transaction from any such accounts in excess of the amount as may be decided by the committee of creditors in their meeting;
(f) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees to third parties;
(j) make any change in the management of the corporate debtor or its subsidiary;
(k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business;
(l) make changes in the appointment or terms of contract of such personnel as specified by the committee of creditors; or
(m) make changes in the appointment or terms of contract of statutory auditors or internal auditors of the corporate debtor.
The resolution professional shall convene a meeting of the committee of creditors and seek the vote of the creditors prior to taking any of the above actions. The above actions shall not be approved by the committee of creditors unless approved by a vote of sixty-six per cent. of the voting shares. Where any above action is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void. The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking necessary actions against him under this Code.